Exhibit 4.3.1
EXECUTION COPY
AMENDED AND RESTATED MORTGAGE SALE AGREEMENT
17 OCTOBER
2006
HALIFAX PLC
AS SELLER AND A BENEFICIARY
AND
PERMANENT FUNDING (NO. 1) LIMITED
AS FUNDING 1 AND A BENEFICIARY
AND
PERMANENT FUNDING (NO. 2) LIMITED
AS FUNDING 2 AND A BENEFICIARY
AND
PERMANENT MORTGAGES TRUSTEE LIMITED
AS MORTGAGES TRUSTEE
AND
THE BANK OF NEW YORK
AS FUNDING 1 SECURITY TRUSTEE AND FUNDING 2 SECURITY TRUSTEE
ALLEN & OVERY
ALLEN & OVERY LLP
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CONTENTS
CLAUSE
PAGE
1.
Definitions and
Construction............................................5
2. Sale
and Purchase of Initial
Portfolio..................................6
3. Initial
Closing
Date....................................................6
4. Sale
and Purchase of New
Portfolios.....................................8
5. Trust
of
Monies........................................................14
6.
Completion of the Transfer of
Loans....................................14
7.
Undertakings...........................................................16
8.
Warranties and Repurchase by the
Seller................................18
9. Other
Warranties.......................................................22
10. Further
Assurance......................................................22
11. Consequences
of Breach.................................................23
12.
Subordination..........................................................23
13.
Non-Merger.............................................................23
14. No Agency or
Partnership...............................................23
15.
Payments...............................................................23
16. Amendments,
Waivers and Consents.......................................24
17.
Notices................................................................24
18.
Assignment.............................................................25
19. Change of
Funding 1 Security Trustee and/or Funding 2 Security
Trustee................................................................25
20. Third Party
Rights.....................................................26
21. Execution in
counterparts; severability................................26
22. Governing
Law..........................................................26
SCHEDULE
1.
Representations and
Warranties.........................................29
2.
Registered
Transfer....................................................37
3.
Unregistered
Transfer..................................................38
4. Lending
Criteria.......................................................41
5. Power
of Attorney in favour of Funding 1, Funding 2, the Mortgages
Trustee,
the Funding 1 Security Trustee and the Funding 2 Security
Trustee................................................................45
6. Loan
Repurchase
Notice.................................................48
7.
Assignment of Third Party
Rights.......................................50
8.
Assignment of Halifax Mortgage Re Limited MIG
Policies.................53
9. Halifax
Mortgage Re Limited MIG Policies Assignment
Notice.............57
10. Insurance
Endorsement..................................................58
11. Insurance
Acknowledgements.............................................60
12. New
Portfolio
Notice...................................................64
13. Forms of
Scottish
Transfer.............................................66
14. Forms of
Scottish
Transfer.............................................69
15. Form of
Scottish Declaration of
Trust..................................72
16. Form of
Memorandum of
Release..........................................79
17.
Re-Assignment of MIG
Policies..........................................80
18. Halifax
Mortgage Re Limited MIG Policies Re-Assignment
Notice..........84
19.
Re-Assignment of Third Party
Rights....................................85
<PAGE>
APPENDIX
Part 1
Initial
Portfolio............................................88
Part 2
Standard
Documentation.......................................88
Part 3
Initial
Portfolio............................................89
Part 4
Standard
Documentation.......................................90
<PAGE>
THIS AMENDED AND RESTATED MORTGAGE SALE AGREEMENT (this AGREEMENT)
is made on
17 October 2006
BETWEEN:
(1) HALIFAX PLC
(registered number 02367076), a public limited company
incorporated under the laws of England and Wales, whose registered
office
is at
Trinity Road, Halifax, West Yorkshire HX1 2RG (acting in its
capacities
as the SELLER and a BENEFICIARY);
(2) PERMANENT
FUNDING (NO. 1) LIMITED (registered number 4267660), a private
limited
company incorporated under the laws of England and Wales, whose
registered
office is at 35 Great St. Helen's, London EC3A 6AP (acting in
its
capacities as FUNDING 1 and a BENEFICIARY);
(3) PERMANENT
FUNDING (NO. 2) LIMITED (registered number 04441772), a private
limited
company incorporated under the laws of England and Wales, whose
registered
office is at 35 Great St. Helen's, London EC3A 6AP (acting in
its
capacities as FUNDING 2 and a BENEFICIARY);
(4) PERMANENT
MORTGAGES TRUSTEE LIMITED (registered number 83116), a private
limited
company incorporated under the laws of Jersey, Channel Islands,
whose
registered office is at 47 Esplanade, St Helier, Jersey JE1
0BD,
Channel
Islands (acting in its capacity as the MORTGAGES TRUSTEE);
(5) THE BANK OF
NEW YORK, a New York banking corporation, acting through its
offices at
48th Floor, One Canada Square, London E14 5AL (acting in its
capacity
as FUNDING 1 SECURITY TRUSTEE, which expression shall include
such
company and all other persons or companies for the time being
acting
as
security trustee (or co-trustee) pursuant to the terms of the
Funding
1 Deed of
Charge); and
(6) THE BANK OF
NEW YORK, a New York banking corporation, acting through its
offices at
48th Floor, One Canada Square, London E14 5AL (acting in its
capacity
as FUNDING 2 SECURITY TRUSTEE, which expression shall include
such
company and all other persons or companies for the time being
acting
as
security trustee (or co-trustee) pursuant to the terms of the
Funding
2 Deed of
Charge).
WHEREAS:
(A) The Seller
carries on the business of, inter alia, originating mortgage
loans to
individual borrowers secured on residential properties in
England,
Wales or Scotland.
(B) The Seller
has sold to the Mortgages Trustee certain of the above
mentioned
mortgage loans together with the benefit of their related
security
on the terms and subject to the conditions set out in the
Mortgage
Sale Agreement (as amended and/or restated by this Agreement
and
from time
to time, the MORTGAGE SALE AGREEMENT).
(C) The
Mortgages Trustee holds all of the above mentioned mortgage loans
as
bare
trustee for the Beneficiaries upon, with and subject to the
trusts,
powers and
provisions of the Mortgages Trust Deed (as amended and/or
restated
from time to time, the MORTGAGES TRUST DEED).
(D) On 12 March
2004 the parties to the Mortgage Sale Agreement agreed to
amend the
terms of the Mortgage Sale Agreement as set out in an Amended
and
Restated Mortgage Sale Agreement of the same date and the Seller
sold
a new
portfolio of mortgage loans to the Mortgages Trustee on 12
March
2004 on
such amended terms.
(E) On 22 July
2004 the parties to the Mortgage Sale Agreement agreed to
amend the
terms of the Mortgage Sale Agreement as set out in an Amended
and
Restated Mortgage Sale Agreement of the
4
<PAGE>
same date
and the Seller sold a new portfolio of mortgage loans to the
Mortgages
Trustee on 22 July 2004 on such amended terms.
(F) On 18
November 2004 the parties to the Mortgage Sale Agreement agreed
to
amend the
terms of the Mortgage Sale Agreement as set out in an Amended
and
Restated Mortgage Sale Agreement of the same date and the Seller
sold
a new
portfolio of mortgage loans to the Mortgages Trustee on 18
November
2004 on
such amended terms.
(G) On 23 March
2005 the parties to the Mortgage Sale Agreement agreed to
amend the
terms of the Mortgage Sale Agreement as set out in an Amended
and
Restated Mortgage Sale Agreement of the same date and the Seller
sold
a new
portfolio of mortgage loans to the Mortgages Trustee on 23
March
2005 on
such amended terms.
(H) On 22 June
2005 the parties to the Mortgage Sale Agreement agreed to
amend the
terms of the Mortgage Sale Agreement as set out in an Amended
and
Restated Mortgage Sale Agreement of the same date and the Seller
sold
a new portfolio
of mortgage loans to the Mortgages Trustee on 22 June
2005 on
such amended terms.
(I) On 22 March
2006 the parties to the Mortgage Sale Agreement agreed to
amend the
terms of the Mortgage Sale Agreement as set out in an Amended
and
Restated Mortgage Sale Agreement of the same date and the Seller
sold
a new
portfolio of mortgage loans to the Mortgages Trustee on 22
March
2006 on
such amended terms.
(J) Funding 2
and the Funding 2 Security Trustee wish to become parties to,
and the
parties wish to amend and restate, the Mortgage Sale Agreement.
The
parties to the Mortgage Sale Agreement, Funding 2 and the Funding
2
Security
Trustee have agreed to amend and restate the terms of the
Mortgage
Sale Agreement as set out herein and the Seller may sell new
portfolios
of mortgage loans and their related security to the Mortgages
Trustee on
such amended terms.
IT IS HEREBY AGREED as follows:
1.
DEFINITIONS AND CONSTRUCTION
1.1 The amended
and restated master definitions and construction schedule
signed by,
amongst others, the parties to this Agreement and dated 17
October
2006 (as the same may be amended, varied or supplemented from
time to
time with the consent of the parties to this Agreement) (the
MASTER
DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly and
specifically incorporated into this Agreement and, accordingly,
the
expressions defined in the Master Definitions and Construction
Schedule
(as so
amended, varied or supplemented from time to time) shall,
except
where the
context otherwise requires and save where otherwise defined
herein,
have the same meanings in this Agreement, including the
Recitals
hereto and
this Agreement shall be construed in accordance with the
interpretation provisions set out in CLAUSE 2 of the Master
Definitions
and
Construction Schedule.
1.2 Any
reference in this Agreement to any discretion, power, right, duty
or
obligation on
the part of the Mortgages Trustee shall be as exercised by
the
Mortgages Trustee subject in each case to the provisions of Clause
16
of the
Mortgages Trust Deed.
1.3 For the
purposes of Section 2 of the Law of Property (Miscellaneous
Provisions) Act 1989, the terms of the Transaction Documents are,
so far
as
applicable, incorporated herein.
1.4 The Initial
Portfolio contained as Part 1 of the Exhibit to this
Agreement
and any schedule of New Loans attached to any New Portfolio
Notice may
be provided in a document stored upon electronic media
(including, but not limited to, a CD-ROM) in a form acceptable to
the
Mortgages
Trustee,
5
<PAGE>
Funding 1
and the Funding 1 Security Trustee and, as of the Programme
Date,
Funding 2 and the Funding 2 Security Trustee (each acting
reasonably).
1.5 This
Agreement amends and restates the Mortgage Sale Agreement made
on
the 14
June 2002 as amended and restated on the 6 March 2003, 25
November
2003, 12
March 2004, 22 July 2004, 18 November 2004, 23 March 2005, 22
June 2005
and 22 March 2006 (the PRINCIPAL AGREEMENT). As of the date of
this
Agreement, any future rights or obligations (excluding such
obligations accrued to the date of this Agreement) of a party under
the
Principal
Agreement shall be extinguished and shall instead be governed
by this
Agreement.
2. SALE
AND PURCHASE OF INITIAL PORTFOLIO
2.1 Subject to
CLAUSE 2.2, in consideration of the Purchase Price (which
shall be
paid in accordance with CLAUSE 3.3) and the covenant of the
Mortgages
Trustee to hold the Trust Property upon trust, with and subject
to all the
trusts, powers and provisions of the Mortgages Trust Deed, the
Seller
hereby agrees to sell to the Mortgages Trustee with full title
guarantee,
the Initial Portfolio on the Initial Closing Date.
2.2 The
obligation of the Seller under CLAUSE 2.1 shall be subject to
and
conditional upon:
(a)
the issue
by the First Issuer of the Issuer Notes on the Initial
Closing Date and the borrowing by Funding 1 of the Term
Advances
under the First Issuer Intercompany Loan Agreement;
(b)
the
constitution of the Mortgages Trust on or prior to the Initial
Closing Date; and
(c)
the
Transaction Documents in existence on the Initial Closing Date
having been executed and delivered by the parties thereto on or
before the Initial Closing Date.
2.3 The sale of
the Portfolio shall not include any obligation to pay any
Delayed
Cashbacks, Home Cash Reserve Drawings or Flexible Loan Drawings
(if any),
which obligation shall at all times, and notwithstanding the
sale of
the Portfolio, remain an obligation of the Seller.
3. INITIAL
CLOSING DATE
3.1 (a)
A meeting
shall take place at 11.00 a.m. on the Initial Closing
Date at the offices of Allen & Overy, One New Change, London
EC4M
9QQ or such other time or offices as the parties may agree at
which the Seller shall deliver to the Funding 1 Security
Trustee
or its representative the following documents:
(i) two
originals of the power of attorney dated as at the
Initial Closing Date and substantially in the form set out
in SCHEDULE 5 hereto, duly executed by the Seller;
(ii) a certified
copy of each of the duly executed Insurance
Acknowledgements;
(iii) a certified copy
of each of the duly executed Insurance
Endorsements;
(iv) a duly
executed assignment of the Halifax Mortgage Re
Limited MIG Policies to the extent that they relate to the
Mortgages comprised in the Initial Portfolio from the
Seller to the Mortgages Trustee and a certified copy of a
notice (the original of which shall be served by the Seller
by courier or by special delivery) of such assignment from
the Seller to HBOS Insurance (PCC) Guernsey Limited dated
as at the Initial Closing Date and in the form (mutatis
mutandis) set out in SCHEDULE 8 and SCHEDULE 9 hereto
respectively and a certified copy of consent to assignment
of the Halifax Mortgage Re Limited MIG Policies (or
acknowledgement that the
6
<PAGE>
Mortgages Trustee will be an insured in respect of the
Initial Portfolio under the Halifax Mortgage Re Limited MIG
Policies following such assignment) from HBOS Insurance
(PCC) Guernsey Limited in such form as HBOS Insurance (PCC)
Guernsey Limited reasonably requires;
(v) a
certificate of a duly authorised officer of the Seller
dated as at the Initial Closing Date attaching a copy of
the board minute of the Seller authorising its duly
appointed representatives to agree the sale of the
Portfolio and authorising execution and performance of this
Agreement, the Servicing Agreement, the other Transaction
Documents to which the Seller is a party (in any capacity)
and all of the documentation to be entered into pursuant to
this Agreement and confirming that the resolutions referred
to therein are in full force and effect and have not been
amended or rescinded as at the date of the certificate;
(vi) a duly
executed assignment of rights against third parties
comprised in the Initial Portfolio dated as at the Initial
Closing Date and in the form of the Assignment of Third
Party Rights; and
(vii) a solvency
certificate from an authorised signatory of the
Seller dated the Initial Closing Date in a form acceptable
to the Mortgages Trustee, Funding 1 and the Funding 1
Security Trustee (each acting reasonably).
(b)
The
parties hereto acknowledge that completion on the Initial
Closing Date of the sale to the Mortgages Trustee of all of the
Seller's right, title, interest and benefit in and to the
Initial
Portfolio subject to the terms and provisions of the Mortgages
Trust Deed shall occur as indicated in this CLAUSE 3, provided
that the matters described in CLAUSES 6.2, 6.3, 6.4 and 6.5
shall
not occur until the relevant time indicated in CLAUSE 6 or, as
applicable, CLAUSE 7.4.
3.2 The Seller
undertakes that from the Initial Closing Date until the
perfection
of the assignment or assignation (as appropriate) in
accordance
with CLAUSES 6.1, 6.2, 6.3, 6.4 and 6.5, the Seller shall hold
the Title
Deeds and Customer Files relating to the Portfolio that are in
its
possession or under its control or held to its order to the order
of
the
Mortgages Trustee or as the Mortgages Trustee shall otherwise
direct.
3.3 Subject to
fulfilment of the conditions referred to in CLAUSES 2.2 and 3,
the Seller
shall be paid the Purchase Price by telegraphic transfer by
Funding 1
on the Initial Closing Date.
3.4 The Seller
shall provide all reasonable co-operation to the Mortgages
Trustee,
Funding 1, the Funding 1 Security Trustee, and, on and after
the
Programme
Date, Funding 2 and the Funding 2 Security Trustee to enable
them to
carry out their respective duties and enforce their rights
under
the
Transaction Documents. Without prejudice to the generality of
the
foregoing,
the Seller shall:
(a)
upon
reasonable prior notice and during normal office hours,
permit the Mortgages Trustee and/or Funding 1 and/or Funding 2
and/or the Funding 1 Security Trustee and/or the Funding 2
Security Trustee and their respective authorised employees and
agents and other persons nominated by them and approved by the
Seller (such approval not to be unreasonably withheld or
delayed),
to review the Customer Files and the Title Deeds in relation to
the Portfolio (subject to such person(s) agreeing to keep the
same
confidential but provided that disclosure shall be permitted to
the professional advisors and auditors of the party to whom
such
disclosure is made and/or to the extent that such disclosure is
required by law or for the purpose of any judicial or other
proceedings); and/or
(b)
give
promptly all such information and explanations relating to
the Loans and their Related Security as the Mortgages Trustee
and/or Funding 1 and/or Funding 2 and/or the Funding 1 Security
Trustee and/or the Funding 2
7
<PAGE>
Security Trustee may reasonably request (including a list of
the
Loans and their Related Security in the Portfolio along with
details of the location of the Title Deeds relating thereto),
provided
that prior to completion in accordance with CLAUSE 6, the
Seller
shall be
under no obligation to provide any information or documentation
to any
person other than the Mortgages Trustee and/or Funding 1 and/or
Funding 2
and/or the Funding 1 Security Trustee and/or the Funding 2
Security Trustee or
their respective employees and/or professional
advisors
or allow such person access to the Customer Files or Title
Deeds
if to do
so would result in a breach of the applicable Mortgage Terms or
the Data
Protection Act 1998.
4. SALE
AND PURCHASE OF NEW PORTFOLIOS
4.1 Subject to
fulfilment of the conditions set out in CLAUSES 2.2, 3.1, 4.2
(or as
applicable, 4.3) and 4.4 and the restriction set out in CLAUSE
2.3, if
the Seller shall, at any time and from time to time serve a
properly
completed New Portfolio Notice on the Mortgages Trustee,
Funding
1 and
Funding 2 with a copy to each of the Funding 1 Security Trustee
and
the
Funding 2 Security Trustee (such service to be in the Seller's
sole
discretion), the Seller agrees that on the date for completion of
the
sale
specified in such New Portfolio Notice the Seller shall sell
with
full title
guarantee (or in relation to rights and assets situated in or
governed
by the law of Scotland with absolute warrandice) to the
Mortgages
Trustee the relevant New Portfolio.
4.2 The
conditions to be met as at each Sale Date are:
(a)
no event
of default under the Transaction Documents shall have
occurred which is continuing as at the relevant Sale Date;
(b)
(i) (in
the case of Funding 1) the Principal Deficiency Ledger
shall not have a debit balance as at the most recent Funding 1
Interest Payment Date after applying all Funding 1 Available
Revenue Receipts on that Funding 1 Interest Payment Date and
(ii)
(in the case of Funding 2) the Funding 2 Principal Deficiency
Ledger shall not have a debit balance as at the most recent
Funding 2 Interest Payment Date after applying all Funding 2
Available Revenue Receipts on that Funding 2 Interest Payment
Date;
(c)
the
Mortgages Trustee is not aware that the purchase of the New
Portfolio
on the relevant Sale Date would adversely affect the
then current rating by the Rating Agencies of any of the Notes
of
any Funding 1 Issuer or of the Master Issuer;
(d)
as at the
relevant Sale Date, the Seller has not received any
notice that the short term, unsecured, unguaranteed and
unsubordinated debt obligations of the Seller are not rated at
least P-1 by Moody's, A-1 by S&P and F1 by Fitch at the time
of,
and
immediately following, the sale of New Loans to the Mortgages
Trustee;
(e)
as at the
relevant Sale Date, the aggregate Outstanding Principal
Balance of the Loans in the Mortgages Trust, in respect of
which
the aggregate amount in arrears is more than three times the
Monthly Payment then due, is less than 5 per cent. of the
aggregate Outstanding Principal Balance of the Loans in the
Mortgages Trust unless the Rating Agencies have confirmed to
Funding 1 and Funding 2 or to the Funding 1 Security Trustee
and
the Funding 2 Security Trustee that the then current ratings of
the Notes of any Funding 1 Issuer or of the Master Issuer will
not
be reduced, withdrawn of qualified;
(f)
except
where Funding 1 and/or Funding 2 (as applicable) pays
amounts to the Seller in consideration of New Loans to be sold
to
the Mortgages Trustee, the aggregate Outstanding Principal
Balance
(excluding Arrears of Interest) of New Loans transferred in any
one
8
<PAGE>
Interest Period must not exceed 15 per cent. of the aggregate
Outstanding Principal Balance of Loans (excluding Arrears of
Interest) in the Mortgages Trust as at the beginning of that
Interest Period;
(g)
the sale
of the New Portfolio on the relevant Sale Date does not
result in the product of WAFF and WALS for the Loans in the
Portfolio after such purchase calculated on the relevant Sale
Date
(in the same way as for the Initial Portfolio (or as agreed by
the
Servicer and the Rating Agencies from time to time)) exceeding
the
product of WAFF and WALS for the Loans in the Portfolio
calculated
on the most recent Closing Date plus 0.25 per cent.;
(h)
the yield
(as calculated below) of the Loans in the Mortgages
Trust together with the yield of the New Loans to be sold to
the
Mortgages Trustee on the relevant Sale Date (together for the
purposes of this paragraph, the RELEVANT LOANS) is at least
0.50
per cent. greater than the weighed average of Sterling-LIBOR
for
three-month sterling deposits as at the previous Funding 2
Interest Payment Date and Sterling-LIBOR for three-month
sterling
deposits as at the previous Funding 1 Interest Payment Date,
after
taking into account the average yield on the Loans which are
Variable Rate Loans, Tracker Rate Loans and Fixed Rate Loans
and
the margins on the Funding 1 Swap(s) and the Funding 2 Swap(s),
in
each case as at the relevant Sale Date. The yield of the
Relevant
Loans is to be calculated as follows:
(AxB)+(Cx(D-E+F))+(Gx(H+I))
---------------------------
J
where,
(A) =
the
Outstanding Principal Balance, on the relevant
Sale Date, of the Relevant Loans which are Fixed Rate
Loans;
(B) =
the fixed
interest rate receivable by Funding 1 under
the Funding 1 Swap(s) and by Funding 2 under the Funding 2
Swap(s), in each case as at the relevant Sale Date;
(C) =
the
Outstanding Principal Balance, on the relevant
Sale Date, of the Relevant Loans which are Variable Rate
Loans;
(D) =
the
weighted average Variable Base Rate of the
Relevant Loans which are Variable Rate Loans on the
relevant Sale Date;
(E) =
the
Variable Rate Swap SVR for the Relevant Loans
which are Variable Rate Loans on the relevant Sale Date;
(F) =
the
variable interest rate receivable by Funding 1
under the Funding 1 Swap(s) and by Funding 2 under the
Funding 2 Swap(s), in each case as at the relevant Sale
Date;
(G) =
the Outstanding Principal Balance,
on the relevant
Sale Date, of the Relevant Loans which are Tracker Rate
Loans;
(H) =
the
tracker interest rate receivable by Funding 1
under the Funding 1 Swap(s) and by Funding 2 under the
Funding 2 Swap(s), in each case as at the relevant Sale
Date;
9
<PAGE>
(I) =
the
weighted average margin of the Relevant Loans
which are Tracker Rate Loans over or under the Bank of
England repo rate on the relevant Sale Date; and
(J) =
the
Outstanding Principal Balance of the Relevant
Loans on the relevant Sale Date;
(i)
the sale
of the New Loans on the relevant Sale Date does not
result in the loan-to-value ratio of the Loans and the New
Loans
after application of the LTV Test on the relevant Sale Date
exceeding the loan-to-value ratio (based on the LTV Test) of
Loans
in the Portfolio on the most recent Closing Date plus 0.25 per
cent.;
(j)
the sale
of the New Loans on the relevant Sale Date does not
result in Loans (other than Fixed Rate Loans) which, after
taking
into account the Funding 1 Swap(s) and the Funding 2 Swap(s),
will
yield less than Sterling-LIBOR plus 0.50 per cent. as at the
relevant Sale Date and that have more than two years remaining
on
their incentive period accounting for more than 15 per cent. of
the aggregate Outstanding Principal Balance of all Loans
comprising the Trust Property;
(k) the sale of the New
Loans on the relevant Sale Date does not
result in the Fixed Rate Loans which have more than one year
remaining on their incentive period accounting for more than 50
per cent. of the aggregate Outstanding Principal Balance of
Loans
comprised in the Trust Property;
(l)
no sale of
New Loans may occur, if, as at the relevant Sale Date,
the Step-up Date in respect of any Note issued by a Funding 1
Issuer issued
after 1 January 2003 and still outstanding has been
reached and such Note issued by any Funding 1 Issuer has not
been
redeemed in full. For the avoidance of doubt, this prohibition
on
the sale of New Loans to the Mortgages Trustee shall remain in
effect only for so long as any such Note issued by any Funding
1
Issuer remains outstanding and, upon its redemption, the sale
of
New Loans to the Mortgages Trustee may be resumed in accordance
with the terms of this Agreement;
(m)
no sale of
new Loans may occur, if, as at the relevant Sale Date,
the Step-up Date in respect of any Note issued by the Master
Issuer after the Programme Date and still outstanding has been
reached and such Note has not been redeemed in full. For the
avoidance of doubt, this prohibition on the sale of New Loans
to
the Mortgages Trustee shall remain in effect only for so long
as
any such Note remains outstanding and, upon its redemption, the
sale of New Loans to the Mortgages Trustee may be resumed in
accordance with the terms of this Agreement;
(n)
as at the
Sale Date, (i) (in the case of Funding 1) the adjusted
General Reserve Fund is equal to or greater than the General
Reserve Fund Threshold and (ii) (in the case of Funding 2) the
Funding 2 General Reserve Fund is equal to or greater than the
Funding 2 General Reserve Fund Threshold;
(o)
if the
sale of New Loans includes the sale of New Loan Types to
the Mortgages Trustee, the Funding 1 Security Trustee and the
Funding 2 Security Trustee have received written confirmation
from
each of the Rating Agencies that such New Loan Types may be
sold
and assigned to the Mortgages Trustee and that such sale of New
Loan Types would not have an adverse effect on the then current
ratings of the Notes of any Funding 1 Issuer or of the Master
Issuer;
(p)
each of
the Funding 1 Swap Agreement and the Funding 2 Swap
Agreement has been modified as required (or, if appropriate,
Funding 1 and/or Funding 2 has entered into a new
10
<PAGE>
swap agreement) to hedge against the interest rates payable in
respect of such New Loans and the floating rate of interest
payable on the Intercompany Loan and the Master Intercompany
Loan
(respectively); and
(q)
no Trigger
Event has occurred on or before the relevant Sale Date;
provided
that the Mortgages Trustee may vary or waive the conditions set
out in
this CLAUSE 4.2 where it has received written confirmation from
each
Rating Agency that such variation or waiver will not cause the
ratings of
the Notes of any Funding 1 Issuer or of the Master Issuer to
be
reduced, withdrawn or qualified. In this CLAUSE 4.2 references to
any
Monthly
Payment due at any date means the Monthly Payment payable in
respect of
the month in which that date falls.
4.3 The
obligations of the Seller under CLAUSE 4.1 shall be subject to
and
conditional upon no Insolvency Event having occurred which is
continuing
as at the
relevant Sale Date.
4.4 Subject to
fulfilment of the conditions referred to in CLAUSES 4.2, 4.3,
4.4, 4.5
and 4.6, the consideration to be provided to the Seller for the
sale and
assignment of the New Portfolio to the Mortgages Trustee on a
Sale Date
shall be the aggregate of:
(a)
the
payment by Funding 1 and/or Funding 2 (as applicable) to the
Seller by telegraphic transfer on the relevant Sale Date of the
proceeds of:
(i) (in
the case of Funding 1) the Term Advances under any
Intercompany Loan Agreement advanced to Funding 1 by a
Funding 1 Issuer for such purpose; and/or
(ii) (in the
case of Funding 2) any Loan Tranche under the
Master Intercompany Agreement advanced to Funding 2 by the
Master Issuer for such purpose; and/or
(iii) (in the case of
Funding 1 or Funding 2) any New
Intercompany Loan made by a New Issuer to Funding 1 or
Funding 2 under a New Intercompany Loan Agreement for such
purpose;
(b)
the
covenant by Funding 1 and Funding 2 to pay, at a later date,
Deferred Consideration to the Seller; and/or
(c)
the
covenant of the Mortgages Trustee to hold the Trust Property
on trust for the Seller (as to the Seller Share), Funding 1 (as
to
the Funding 1 Share) and Funding 2 (as to the Funding 2 Share)
pursuant to the terms of the Mortgages Trust Deed.
4.5 (a)
On the
date of the sale of the relevant New Portfolio the Seller
shall deliver to the Funding 1 Security Trustee and the Funding
2
Security Trustee or their respective representatives the
following
documents:
(i) on the
date of the first sale of a relevant New Portfolio
including Scottish Loans:
(A) two
originals of the power of attorney dated as at
the Sale Date and substantially in the form set out
in SCHEDULE 5 hereof duly executed by the Seller;
(B) a certified
copy of each of the duly executed
Insurance Acknowledgements; and
(C) a certified
copy of each of the duly executed
Insurance Endorsements;
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(ii) a duly
executed assignment of the Halifax Mortgage Re
Limited MIG Policies to the extent that they relate to the
Mortgages comprised in the relevant New Portfolio from the
Seller to the Mortgages Trustee and a certified copy of a
notice (the original of which shall be served by the Seller
by courier or by special delivery) of such assignment from
the Seller to HBOS Insurance (PCC) Guernsey Limited dated
as of the relevant Sale Date and in the form (mutatis
mutandis) set out in SCHEDULE 8 and SCHEDULE 9 hereof
respectively and a certified copy of consent to assignment
of the Halifax Mortgage Re Limited MIG policies (or
acknowledgement that the Mortgages Trustee will be an
insured under the Halifax Mortgage Re Limited MIG Policies
following the assignment) from HBOS Insurance (PCC)
Guernsey Limited in such form as HBOS Insurance (PCC)
Guernsey Limited reasonably requires;
(iii) a duly executed
assignment of rights against third parties
comprised in the relevant New Portfolio dated as at the
relevant Sale Date and in the form of the Assignment of
Third Party Rights;
(iv) a certified
copy of each of the duly executed Insurance
Acknowledgements;
(v) on any
Sale Date that Funding 1 and/or Funding 2 (as
applicable) provides consideration for New Loans to be sold
to the Mortgages Trustee pursuant to CLAUSE 4.4(A) above
only, a certificate of a duly authorised officer of the
Seller dated as at the relevant Sale Date attaching either
(A) a copy of the board minute referred to in CLAUSE
3.1(A)(V) or (B) any board minutes or considerations, notes
and resolutions of the Seller or its duly authorised
delegate (as applicable) authorising its duly appointed
representatives to agree the sale of a New Portfolio, and
authorising the execution and performance of the
Transaction Documents to which the Seller is party, in each
case confirming that the resolutions referred to therein
are in full force and effect and have not been amended or
rescinded as at the date of the certificate;
(vi) on any Sale
Date that Funding 1 and/or Funding 2 (as
applicable) provides consideration for New Loans to be sold
to the Mortgages Trustee pursuant to CLAUSE 4.4(A) above
only, a solvency certificate from an authorised signatory
of the Seller dated as at the relevant Sale Date; and
(vii) a Scottish
Declaration of Trust in respect of any Scottish
Loans and their Related Security comprised in the relevant
New Portfolio, in the form (mutatis mutandis) set out in
SCHEDULE 15 and with the annexure thereto duly completed,
duly executed by the Seller, the Mortgages Trustee, Funding
1 and Funding 2.
(b) The
parties hereto acknowledge that completion on each relevant
Sale
Date
of the sale to the Mortgages Trustee of all of the Seller's
right,
title, interest and benefit in and to the relevant New Portfolio
subject
to
the terms and provisions of the Mortgages Trust Deed shall occur
as
indicated in this CLAUSE 4 PROVIDED THAT the matters described
in
CLAUSES 6.5 and 6.6 shall not occur until the relevant time
indicated in
CLAUSE 6 or, as applicable, CLAUSE 7.4.
4.6 (a)
The Seller
undertakes that from the relevant Sale Date until the
perfection of the assignment or assignation (as appropriate) in
accordance with CLAUSES 6.1, 6.2, 6.3, 6.4 and 6.5, the Seller
shall hold the Title Deeds and Customer Files relating to the
New
Portfolio that are in its possession or under its control or
held
to its order to the order of the Mortgages Trustee or as the
Mortgages Trustee shall direct.
(b)
The Seller
undertakes that within three (3) London Business Days
of the Sale Date to provide the Mortgages Trustee, the Funding
1
Security Trustee and the Funding 2 Security Trustee with an
updated, complete and accurate list of the Loans and their
Related
Security
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which comprise the New Portfolio which may be provided in a
document stored upon electronic media (including, but not
limited
to a CD-Rom) in a form acceptable to the Mortgages Trustee, the
Funding 1 Security Trustee and the Funding 2 Security Trustee
(each acting reasonably).
4.7 Prior to the
earlier to occur of:
(a)
a Trigger
Event:
(b)
the later
of:
(i) (a) if
Funding 1 does not enter into a New Intercompany
Loan Agreement, the Funding 1 Interest Payment Date in
September 2012 or (b) on each occasion that Funding 1
enters into a New Intercompany Loan Agreement, the latest
Funding 1 Interest Payment Date specified by Funding 1 by
notice in writing to the Seller, Funding 2 and the
Mortgages Trustee as applying in relation to this covenant;
and
(ii) on the date
that Funding 2 enters into the Master
Intercompany Loan Agreement and on each occasion that the
Master Issuer advances Funding 2 a Loan Tranche under the
Master Intercompany Loan Agreement, the latest Funding 2
Interest Payment Date specified by Funding 2 by notice in
writing to the Seller, Funding 1 and the Mortgages Trustee
as applying in relation to this covenant,
the Seller
undertakes to use all reasonable endeavours to offer to sell,
in
accordance with the provisions of this CLAUSE 4, to the
Mortgages
Trustee
and the Mortgages Trustee undertakes to use all reasonable
endeavours
to acquire from the Seller and to hold pursuant to the terms
of the
Mortgages Trust Deed until the earlier of the occurrence of a
Trigger
Event and the dates set out in PARAGRAPH (B) above, sufficient
New Loans
and their Related Security so that the aggregate Outstanding
Principal
Balance of Loans in the Portfolio during the period from and
including
the most recent Closing Date to but excluding later of the
dates
specified in any notice from Funding 1 or Funding 2 (as
applicable)
given
pursuant to PARAGRAPH (B) above is not less than the amount
specified
in such notice provided that the Seller shall not be obliged to
sell to
the Mortgages Trustee, and the Mortgages Trustee shall not be
obliged to
acquire, New Loans and their Related Security if in the
reasonable
opinion of the Seller the sale to the Mortgages Trustee of New
Loans and
their Related Security would adversely affect the business of
the
Seller.
4.8 On each Sale
Date that Funding 1 and/or Funding 2 (as applicable)
provides
consideration for New Loans to be sold to the Mortgages Trustee
pursuant
to CLAUSE 4.4(A) above, the Beneficiaries shall appoint a firm
of
independent auditors to undertake a due diligence exercise on a
sample
of the
Customer Files relating to the New Loans to be sold to the
Mortgages
Trustee on the relevant Sale Date. The costs of such
independent auditors shall be borne by the relevant Funding 1
Issuer or
the Master
Issuer (as applicable) which is making a Term Advance or a
Loan
Tranche (as applicable) to Funding 1 or Funding 2 (as
applicable)
(which
shall be procured by Funding 1 or Funding 2 (as applicable)).
4.9 By way of
additional consideration for the Initial Portfolio and the New
Portfolios, Funding 1 and Funding 2 shall pay Deferred
Consideration to
the Seller
in the amount and in the manner provided in the Funding 1 Deed
of Charge
and the Funding 2 Deed of Charge respectively. The amount
payable
under this CLAUSE 4.9 shall be payable without allocation among
the Initial Portfolio
and the New Portfolios and is payable
notwithstanding the actual amount of the Portfolio.
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5. TRUST
OF MONIES
5.1
Notwithstanding the sales effected by this Agreement, if at, or at
any
other time
after, a Closing Date (but prior to any repurchase in
accordance
with CLAUSE 8.5) the Seller holds, or there is held to its
order, or
it receives, or there is received to its order any property,
interests,
rights or benefits and/or the proceeds thereof hereby agreed
to be
sold, the Seller undertakes to each of the Mortgages Trustee,
Funding 1,
Funding 2, the Funding 1 Security Trustee and the Funding 2
Security
Trustee that, subject to CLAUSE 6, it will promptly remit,
assign
and/or transfer the same to the Mortgages Trustee or, if
appropriate, the Funding 1 Security Trustee and the Funding 2
Security
Trustee
and until it does so or to the extent that the Seller is unable
to effect such
remittance, assignment, assignation or transfer, it will
hold such
property, interests, rights or benefits and/or the proceeds
thereof
upon trust for the Mortgages Trustee subject at all times to
the
Mortgages
Trust.
5.2 If at, or
any time after, the Initial Closing Date the Mortgages Trustee
holds, or
there is held to its order, or it receives, or there is
received
to its order, any property, interests, rights or benefits
relating
to:
(a)
any Loan
or Loans under a Mortgage Account and its Related
Security repurchased by the Seller pursuant to CLAUSE 8.5; or
(b)
(without
prejudice to CLAUSE 12) amounts owed by a Borrower to the
Seller which the Seller has not agreed to sell under CLAUSE
2.1,
and/or the
proceeds thereof, the Mortgages Trustee undertakes to the
Seller
that it will remit, assign, re-assign, retrocess or transfer
the
same to
the Seller, as the case may require, and until it does so or to
the extent
that the Mortgages Trustee is unable to effect such
remittance, assignation, assignment, re-assignment, retrocession
or
transfer,
the Mortgages Trustee undertakes to hold such property,
interests,
rights or benefits and/or the proceeds thereof upon trust for
the Seller
as the beneficial owner thereof or as the Seller may direct
provided
that the Mortgages Trustee shall not be in breach of its
obligations under this CLAUSE 5 if, having received any such monies
and
paid them
to third parties in error, it pays an amount equal to the
monies so
paid in error to the Seller in accordance with the Servicing
Agreement.
6.
COMPLETION OF THE TRANSFER OF LOANS
6.1 The
assignments or assignations (as appropriate) contemplated by
this
Agreement
shall be perfected on the twentieth London Business Day after
the
earliest to occur of:
(a)
the
service of an Intercompany Loan Acceleration Notice (in
relation to any Intercompany Loan), a Master Intercompany Loan
Acceleration Notice (in relation to the Master Intercompany
Loan)
or a Note Acceleration Notice (in relation to any Notes of any
Funding 1 Issuer or the Master Issuer); or
(b)
the Seller
being required to perfect the Mortgages Trustee's legal
title to the Mortgages, or procure any or all of the acts
referred
to in this CLAUSE 6 by an order of a court of competent
jurisdiction or by any regulatory authority of which the Seller
is
a member or any organisation whose members comprise (but are
not
necessarily limited to) mortgage lenders and with whose
instructions it is customary for the Seller to comply; or
(c)
it
becoming necessary by law to do any or all of the acts referred
to in this CLAUSE 6; or
(d)
(i)
the
Funding 1 Security Trustee certifying that, in its
reasonable opinion, the property, assets and rights of
Funding 1 comprised in the security constituted by the
Funding 1 Deed of Charge or any material part thereof
is/are in jeopardy; or
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(ii) the Funding
2 Security Trustee certifying that, in its
reasonable opinion, the property, assets and rights of
Funding 2 comprised in the security constituted by the
Funding 2 Deed of Charge or any material part thereof
is/are in jeopardy,
and (in either case) that the doing of any or all of the acts
referred to in CLAUSES 6.2 to 6.6 inclusive is necessary in
order
materially to reduce such jeopardy; or
(e)
unless
otherwise agreed in writing by the Rating Agencies, the
Funding 1 Security Trustee and the Funding 2 Security Trustee,
the
termination of the Seller's role as Servicer under the
Servicing
Agreement; or
(f)
the Seller
calling for perfection by serving notice in writing to
that effect on the Mortgages Trustee, Funding 1, Funding 2, the
Funding 1 Security Trustee and the Funding 2 Security Trustee;
or
(g)
the date
on which the Seller ceases to be assigned a long term
unsecured, unsubordinated debt obligation rating from S&P of
at
least BBB- or from Moody's of at least Baa3 or from Fitch of at
least BBB-; or
(h)
the
occurrence of an Insolvency Event in relation to the Seller;
or
(i)
the latest
of the last repayment dates of the Intercompany Loan
Agreements, the Master Intercompany Loan Agreement and any New
Intercompany Loan Agreement where such Loan has not been
discharged in full.
6.2 Completion
of the transfer of the English Mortgages in the Portfolio
shall be
effected by:
(a) a Registered Transfer,
in the case of English Mortgages over
Registered Land (in the form set out in SCHEDULE 2); and
(b)
an
Unregistered Transfer, in the case of English Mortgages over
Unregistered Land (in the form set out in SCHEDULE 3).
6.3 Completion
of the transfer of the Scottish Mortgages in the Portfolio
shall be
effected by:
(a)
the
completion and registration in the Land Register of Scotland
of an SLR Transfer (in the form set out in SCHEDULE 13), in the
case of Scottish Mortgages over Properties title to which is
registered in the Land Register of Scotland; and
(b)
the
completion and recording in the General Register of Sasines of
a Sasine Transfer (in the form set out in SCHEDULE 14), in the
case of Scottish Mortgages over Properties title to which is
recorded in the General Register of Sasines.
6.4 Completion
of the transfer of any other matter comprised in the Portfolio
shall be
effected by a transfer, conveyance or assignation in such form
as the
Mortgages Trustee may reasonably require.
6.5 Subject to
CLAUSE 7.5, prior to perfection pursuant to CLAUSE 6.1, none
of the
Mortgages Trustee, Funding 1, Funding 2, the Funding 1 Security
Trustee or
the Funding 2 Security Trustee will:
(a)
submit or
require the submission of any notice, form, request or
application to or pay any fee for the registration or recording
of, or the noting of any interest at the Land Charges
Department
of the Land Registry or at the Land Registry or Registers of
Scotland in relation to, the Mortgages Trustee's and/or Funding
1's and/or
Funding 2's interests in the Portfolio;
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(b)
give or
require the giving of any notice to any Borrower of the
assignment or assignation of that Borrower's Loan and its
Related
Security to the Mortgages Trustee, the making of any Scottish
Declaration of Trust, the charge by Funding 1 of Funding 1's
interest in that Borrower's Loan and its Related Security to
the
Funding 1 Security Trustee pursuant to the Funding 1 Deed of
Charge or the charge by Funding 2 of Funding 2's interest in
that
Borrower's Loan and its Related Security to the Funding 2
Security
Trustee pursuant to the Funding 2 Deed of Charge; or
(c)
send or
require to be sent to any solicitor who has acted on
behalf of the Seller in respect of any Mortgage with respect to
which the Seller has not received a complete set of the Title
Deeds a
letter or other communication requiring such solicitor to
hold such documents to the order of the Mortgages Trustee, the
Funding 1 Security Trustee and the Funding 2 Security Trustee.
6.6 Within 25
London Business Days following perfection pursuant to CLAUSE
6.1, the
Seller will do such of the acts or things referred to in
CLAUSES
6.2 to 6.5
as the Funding 1 Security Trustee and the Funding 2 Security
Trustee or
the Mortgages Trustee requires the Seller to do.
6.7 The Seller
shall indemnify each of the Mortgages Trustee, Funding 1,
Funding 2,
Funding 1 Security Trustee and the Funding 2 Security Trustee
from and
against any and all costs, fees and expenses (including,
without
limitation, legal fees and expenses and any applicable VAT thereon)
which
may be
incurred by the Mortgages Trustee and/or Funding 1 and/or
Funding
2 and/or
the Funding 1 Security Trustee and/or the Funding 2 Security
Trustee by
reason of the doing of any act, matter or thing referred to in
this
CLAUSE 6 and CLAUSE 7.5.
7.
UNDERTAKINGS
7.1 The
Mortgages Trustee, Funding 1 and Funding 2 undertake to the
Seller
that they
will at all times (or will direct the Servicer at all times to)
use
reasonable endeavours to administer and enforce (and exercise
their
powers and
rights and perform their obligations under) the Loans
comprised
in the Portfolio and their Related Security in accordance with
the
Seller's Policy (for so long as it exists and thereafter in
accordance
with such policies as would be applied by a Reasonable,
Prudent
Mortgage Lender in the conduct of its business), provided that
if
the Seller
fails to comply with its obligations to repurchase any Loan
and its
Related Security pursuant to CLAUSE 8.5 the Mortgages Trustee
shall be
entitled to waive any Early Repayment Fee in respect of such
Loan and
its Related Security if, in the Mortgages Trustee's reasonable
opinion, such waiver
is reasonably necessary in order to effect an
interest
rate change.
7.2 The Seller
hereby undertakes to the Mortgages Trustee, Funding 1 and
Funding 2
that, in the event that any Borrower establishes that it has at
any time prior
to the Initial Closing Date or, as the case may be, the
relevant
Sale Date, paid to the Seller any amounts in excess of sums due
to the
Seller as at the date of payment under the Mortgage Conditions
applicable
to that Loan, the Seller will reimburse the Borrower for such
overpayment together with any interest, cost or other expense
associated
therewith.
The Seller further agrees to hold the Mortgages Trustee,
Funding 1
and Funding 2 harmless against any such claims and to indemnify
the
Mortgages Trustee, Funding 1 and Funding 2 on an after Tax basis
in
relation
to any costs, expense, loss or other claim which may arise in
connection
therewith. Any payment made by the Seller to the Mortgages
Trustee,
Funding 1 and Funding 2 in discharge of the foregoing indemnity
shall be
regarded as a rebate of part of the Purchase Price of the
relevant
Loan.
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7.3 Each of the
Seller, the Mortgages Trustee, Funding 1 and Funding 2
undertakes
to each other and to Funding 1 Security Trustee and the
Funding 2
Security Trustee that if and to the extent that any
determination shall be made by any court or other competent
authority or
any
ombudsman in respect of any Loan and its Related Security that:
(a)
any term
which relates to the recovery of interest under the
Standard Documentation applicable to that Loan and its Related
Security is unfair; or
(b)
the
interest payable under any Loan is to be set by reference to
HVR 1 or HVR 2 (as applicable) (and not a rate set by the
Seller's
successors or assigns or those deriving title from them); or
(c)
the
variable margin above the Bank of England repo rate under any
Tracker Rate Loan must be set by the Seller (rather than by its
successors or assigns or those deriving title from them) and
such
rate is lower than the rate set by the Seller's successors or
assigns or those deriving title from them; or
(d)
the
interest payable under any Loan is to be set by reference to
an interest rate other than that set or purported to be set by
either the Servicer or the Mortgages Trustee as a result of the
Seller having more than one variable mortgage rate,
then, at
the directions of the Beneficiaries (subject to the prior
written
consent of the Funding 1 Security Trustee and the Funding 2
Security
Trustee), the Mortgages Trustee will serve upon the Seller a
notice in
the form of the Loan Repurchase Notice requiring the Seller to
repurchase
the relevant Loan and all other Loans under the relevant
Mortgage
Account and its Related Security in accordance with CLAUSE 8.5
(but in
the case of a determination in respect of (b) above, only if at
any time
on or after such determination, HVR 1 or HVR 2 (as applicable)
shall be
below or shall fall below the standard variable rate of
interest
set by
such successors or assigns or those deriving title from them).
7.4 The Seller
hereby undertakes to the Mortgages Trustee, Funding 1, Funding
2, the
Funding 1 Security Trustee and the Funding 2 Security Trustee
that:
(a)
if the
long term unsecured, unsubordinated and unguaranteed debt
obligations of the Seller cease to be assigned a rating of Baa2
or
higher from Moody's and BBB or higher from S&P and BBB or
higher
from Fitch, the Seller shall deliver to the Mortgages Trustee,
Funding 1, Funding 2, the Funding 1 Security Trustee, the
Funding
2 Security Trustee and the Rating Agencies a draft letter of
notice to each of the Borrowers of the sale and purchase
effected
by this Agreement; and
(b)
if the
long term unsecured, unsubordinated and unguaranteed debt
obligations of the Seller cease to be assigned a rating of Baa3
or
higher from Moody's and BBB- or higher from S&P and BBB- or
higher
from Fitch, then the Seller shall, within 20 London Business
Days
of it becoming aware of such a rating being assigned, give
notice
of the sale and purchase effected by this Agreement to each
Borrower.
7.5 The Seller
undertakes to the Mortgages Trustee, Funding 1, Funding 2, the
Funding 1
Security Trustee and the Funding 2 Security Trustee that,
pending
perfection under CLAUSE 6, the Seller:
(a)
shall not
do or omit to do any act or thing which might, in the
reasonable opinion of the Funding 1 Security Trustee and the
Funding 2 Security Trustee, prejudice the respective interests
of
the Mortgages Trustee and/or Funding 1 and/or Funding 2 and/or
the
Funding 1 Security Trustee and/or the Funding 2 Security
Trustee
(respectively) in the Portfolio;
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(b)
shall
promptly notify the Mortgages Trustee, Funding 1, Funding 2,
the Funding 1 Security Trustee and the Funding 2 Security
Trustee
in writing if it receives written notice of any litigation or
claim calling into question in any material way the Seller's or
the Mortgages Trustee's title to any Loan comprised in the
Portfolio or its Related Security or if it becomes aware of any
material breach of any of the Representations and Warranties or
other obligations under this Agreement;
(c)
shall, if
reasonably required so to do by the Mortgages Trustee or
the Funding 1 Security Trustee and the Funding 2 Security
Trustee,
participate or join in any legal proceedings to the extent
necessary to protect preserve and enforce the Seller's and/or
the
Mortgages Trustee's and/or Funding 1's and/or Funding 2's
and/or
the
Funding 1 Security Trustee's and/or the Funding 2 Security
Trustee's title to or interest in any Loan or its Related
Security;
(d)
shall use
all reasonable endeavours to obtain as soon as
reasonably possible:
(i) the
title number to each Property in respect of which a
Mortgage is registered at the Land Registry to the extent
that such title number does not appear in the Exhibit to
this
Agreement (or, as the case may be, the relevant New
Portfolio Notice); and
(ii) the title
number to each Property in respect of which a
Mortgage is registered in the Land Register of Scotland to
the extent that such title number does not appear in the
Exhibit to this Agreement (or, as the case may be, the
relevant New Portfolio Notice or Scottish Declaration of
Trust); and
(e)
shall make
and enforce claims under the Buildings Policies and the
Halifax Insurance Policies and hold the proceeds of such claims
on
trust for the Mortgages Trustee or as the Mortgages Trustee may
direct.
7.6 The Seller
hereby further undertakes to the Mortgages Trustee, Funding 1
and
Funding 2 that it is and at all times shall remain solely
responsible
for
funding any Delayed Cashbacks, any Home Cash Reserve Drawings
and
Flexible
Loan Drawings (if any) made by a Borrower and for funding any
request
for any Further Advance made by a Borrower and, for the
avoidance
of doubt,
none of the Mortgages Trustee, Funding 1 or Funding 2 will be
required
to advance moneys to the Seller or to a Borrower in order to
fund such
a Delayed Cashback, Home Cash Reserve Drawing, Flexible Loan
Drawing
(if any), or Further Advance in any circumstances whatsoever.
7.7 The Seller
shall grant security powers of attorney to the Mortgages
Trustee,
Funding 1, Funding 2, the Funding 1 Security Trustee and the
Funding 2
Security Trustee in the form set out in SCHEDULE 5 allowing any
of the
Mortgages Trustee, Funding 1, Funding 2, the Funding 1 Security
Trustee and the
Funding 2 Security Trustee and their delegates from time
to time
(inter alia) to set the Seller's Variable Base Rate in the
circumstances referred to in CLAUSE 4 of the Servicing Agreement
and/or
following
perfection pursuant to CLAUSE 6.1 PROVIDED THAT nothing in this
CLAUSE 7.7
shall prevent the Seller (or any of its attorneys from time to
time) from
setting a higher Seller's Variable Base Rate than those set or
to be set
or required or to be required by the Mortgages Trustee, Funding
1, Funding
2, the Funding 1 Security Trustee or the Funding 2 Security
Trustee.
8.
WARRANTIES AND REPURCHASE BY THE SELLER
8.1 (a)
The Seller
hereby makes the Representations and Warranties:
(i)
in respect
of each Loan and its Related Security in the
Initial Portfolio on the Initial Closing Date; and
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(ii) in relation
to each New Loan and its Related Security in a
New Portfolio, on the date of the service of the relevant
New Portfolio Notice and on the relevant Sale Date.
(b)
Each
statement comprised in the Representations and Warranties
shall be construed as a separate statement and (save as
expressly
provided to the contrary) shall not be limited or restricted by
reference to or inference from the terms of any other such
statement.
(c)
The Seller
acknowledges:
(i) that
the Representations and Warranties are made with a
view to inducing the Mortgages Trustee, Funding 1, Funding
2, the Funding 1 Security Trustee and the Funding 2
Security Trustee (as the case may be) either to enter into
this Agreement and the other Transaction Documents to which
is a party or to agree to purchase the New Loans and their
Related Security comprised in each New Portfolio, and
(ii) that each
of the Mortgages Trustee, Funding 1, Funding 2,
the Funding 1 Security Trustee and the Funding 2 Security
Trustee has entered into this Agreement and the other
Transaction Documents to which it is a party in reliance
upon the Representations and Warranties notwithstanding any
information in fact possessed or discoverable by the
Mortgages Trustee, Funding 1, Funding 2, the Funding 1
Security Trustee and/or the Funding 2 Security Trustee or
otherwise disclosed to any of them, and
(iii) that prior to
entering into this Agreement and the other
Transaction Documents to which each is a party none of the
Mortgages Trustee, Funding 1, Funding 2, the Funding 1
Security Trustee or the Funding 2 Security Trustee has made
any enquiries of any matter.
8.2 The
Mortgages Trustee's, Funding 1's, Funding 2's, the Funding 1
Security
Trustee's
and the Funding 2 Security Trustee's sole remedy in respect of
a breach
of any of the Representations and Warranties shall be to take
action
under this CLAUSE 8 or under CLAUSE 8.4 of the Mortgages Trust
Deed.
8.3 In the event
of a material breach of any of the Representations or
Warranties
in respect of any Loan and/or its Related Security made under
CLAUSE 8.1
or if any of those Representations or Warranties proves to be
materially
untrue as at the Initial Closing Date or, as the case may be,
the
relevant Sale Date, and provided that:
(a)
the
Mortgages Trustee (acting on the directions of Funding 1 and
Funding 2) has given the Seller not less than 20 London
Business
Days' notice in writing (or such shorter period of notice as
may
be agreed between the Mortgages Trustee and the Seller);
(b)
the
Mortgages Trustee has obtained the prior written consent of
the Funding 1 Security Trustee and the Funding 2 Security
Trustee;
and
(c)
such
breach or untruth, where capable of remedy, is not remedied
to the reasonable satisfaction of Funding 1 and Funding 2, the
Funding 1 Security Trustee and the Funding 2 Security Trustee
within the 20 London Business Days period referred to in (a)
(or
such longer period as Funding 1 and Funding 2 and the Funding 1
Security Trustee and the Funding 2 Security Trustee may direct
the
Mortgages Trustee in writing),
then at
the direction of Funding 1 and Funding 2 and subject to the
prior
written
consent of the Funding 1 Security Trustee and the Funding 2
Security
Trustee, the Mortgages Trustee shall serve upon the Seller a
notice in
the form of the Loan Repurchase Notice set out in SCHEDULE 6
requiring
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the Seller
to repurchase the relevant Loan and its Related Security (and
any other
Loan secured or intended to be secured by that Related Security
or any
part of it) in accordance with CLAUSE 8.5.
8.4 (a)
If the
Seller accepts an application from, or makes an offer
(which is accepted) to, a Borrower for a Further Advance or a
Home
Cash Reserve Advance then (save in the case of any Loan which
is
then in arrears), at the direction of Funding 1 and Funding 2
(subject to the prior written consent of the Funding 1 Security
Trustee and the Funding 2 Security Trustee), the Mortgages
Trustee
will serve upon the Seller a notice in the form of the Loan
Repurchase Notice requiring the Seller to repurchase the
relevant
Loan and its Related Security (and any other Loan secured or
intended to be secured by that Related Security or any part of
it)
in accordance with CLAUSE 8.5.
(b)
If the
Seller accepts an application from, or makes an offer
(which is accepted) to, a Borrower for a Product Switch and
(except as provided in PARAGRAPH (C) below) on the immediately
preceding Distribution Date, the Seller is in breach of the
conditions referred to in CLAUSES 4.2(A) to (P) inclusive as if
references therein to NEW LOANS and NEW PORTFOLIO were
references
to the Loan which would result from the implementation of such
Product Switch and as if references to SALE DATE were
references
to the date when the Seller and relevant Borrower complete such
Product Switch then (save in the case of any Loan which is then
in
arrears) from and including the relevant Distribution Date to
but
excluding the date when such conditions have been satisfied, at
the direction of Funding 1 and Funding 2 (subject to the prior
written consent of the Funding 1 Security Trustee and the
Funding
2 Security Trustee), the Mortgages Trustee will serve upon the
Seller a notice in the form of the Loan Repurchase Notice
requiring the Seller to repurchase the relevant Loan and its
Related Security (and any other Loan secured or intended to be
secured by that Related Security or any part of it) in
accordance
with CLAUSE 8.5.
(c)
If the
Seller accepts an application from, or makes an offer
(which is accepted) to, a Borrower for a Product Switch, the
effect of which is to extend the final maturity date of the
relevant Loan beyond June 2040 then, at the direction of Funding
1
and Funding 2 (subject to the prior written consent of the
Funding
1 Security Trustee and the Funding 2 Security Trustee), the
Mortgages Trustee will serve upon the Seller a notice in the
form
of the Loan Repurchase Notice requiring the Seller to
repurchase
the relevant Loan and its Related Security in accordance with
CLAUSE 8.5 notwithstanding that the conditions referred to in
CLAUSES 4.2(A) to 4.2(Q) have been satisfied.
(d)
For the
avoidance of doubt, the Seller shall not accept an
application from nor make an offer (which is accepted) to a
Borrower for a Further Advance, a Home Cash Reserve Advance or
a
Product Switch if the relevant Loan to which such Further
Advance,
Home Cash Reserve Advance or Product Switch relates is then in
arrears subject only to such exceptions as made on a case by
case
basis as would be acceptable to a Reasonable, Prudent Mortgage
Lender provided that the Seller shall not so act if it would
result in any Funding I Issuer, the Master Issuer, Funding 1,
Funding 2 or the Mortgages Trustee arranging or advising in
respect of, administering (servicing) or entering into a
regulated
mortgage contract or agreeing to carry on any of these
activities,
if any Funding I Issuer, the Master Issuer, Funding 1, Funding
2
or the Mortgages Trustee would be required to be authorised
under
the FMSA to do so.
8.5 Upon receipt
of a Loan Repurchase Notice substantially in the form set
out in
SCHEDULE 6 duly signed on behalf of the Mortgages Trustee, the
Seller
shall sign and return a duplicate copy and shall repurchase
from
the
Mortgages Trustee, and the Mortgages Trustee shall re-assign or
re-transfer to the Seller free from the Security Interests created
by the
Funding 1
Deed of Charge and the Second Supplemental Funding 1 Deed of
Charge
(and any further supplement to the Funding 1 Deed of Charge)
and
the
Funding 2 Deed of Charge (and any supplement to the Funding 2 Deed
of
Charge), the
relevant Loan (and any other Loan secured or intended to be
secured by
that Related Security or
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any part
of it) and their Related Security. Completion of such
repurchase
shall take place on
the Distribution Date after receipt by the Seller of
such Loan
Repurchase Notice or such other date as the Mortgages Trustee
may direct
in the Loan Repurchase Notice (provided that the date so
specified
by the Mortgages Trustee shall not be later than 90 days after
receipt by
the Seller of such notice) when the Seller shall pay to the
Mortgages
Trustee GIC Account (or as the Mortgages Trustee shall direct)
an amount
equal to the aggregate Outstanding Principal Balance of such
Loan or
Loans and any Related Security and all Arrears of Interest and
Accrued
Interest relating thereto (save for the repurchase of any Loan
and its
Related Security which is subject to a Further Advance, a Home
Cash
Reserve Advance or a Product Switch pursuant to CLAUSE 8.4 in
which
case the
Seller shall pay to the Mortgages Trustee GIC Account (or as
the
Mortgages
Trustee shall direct) an amount equal to the aggregate
Outstanding Principal Balance of such Loan and its Related Security
and
Accrued
Interest relating thereto only) as at the date of such
repurchase
and the
provisions of CLAUSE 8.6 shall apply.
8.6 On the date
of completion of any repurchase of a Loan and its Related
Security
in accordance with CLAUSE 8.5 above, the Funding 1 Security
Trustee,
the Funding 2 Security Trustee, the Mortgages Trustee, Funding
1
and
Funding 2 shall at the cost of the Seller execute and deliver,
or
cause
their respective duly authorised attorneys to execute and
deliver,
to the
Seller:
(a)
a
memorandum of release of such Loan and its Related Security
from
the security constituted by the Funding 1 Deed of Charge, the
Second Supplemental Funding 1 Deed of Charge (and any further
supplement to the Funding 1 Deed of Charge) and the Funding 2
Deed
of Charge (and any supplement to the Funding 2 Deed of Charge)
substantially in the form set out in SCHEDULE 16;
(b)
in
relation to the English Mortgages, if perfection of the
assignment to the Mortgages Trustee has occurred in accordance
with CLAUSE 6:
(i) if the
relevant English Mortgage is over Registered Land, a
transfer of such Mortgage to the Seller in the form of the
Registered Transfer; or
(ii) if the
relevant English Mortgage is over Unregistered Land,
a transfer of such English Mortgage to the Seller in the
form of the Unregistered Transfer;
(c)
in
relation to the Scottish Mortgages, if perfection of the
assignation to the Mortgages Trustee has occurred in accordance
with CLAUSE 6:
(i) if the
relevant Scottish Mortgage is over a Property title
to which is registered in the Land Register of Scotland, a
transfer by the Mortgages Trustee in favour of the Seller
in a form substantially similar to an SLR Transfer; and
(ii) if the
relevant Scottish Mortgage is over a Property title
to which is recorded in the General Register of Sasines, a
transfer by the Mortgages Trustee in favour of the Seller
in a form substantially similar to a Sasine Transfer;
(d)
a
re-assignment or retrocession (as appropriate) of the rights of
the Mortgages Trustee in respect of the relevant Related
Security
and a notice of such re-assignment or retrocession (as
appropriate) each in a form reasonably acceptable to the Seller
(which shall, in the case of the re-assignment of the MIG
Policies
and notice of such re-assignment, be substantially in the form
set
out in SCHEDULE 17 and SCHEDULE 18 hereto respectively and in
the
case the re-assignment of rights against third parties, be
substantially in the form set out in SCHEDULE 19); and
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(e)
a
notification to the Servicer that all further sums due in
respect of such repurchased Loan are for the Seller's account.
Upon such
completion the Seller shall cease to be under any further
obligation
to hold any Title Deeds or other documents relating to such
Loan or
Loans and its/their Related Security to the order of the
Mortgages
Trustee and if the Mortgages Trustee holds the Title Deeds it
will
return them to the Seller. Any repurchase by the Seller of or
in
respect of
a Loan or Loans and its or their Related Security shall
constitute
a discharge and release of the Seller from any claims which
the
Mortgages Trustee and/or Funding 1 and/or Funding 2 and/or the
Funding 1
Security Trustee and/or the Funding 2 Security Trustee may have
against
the Seller arising from the relevant Representation or Warranty
in
relation to that Loan or Loans and its or their Related Security
only
but shall
not affect any rights arising from a breach of any other
express
provision of this Agreement or any Representation or Warranty
in
relation
to any other Loan and other Related Security.
8.7 After the
Seller becomes aware of any event and/or fact which may
reasonably
give rise to an obligation under any clause of this Agreement
to
repurchase any Loan it shall notify the Mortgages Trustee, Funding
1,
Funding 2, the
Funding 1 Security Trustee and the Funding 2 Security
Trustee in
writing thereof as soon as reasonably practicable.
8.8 The terms of
this CLAUSE 8 shall not prejudice the rights of the
Mortgages
Trustee or the Beneficiaries under the Mortgages Trust Deed.
8.9 The parties
to this Agreement may, with the prior written consent of the
Funding 1
Security Trustee and the Funding 2 Security Trustee, waive or
amend the
Representations and Warranties. In determining whether to give
its
consent to the proposed waiver or amendments to the
Representations
and
Warranties, each of the Funding 1 Security Trustee and the Funding
2
Security
Trustee shall exercise its discretion (in the case of the
Funding 1
Security Trustee) in accordance with the terms of CLAUSE 25.8
of the
Funding 1 Deed of Charge and (in the case of the Funding 2
Security
Trustee) the terms of CLAUSE 24.8 of the Funding 2 Deed of
Charge and
(in both cases) in accordance with CLAUSE 4 of the Controlling
Beneficiary Deed.
9. OTHER
WARRANTIES
On the
date of this Agreement, each Closing Date, and each Sale Date,
the
Seller
represents and warrants to each of the Mortgages Trustee,
Funding
1, Funding
2, the Funding 1 Security Trustee and the Funding 2 Security
Trustee
that:
(a)
the Seller
has not acquired or owned or possessed any rights in
any Funding 1 Issuer, the Master Issuer, the Mortgages Trustee,
Funding 1 or Funding 2 such that it would CONTROL any of
Funding
1, Funding 2, any Funding 1 Issuer or the Master Issuer within
the
meaning of Section 416 ICTA; and
(b)
there is
not any CONNECTION (within the meaning of Section 87
Finance Act 1996) between (i) any Funding 1 Issuer, the Master
Issuer, Funding 1 and/or Funding 2 and (ii) any Borrower.
10. FURTHER
ASSURANCE
The
parties hereto agree that they will co-operate fully to do all
such
further
acts and things and execute any further documents that may be
necessary
or desirable to give full effect to the transactions
contemplated by this Agreement (but subject always to CLAUSE
6).
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11. CONSEQUENCES
OF BREACH
Without
prejudice to CLAUSES 7 and 8, Funding 1, Funding 2, the
Mortgages
Trustee,
the Funding 1 Security Trustee and the Funding 2 Security
Trustee
severally acknowledge to and agree with the Seller, and each of
the
Funding 1 Security Trustee and the Funding 2 Security Trustee
acknowledges to and agrees with Funding 1, Funding 2 and the
Mortgages
Trustee,
that the Seller shall have no liability or responsibility
(whether,
in either case, contractual, tortious or delictual, express or
implied)
for any loss or damage for or in respect of any breach of, or
any act or
omission in respect of, any of its obligations hereunder other
than loss
or damage directly (and not indirectly or consequentially)
suffered
by the Mortgages Trustee and/or Funding 1 and/or Funding 2
and/or the
assets comprised in the Funding 1 Security constituted by the
Funding 1
Deed of Charge and/or the Funding 2 Security constituted by the
Funding 2
Deed of Charge respectively by reason of such breach, act or
omission.
For this purpose (and without limiting the scope of the above
exclusion
in respect of indirect or consequential loss or damage) any
loss or
damage suffered by the Mortgages Trustee and/or Funding 1
and/or
Funding 2
or such assets as a result of the breach, act or omission in
question
also having been or given rise to an Intercompany Loan Event of
Default
and/or a Master Intercompany Loan Event of Default or
enforcement
of the
Funding 1 Security constituted by the Funding 1 Deed of Charge
and/or the
Funding 2 Security constituted by the Funding 2 Deed of Charge
shall be
treated as indirect or consequential loss or damage PROVIDED
THAT this
sentence shall not apply to any direct or non-consequential
loss or
damage arising from any such breach, act or omission.
12.
SUBORDINATION
The Se
