Exhibit 4.10
EXECUTION VERSION
Dated 19 January, 2005
NORTHERN ROCK PLC
as Servicer
GRANITE FINANCE TRUSTEES LIMITED
as Mortgages Trustee
NORTHERN ROCK PLC
as Seller and Beneficiary
GRANITE FINANCE FUNDING LIMITED
as Beneficiary
GRANITE FINANCE FUNDING 2 LIMITED
as Beneficiary
- and -
THE BANK OF NEW YORK
as Security Trustee and Funding 2 Security Trustee
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NINTH AMENDED AND RESTATED
ADMINISTRATION AGREEMENT
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SIDLEY AUSTIN
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SIDLEY
CONTENTS
1. Definitions and Interpretation............................................2
2. Appointment of Servicer...................................................3
3. The Administration Services...............................................4
4. Interest Rates............................................................7
5. Administration of Mortgages..............................................12
6. No Liability.............................................................18
7. New Mortgage Loans.......................................................19
8. Product Switching and Further Advances...................................19
9. Redemption of Mortgages..................................................19
10. Powers of Attorney.......................................................20
11. Costs and Expenses.......................................................21
12. Information..............................................................21
13. Remuneration.............................................................23
14. Insurances...............................................................24
15. Title Deeds..............................................................26
16. Data Protection..........................................................26
17. Covenants and Representations and Warranties of Servicer.................28
18. Services Non-exclusive...................................................29
19. Termination..............................................................29
20. Further Assurances.......................................................32
21. Miscellaneous............................................................33
22. Confidentiality..........................................................34
23. No Partnership...........................................................35
24. Assignment...............................................................35
25. Security Trustee; Authorised Third Party.................................36
26. New Intercompany Loan Agreements.........................................37
27. Non Petition Covenant; Limited Recourse..................................37
28. Amendments and Waiver....................................................38
29. Notices..................................................................39
30. Third Party Rights.......................................................40
31. Execution in Counterparts; Severability..................................40
32. Governing Law and Submission to Jurisdiction.............................40
33. Process Agent............................................................41
34. Appropriate Forum........................................................41
SCHEDULE 1 THE SERVICES......................................................42
SCHEDULE 2 FORM OF INVESTORS' MONTHLY REPORT.................................43
SCHEDULE 3 SERVICER REPRESENTATIONS AND WARRANTIES...........................44
SCHEDULE 4 AUTHORISED THIRD PARTY............................................46
SCHEDULE 5 MINIMUM SERVICING STANDARDS.......................................49
SCHEDULE 6 FORM OF ANNUAL CERTIFICATION......................................51
SCHEDULE 7 FORM OF SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF
COMPLIANCE STATEMENT..............................................53
THIS AGREEMENT IS MADE ON 26 MARCH, 2001 AND AMENDED AND RESTATED PURSUANT TO
THE DEEDS OF AMENDMENT AND RESTATEMENT DATED 28 SEPTEMBER 2001, 27 JANUARY 2003,
21 MAY 2003, 24 SEPTEMBER 2003, 28 JANUARY 2004, 25 JUNE 2004, 19 JANUARY 2005,
24 AUGUST 2005, 24 MAY, 2006 and 17 MAY, 2007 BETWEEN:
(1) NORTHERN ROCK PLC (registered number 3273685), a public limited company
incorporated under the laws of England and Wales whose registered office
is at Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL in its
capacity as servicer (the "Servicer" or the "Administrator");
(2) GRANITE FINANCE TRUSTEES LIMITED (registered number 79309), a private
limited company incorporated under the laws of Jersey whose registered
office is at 22 Grenville Street, St. Helier, Jersey JE4 8PX, Channel
Islands in its capacity as Mortgages Trustee;
(3) NORTHERN ROCK PLC (registered number 3273685), a public limited company
incorporated under the laws of England and Wales whose registered office
is at Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL in its
capacity as Seller and its capacity as a Beneficiary;
(4) GRANITE FINANCE FUNDING LIMITED (registered number 79308), a private
limited company incorporated under the laws of Jersey but acting out of
its branch office established in England (registered overseas company
number FC022999 and branch number BR0051916) at 8th Floor, 68 King William
Street, London EC4N 7DZ in its capacity as a Beneficiary;
(5) GRANITE FINANCE FUNDING 2 LIMITED (registered number 5249387), a private
limited company incorporated under the laws of England and Wales whose
registered office is at Fifth Floor, 100 Wood Street, London EC2V 7EX in
its capacity as a Beneficiary; and
(6) THE BANK OF NEW YORK, a New York banking corporation whose London branch
address is at 40th Floor, One Canada Square, London E14 5AL, in its
separate capacities as Security Trustee and as Funding 2 Security Trustee.
WHEREAS:
(A) The Servicer carries on the business of, inter alia, administering and
servicing mortgage loans secured on residential properties located within
the United Kingdom.
(B) By the Mortgage Sale Agreement, the Seller has agreed to sell and assign
Mortgage Loans and their Related Security to the Mortgages Trustee. The
Mortgages Trustee shall hold the Mortgage Portfolio together with any New
Mortgage Portfolio on trust
for Funding, Funding 2 and the Seller pursuant to the terms of the
Mortgages Trust Deed.
(C) The Servicer is willing to administer and service the Mortgage Loans on
behalf of the Mortgages Trustee and to provide certain other
administration and management services to the Mortgages Trustee, the
Seller, Funding and Funding 2 on the terms and subject to the conditions
contained in this Agreement in relation to, inter alia, the Mortgage Loans
and Related Security sold and assigned to the Mortgages Trustee by the
Seller.
IT IS HEREBY AGREED as follows:
1. Definitions and Interpretation
1.1 Definitions: The provisions of the Programme Master Definitions Schedule
signed for the purposes of identification by Sidley Austin Brown & Wood
and Allen & Overy LLP on 19 January 2005 (as the same have been and may be
amended, varied or supplemented from time` to time with the consent of the
parties hereto) are expressly and specifically incorporated into and shall
apply to this Agreement.
For the purposes of this Agreement:
"Commission" means the United States Securities and Exchange Commission;
"Regulation AB" means Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended
from time to time, and subject to such clarification and interpretation as
have been provided by the Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be provided
by the Commission or its staff from time to time;
"Sarbanes-Oxley Certification" has the meaning specified in Clause
5.8(a)(iv);
"Servicing Criteria" means the "servicing criteria" set forth in Item
1122(d) of Regulation AB; and
"Subcontractor" means any vendor, subcontractor or other Person that is
not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgage-backed securities market) of
Mortgage Loans but performs one or more discrete functions identified in
Item 1122(d) of Regulation AB with respect to the Mortgage Loans under the
direction or authority of the Servicer.
1.2 Exercise of Discretion: Any reference in this Agreement to any discretion,
power or right on the part of the Mortgages Trustee shall be exercised by
the Mortgages Trustee only as directed by the Beneficiaries but subject in
each case to the provisions of the Mortgages Trust Deed and the
Controlling Beneficiary Deed.
1.3 Schedules: For the avoidance of doubt, the parties hereto agree that the
Schedules attached to this Agreement shall form a part of this Agreement,
and the provisions of this Agreement shall be construed in accordance with
such Schedules.
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2. Appointment of Servicer
2.1 Appointment: Subject to Clause 4.5 (Termination of Authority) herein, and
until termination pursuant to Clause 19 herein (Termination), the
Mortgages Trustee hereby appoints the Servicer to administer and service
the Mortgages Loans on its behalf, and each of the Mortgage Trustee, the
Seller and Funding (according to their respective estates and interests)
hereby appoints the Servicer as its lawful agent on its behalf to provide
certain other administration and management services and to exercise their
respective rights, powers and discretions, and to perform their respective
duties, under and in relation to the Mortgage Loans, their Related
Security and the applicable Mortgage Conditions. The Servicer in each case
hereby accepts such appointment on the terms and subject to the conditions
of this Agreement. The Security Trustee consents to the appointment of the
Servicer on the terms of and subject to the conditions of this Agreement.
2.2 Appointment by Funding 2: Subject to Clause 4.5 (Termination of Authority)
herein, and until termination pursuant to Clause 19 (Termination) herein,
Funding 2 (according to its estates and interests) hereby appoints the
Servicer as its lawful agent on its behalf to provide certain other
administration and management services and to exercise its rights, powers
and discretions, and to perform its duties, under and in relation to the
Mortgage Loans, their Related Security and the applicable Mortgage
Conditions. The Servicer hereby accepts such appointment on the terms and
subject to the conditions of this Agreement. The Funding 2 Security
Trustee consents to the appointment of the Servicer on the terms of and
subject to the conditions of this Agreement.
2.3 Power and Authority: For the avoidance of doubt and in connection with the
rights, powers and discretions conferred under Clause 2.1 (Appointment)
and Clause 2.2 (Appointment by Funding 2) herein, during the continuance
of its appointment hereunder, the Servicer shall, subject to the terms and
conditions of this Agreement, the Mortgage Conditions, the Mortgage Sale
Agreement and the Mortgages Trust Deed, have the full power, authority and
right to do or cause to be done any and all things which it reasonably
considers necessary, convenient or incidental to the administration of the
Mortgage Loans and their Related Security or the exercise of such rights,
powers and discretions, provided however that neither the Mortgages
Trustee, the Funding Beneficiaries nor their respective directors shall be
required or obliged at any time to enter into any transaction or to comply
with any directions which the Servicer may give with respect to the
operating and financial policies of the Mortgages Trustee and/or the
Funding Beneficiaries and the Servicer hereby acknowledges that all powers
to determine such policies (including the determination of whether or not
any particular policy is for the benefit of the Mortgages Trustee or any
Funding Beneficiary) are, and shall at all times remain, vested, as the
case may be, in the Mortgages Trustee and/or each Funding Beneficiary (and
their respective directors) and none of the provisions of this Agreement
shall be construed in a manner inconsistent with this proviso.
2.4 Appointment Conditional: The appointment pursuant to Clause 2.1
(Appointment) herein is conditional upon the issue of the First Issuer
Notes having taken place and shall take effect upon and from the Initial
Closing Date automatically without any further action on the part of any
person PROVIDED THAT if the issue of the First Issuer Notes has not
occurred by 30 April 2001, or such later date as the First Issuer
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and the Lead Manager may agree, this Agreement shall cease to be of
further effect.
2.5 Appointment by Funding 2 Conditional: The appointment pursuant to Clause
2.2 (Appointment by Funding 2) herein is conditional upon the acquisition
by Funding 2 from the Seller of a portion of the Seller's beneficial
interest in the Mortgages Trust pursuant to the Seller (Mortgages Trust)
Assignment Agreement and shall take effect upon and from the Funding 2
Programme Date automatically without any further action on the part of any
person PROVIDED THAT if Funding 2 has not acquired from the Seller a
portion of the Seller's beneficial interest in the Mortgages Trust by 31
January, 2005, or such later date as Funding 2 and the Seller may agree,
the appointment of the Servicer as agent of Funding 2 under Clause 2.2
(Appointment by Funding 2) shall not take effect.
3. The Administration Services
3.1 General:
(a) The duty of the Servicer shall be to provide the services set out in
this Agreement including Schedule 1 (the "Services").
(b) If and when the Servicer is required to confirm or state the
capacity in which it is administering or servicing the Mortgage
Loans and their Related Security in the Mortgage Portfolio and
related matters pursuant to this Agreement by any Borrower or any
third party to this Agreement and to whom the Servicer is by law
obliged to disclose such information, unless otherwise indicated
herein, the Servicer shall confirm or state that it is acting in its
capacity as Servicer of such Mortgage Loans and their Related
Security and related matters as agent for and on behalf of the
Mortgages Trustee and not on its own behalf.
3.2 Sub-contracts:
(a) The Servicer may sub-contract or delegate the performance of all or
any of its powers and obligations under this Agreement, provided
that (but subject to Clause 3.2(b) herein):
(i) the prior written consent of the Mortgages Trustee to the
proposed arrangement (including, if the Funding Beneficiaries
consider it necessary after consulting with the Funding
Security Trustees, approving any contract which sets out the
terms on which such arrangements are to be made) has been
obtained, the Funding Security Trustees have been consulted
and notification has been given to each of the Rating
Agencies;
(ii) where the arrangements involve the custody or control of any
Mortgage Loan Files and/or Title Deeds relating to the
Mortgage Portfolio for the purpose of performing any delegated
Services, the Subcontractor or delegate has executed an
acknowledgement in writing acceptable to the Funding
Beneficiaries and the Funding Security Trustees to the effect
that any such Mortgage Loan Files and/or Title Deeds are and
will be held to the order of the Mortgages Trustee (as trustee
for the Beneficiaries);
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(iii) where the arrangements involve or may involve the receipt by
the Subcontractor or delegate of monies belonging to the
Mortgages Trustee and/or the Beneficiaries which, in
accordance with this Agreement, are to be paid into the
relevant Collection Account, the Subcontractor or delegate has
executed a declaration in writing acceptable to the Funding
Beneficiaries and the Funding Security Trustees that any such
monies held by it or to its order are held on trust for the
Mortgages Trustee (as trustee for the Beneficiaries) and will
be paid forthwith into the relevant Collection Account in
accordance with the terms of the Mortgages Trust Deed;
(iv) any such Subcontractor or delegate has executed a written
waiver of any Security Interest arising in connection with
such delegated Services (to the extent that such Security
Interest relates to the Mortgage Portfolio or any amount
referred to in (iii) above); and
(v) neither the Mortgages Trustee, the Funding Security Trustees
nor the Beneficiaries shall have any liability for any costs,
charges or expenses payable to or incurred by such
Subcontractor or delegate or arising from the entering into,
the continuance or the termination of any such arrangement.
(b) The provisos in Clause 3.2(a) (i), (ii) and (iii) herein shall not
apply:
(i) to the engagement by the Servicer of:
(A) any receiver, solicitor, insurance broker, valuer,
surveyor, accountant, estate agent, insolvency
practitioner, auctioneer, bailiff, debt counsellor,
tracing agent, property management agent, licensed or
qualified conveyancer or other professional adviser
acting as such; or
(B) any locksmith, builder or other contractor acting as
such in relation to a Mortgaged Property,
in any such case being a person or persons whom the Servicer
would be willing to appoint in respect of its own mortgages in
connection with the performance by the Servicer of any of its
obligations or functions or in connection with the exercise of
its powers under this Agreement; or
(ii) to any delegation to any wholly-owned subsidiary of the Seller
from time to time.
(c) The Mortgages Trustee and/or the Funding Beneficiaries and the
Funding Security Trustees may require the Servicer to assign to the
Mortgages Trustee any rights which the Servicer may have against any
Subcontractor or delegate arising from the performance of services
by such person in association with any matter contemplated by this
Agreement and the Servicer acknowledges that such rights assigned to
the Mortgages Trustee will be exercised by the
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Mortgages Trustee as trustee for the Beneficiaries subject to the
terms of the Mortgages Trust Deed.
(d) Notwithstanding any sub-contracting or delegation of the performance
of the Servicer's obligations under this Agreement:
(i) the Servicer shall not thereby be released or discharged from
any liability hereunder;
(ii) the Servicer shall remain responsible for the performance of
the obligations of the Servicer under this Agreement;
(iii) the performance or non-performance or the manner of
performance of any Subcontractor or delegate of any of the
Services shall not affect the Servicer's obligations under
this Agreement;
(iv) any breach in the performance of the Services by any
Subcontractor or delegate shall, subject to the Servicer being
entitled for a period of twenty (20) Business Days from
receipt of notice of the breach to remedy such breach by any
Subcontractor or delegate, be treated as a breach of this
Agreement by the Servicer; and
(v) the Funding Security Trustees shall have no liability for any
act or omission of the Subcontractor or delegate and shall
have no responsibility for monitoring or investigating the
suitability of any such Subcontractor or delegate.
3.3 Notices etc.
(a) Within fifteen (15) days after the Initial Closing Date, the
Servicer will:
(i) on behalf of the Mortgages Trustee (at the direction of the
Beneficiaries or with their consent), give to third parties
such notices as any of the Beneficiaries are required to give
pursuant to the Mortgage Sale Agreement; and
(ii) submit for registration at the Companies Registry a duly
completed Form 395 and original executed copy of the First
Issuer Deed of Charge pursuant to Chapter 1 of Part XII of the
Companies Act 1985,
and in each case, the Servicer shall take all reasonable steps to
ensure the return by the relevant recipient of the duplicate notices
of assignment by way of acknowledgement thereof.
(b) Promptly upon request by the Funding Beneficiaries and the Funding
Security Trustees, the Servicer shall procure that any notices
permitted to be given by the Mortgages Trustee under Clause 6.4
(Prior to Perfection) of the Mortgage Sale Agreement are so given by
the Servicer on the Mortgages Trustee's behalf.
3.4 Liability of Servicer:
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(a) The Servicer shall indemnify each of the Mortgages Trustee and the
Beneficiaries on demand on an after-tax basis for any loss,
liability, claim, expense or damage suffered or incurred by either
of them in respect of the negligence or wilful default of the
Servicer in carrying out its functions as Servicer under this
Agreement or the other Transaction Documents or as a result of a
breach by the Servicer of the terms and provisions of this Agreement
or the other Transaction Documents in relation to such functions.
(b) For the avoidance of doubt, the Servicer shall not be liable in
respect of any loss, liability, claim, expense or damage suffered or
incurred by the Mortgages Trustee and/or the Beneficiaries and/or
any other person as a result of the proper performance of the
Services by the Servicer save where such loss, liability, claim,
expense or damage is suffered or incurred as a result of any
negligence or wilful default of the Servicer or as a result of a
breach by the Servicer of the terms and provisions of this Agreement
or the other Transaction Documents in relation to such functions.
(c) Any indemnification under this Clause 3.4 in respect of loss
suffered by the Beneficiaries whilst Northern Rock is the Servicer,
shall be paid for by reducing the Seller Share of the Trust Property
by an amount equal to the relevant loss incurred by the
Beneficiaries in accordance with Clause 8.5 (Adjustments to Trust
Property) of the Mortgages Trust Deed and Schedule 2 to the Cash
Management Agreement.
3.5 Perfection of Mortgages Trustee's and Beneficiaries' Title to the Mortgage
Loans
Subject to Clause 6 of the Mortgage Sale Agreement:
(a) upon the receipt by the Seller of a written request in accordance
with Clause 6.2 (Perfection) of the Mortgage Sale Agreement to
execute transfers and/or assignments, the Servicer shall execute or
procure the execution of such transfers and/or assignments on behalf
of the Seller or shall provide sufficient information to enable the
Mortgages Trustee, either Funding Beneficiary or either Funding
Security Trustee to do so; and
(b) upon the Seller being required to do so in accordance with Clause
6.1 (Perfection Events) of the Mortgage Sale Agreement, the Servicer
shall do all or any of the acts, matters or things referred to in
Clauses 6.2 (Perfection) and 6.3 (Transfer Documents) of the
Mortgage Sale Agreement.
4. Interest Rates
4.1 Determination of Interest Rates: Subject to the provisions of applicable
law, regulations and rules and any regulatory undertakings binding on the
Servicer or the Issuer from time to time and subject to the following
provisions of this Clause 4, the Mortgages Trustee and each of the
Beneficiaries each hereby grants the Servicer full right, liberty and
authority from time to time to determine:
(a) in accordance with the applicable Mortgage Conditions, Mortgage
Terms and the Base Rate Pledge, the Standard Variable Rate and any
other discretionary
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rates and margins applicable to the Mortgage Loans chargeable to
Borrowers from time to time; and
(b) the Existing Borrowers' Re-Fix Rate in accordance with Clause 4.4
(Existing Borrowers' Re-Fix Rate) herein.
In exercising such right, liberty and authority the Servicer undertakes to
each of the other parties to this Agreement that it shall not at any time
set or maintain the Standard Variable Rate and any other discretionary
rates and margins applicable to the Mortgage Loans at rates which are
higher than the then prevailing equivalent rates offered by the Seller,
unless the Servicer is required to do so pursuant to Clause 4.3 (Interest
Rate Shortfall) herein, and, subject to that requirement, that it shall
not change the Standard Variable Rate and any other discretionary rates
and margins applicable to the Mortgage Loans save for the same reasons as
the Seller was entitled, under the Mortgage Conditions, to change the then
prevailing equivalent rates offered by the Seller prior to the sale and
assignment to the Mortgages Trustee of the Mortgage Loans comprised in the
Mortgage Portfolio and their Related Security. Each Issuer, Funding
Beneficiary and Funding Security Trustee shall be bound by any Mortgage
Rates (including the Existing Borrowers' Re-Fix Rate) determined by the
Servicer in accordance with this Clause 4.
4.2 Notification to Borrowers: The Servicer shall take all steps necessary
pursuant to the relevant Mortgage Conditions and/or applicable law,
regulations and rules to bring each change in the Standard Variable Rate
and any other discretionary rate or margin applicable to the Mortgage
Loans and any consequent changes in Monthly Payments to the attention of
the relevant Borrowers and shall, as soon as reasonably practicable after
any change in such rates, provide details of such changes to the Mortgages
Trustee, each Funding Security Trustee and each Beneficiary, and shall,
upon receipt of a request from any of such parties, notify such requesting
party of any changes in the Monthly Payments in relation to the Mortgage
Loans.
4.3 Interest Rate Shortfall:
(a) On each Payment Date (in relation to Funding) and on or before the
last Loan Payment Date falling in a Monthly Payment Period (in
relation to Funding 2) the Servicer shall determine, having regard
to:
(i) the income which each of Funding and Funding 2 would expect to
receive during the next succeeding Interest Period (in the
case of Funding) and, during the next succeeding Interest
Periods ending in the next following Monthly Payment Period
(in the case of Funding 2);
(ii) the Mortgage Rates in respect of the Mortgage Loans which the
Servicer proposes to set under this Clause 4; and
(iii) the other resources available to Funding including (but not
limited to) the Funding Reserve Fund and amounts standing to
the credit of any applicable Issuer Reserve Fund and/or any
applicable Issuer Liquidity Reserve Fund and the other
resources available to Funding 2 including (but not limited
to) the Funding 2 Reserve Fund, the Funding 2 Liquidity
Reserve Fund and any applicable Issuer Reserve Fund,
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whether:
(A) Funding would receive an amount of income during that
Interest Period which when aggregated with the funds
otherwise available to it is less than the amount which
is the aggregate of (1) the amount of interest which
will be payable by Funding in order to fund (whether by
payment to a swap provider or otherwise) the amount of
interest payable in respect of the Class A Notes of the
Funding Issuers and all amounts which rank in priority
thereto on the Payment Date occurring at the end of such
Interest Period, and (2) all other amounts payable by
Funding which rank in priority to or pari passu with
interest due on each Funding Intercompany Loan in
respect of interest which is payable on the Class A
Notes of the Funding Issuers (the amount (if any) by
which it is less being the "Funding Interest Rate
Shortfall"); and
(B) Funding 2 would receive an amount of income during such
Interest Periods which when aggregated with the funds
otherwise available to it is less than the amount which
is the aggregate of (1) the amount of interest which
would be payable by Funding 2 in order to fund (whether
by payment to a swap provider or otherwise) the amount
of interest payable in respect of the AAA Loan Tranches
of each Funding 2 Intercompany Loan and all amounts
which rank in priority thereto on the Monthly Payment
Dates falling in the next following Monthly Payment
Period and (2) all other amounts payable by Funding 2
which rank in priority to or pari passu with interest
due on each Funding 2 Intercompany Loan in respect of
the AAA Loan Tranches (the amount (if any) by which it
is less being a "Funding 2 Interest Rate Shortfall").
(b) If the Servicer determines that there will be either a Funding
Interest Rate Shortfall or a Funding 2 Interest Rate Shortfall, it
will within one (1) London Business Day of such determination give
written notice thereof to the Mortgages Trustee, each Funding
Beneficiary and each Funding Security Trustee of such Interest Rate
Shortfall(s) and of the Standard Variable Rate and other
discretionary rates and margins applicable to the Mortgage Loans
which would, in the Servicer's opinion, need to be set in order for:
(i) no Funding Interest Rate Shortfall to arise, having regard to
the obligations of Funding under all Funding Intercompany
Loans;
(ii) no Funding 2 Interest Rate Shortfall to arise, having regard
to the obligations of Funding 2 under all Funding 2
Intercompany Loans; and
(iii) no Interest Rate Shortfalls to arise, having regard to the
obligations of Funding and Funding 2 under all Intercompany
Loans.
(c) If the Mortgages Trustee, Funding and/or the Security Trustee notify
the Servicer that, having regard to the obligations of Funding, the
Standard
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Variable Rate and other discretionary rates and margins should be
increased in order for no Funding Interest Rate Shortfall to arise,
but no notification is provided to the Servicer in accordance with
Clause 4.3(d) then the Servicer, as agent for and on behalf of the
Mortgages Trustee, shall take all steps which are necessary,
including publishing any notice which is required in accordance with
the Mortgage Terms, to effect the changes in such rates (such
changes being those previously notified in relation to Clause
4.3(b)(i)) on the date(s) specified in the notice referred to in
Clause 4.3(b) herein.
(d) If the Mortgage Trustee, Funding 2 and/or the Funding 2 Security
Trustee notify the Servicer that having regard to the obligations of
Funding 2, the Standard Variable Rate and the other discretionary
rates and margins should be increased in order for no Funding 2
Interest Rate Shortfall to arise, but no notification is provided to
the Servicer in accordance with Clause 4.3(c) then the Servicer, as
agent for and on behalf of the Mortgages Trustee, shall take all
steps which are necessary, including publishing any notice which is
required in accordance with the Mortgage Terms, to effect the
changes in such rates (such changes being those previously notified
in relation to Clause 4.3(b)(ii)) on the date(s) specified in the
notice referred to in Clause 4.3(b) herein.
(e) If the Servicer receives notification from:
(i) the Mortgages Trustee, Funding and/or the Security Trustee in
accordance with Clause 4.3(c); and
(ii) the Mortgage Trustee, Funding 2 and/or the Funding 2 Security
Trustee in accordance with Clause 4.3(d),
then the Servicer, as agent for and on behalf of the Mortgages
Trustee, shall take all steps which are necessary, including
publishing any notice which is required in accordance with the
Mortgage Terms, to effect the changes in such rates (such changes
being those previously notified in relation to Clause 4.3(b)(iii))
on the date(s) specified in the notice referred to in Clause 4.3(b)
herein.
4.4 Existing Borrowers' Re-Fix Rate:
(a) The Servicer shall, in relation to each Fixed Rate Mortgage Loan,
serve on the Seller as agent for and on behalf of, inter alios, the
Mortgages Trustee and the Beneficiaries the notice referred to in
Clause 8.6(a) of the Mortgage Sale Agreement sixty (60) days before
the expiry of the initial fixed rate period (as defined in Clause
8.6(a) of the Mortgage Sale Agreement) applicable to that Fixed Rate
Mortgage Loan.
(b) If Clause 8.6(b) of the Mortgage Sale Agreement applies to any Fixed
Rate Mortgage Loan, the Servicer shall take all steps which are
necessary to perform the obligations of the Seller and exercise the
rights under such Clause.
(c) The Servicer shall, on behalf of the Seller, whenever Clause 8.6(d)
of the Mortgage Sale Agreement applies to a Fixed Rate Mortgage
Loan, determine (after consultation with the Swap Providers, and any
other swap provider the
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Servicer (acting reasonably) determines appropriate) the rate (and
terms) upon which the Existing Borrowers' Re-Fix Rate should be set
having regard to the interests of each Swap Provider (except to the
extent that the Servicer believes that the interests of any Swap
Provider are materially prejudicial to the interests of the
Noteholders in respect of the Funding Issuers and/or the Noteholders
in respect of the Funding 2 Issuers). The Servicer will give written
notice of such determination within one Business Day thereof to the
Mortgages Trustee and the Beneficiaries recommending what the
Existing Borrowers' Re-Fix Rate should be and the terms at which it
should be offered, having regard to the interests of the Swap
Providers (except to the extent that the Servicer believes that the
interests of any Swap Provider are materially prejudicial to the
interests of the Noteholders in respect of the Funding Issuers
and/or the Noteholders in respect of the Funding 2 Issuers). The
Servicer will solicit quotations on rates from each of (i) the
Mortgages Trustee, (ii) Funding, (iii) Funding 2 and (iv) other
trustees for re-fixed mortgage loans in relation to other
outstanding securitisations of the Seller (if any), and shall notify
the Mortgages Trustee and the Beneficiaries as to the higher of (x)
any rate provided by any of the parties in (i) through (iv) herein
and (y) current rates for re-fixed mortgage loans (not included in
any Mortgage Portfolio) in relation to other Mortgage Loans of the
Servicer. If the Mortgages Trustee agrees in writing with such
recommendation, or (whether or not it has received the Servicer's
recommendation) requires alternative rates and/or terms (such
agreement or requirement being the "EBRR Determination") the
Servicer shall immediately notify the Seller, each Funding
Beneficiary and each Issuer of the EBRR Determination, and take all
steps which are necessary to enable each Funding Beneficiary and
each Issuer to enter into the relevant swap agreement with the
applicable Swap Provider(s) (or other swap provider whose
appointment would not adversely affect the then current ratings of
the Notes) at the rate (and on the terms) required in accordance
with the EBRR Determination (the "Required Rate and Terms"). Nothing
in this Clause 4.4(c) shall prevent the Mortgages Trustee from
setting the Existing Borrowers' Re-Fix Rate in accordance with its
powers under the Mortgage Sale Agreement.
(d) If Clause 8.6 (Purchase of Product Switches, Further Advances and
purchases relating to Personal Secured Loans) of the Mortgage Sale
Agreement applies to any Fixed Rate Mortgage Loan, and the Seller
fails to set the Existing Borrowers' Re-Fix Rate immediately upon
being required to do so in accordance with the Required Rate and
Terms or otherwise to perform its obligations under Clause 8.6(d) of
the Mortgage Sale Agreement, the Servicer as attorney for the
Mortgages Trustee and the Beneficiaries shall set the Existing
Borrowers' Re-Fix Rate on the Required Rate and Terms.
4.5 Termination of Authority: The Mortgages Trustee and/or the Funding
Beneficiaries and the Funding Security Trustees may terminate the
authority of the Servicer under Clauses 4.1 (Determination of Interest
Rates) and 4.3 (Interest Rate Shortfall) herein to determine either of the
Mortgage Rate(s) or Existing Borrowers' Re-Fix Rate on or after the
occurrence of a Termination Event pursuant to Clause 19 (Termination)
herein, in which case the Mortgages Trustee shall set the Mortgage Rate(s)
or Existing Borrowers' Re-Fix Rate, as applicable, in accordance with this
Clause 4.
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5. Administration of Mortgages
5.1 Collection of Payments:
(a) For the purposes of collecting amounts due from any Borrower in
respect of a Mortgage Loan, where such Borrower makes a Monthly
Payment by way of Direct Debit, Northern Rock (whether or not it is
the Servicer) will, unless otherwise agreed in writing with the
Beneficiaries:
(i) act as collecting agent for the Mortgages Trustee and for the
Beneficiaries under the Direct Debiting Scheme;
(ii) comply with the obligations on its part set out in the Bank
Account Agreement including, without limitation, the specific
provisions relating to the collection of monies set out in
Clause 4 of the Bank Account Agreement;
(iii) comply in all material respects with the requirements from
time to time of the Direct Debiting Scheme; and;
(iv) using its reasonable endeavours, credit any Monthly Payment
made by a Borrower by way of Direct Debit to the relevant
Collection Account within one (1) London Business Day of
receipt (and in any event within three (3) London Business
Days of such receipt) into the relevant Collection Account.
(b) The Servicer may agree with a Borrower that the Direct Debiting
Scheme shall not apply to Monthly Payments to be made by such
Borrower, provided that (i) alternative payment arrangements are
made which are intended to ensure the timely making of Monthly
Payments due from the Borrower to the Mortgages Trustee, and (ii)
the change in arrangements was made at the instigation of the
Borrower or by the Servicer in accordance with the procedures which
would be adopted by a reasonable and prudent mortgage lender.
Northern Rock (whether or not it is the Servicer) shall, using its
reasonable endeavours, credit Monthly Payments made by a Borrower
under an alternative payment arrangement as follows to the relevant
Collection Account:
(i) by standing order, by close of business on the second (2nd)
London Business Day following the day on which such amount is
received or credited by it;
(ii) by payment of cash, transfer payment from another account of
the Seller or check where reference to the relevant Borrower
is provided or payments made by way of paying-in book, by
close of business on the London Business Day which immediately
follows the day on which such amount is received or credited
by it; and
(iii) in the case of any payment by check where a reference to the
relevant Borrower is not provided, by close of business on the
next London Business Day after notification to it of the
identity of the Borrower,
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provided however, that in any event Northern Rock shall credit Monthly
Payments made by a Borrower under an alternative payment arrangement
within three (3) London Business Days of such receipt.
(c) The Servicer may, notwithstanding the proviso in Clause 5.2(b)
herein, agree such procedures for the payment by a Borrower of (i)
overdue amounts and (ii) amounts payable on redemption of a Mortgage
in whole or in part other than through the Direct Debiting Scheme as
would be agreed by a reasonable and prudent mortgage lender.
(d) Where a Borrower permits a Direct Debit to be made to his bank
account, the Servicer will endeavour to procure that such Borrower
maintains a valid and effective mandate relating to such Direct
Debit in relation to each Monthly Payment due from that Borrower,
provided that in any case where a Borrower will not permit a Direct
Debit to be made to his bank account the Servicer will endeavour to
make alternative arrangements acceptable to a reasonable and prudent
mortgage lender so that such Borrower nevertheless pays each Monthly
Payment on the due date.
(e) In the event that the Bankers Automated Clearing System ceases to
operate for any reason Northern Rock will use reasonable endeavours
to make alternative arrangements for the use of the back-up systems
available to each Account Bank.
5.2 Administration and Enforcement of Mortgages:
(a) The Mortgages Trustee as trustee for the Beneficiaries hereby
directs the Servicer to administer and service the Mortgage Loans
comprised in the Mortgage Portfolio and carry out its specific
obligations under this Agreement in accordance with the
Administration Procedures.
(b) The Servicer will, in relation to any default by a Borrower in
connection with a Mortgage Loan or a Mortgage comprised in the
Mortgage Portfolio, comply with the Enforcement Procedures or, to
the extent that the Enforcement Procedures are not applicable having
regard to the nature of the default in question, take such action as
is not materially prejudicial to the interests of the Mortgages
Trustee (as trustee for the Beneficiaries) and the Beneficiaries
under the relevant MIG Policy, provided that:
(i) the Servicer shall only become obliged to comply with the
Enforcement Procedures (to the extent applicable) or to take
action as aforesaid after it has become aware of the default;
(ii) it is acknowledged by the Beneficiaries that mortgage lenders
generally exercise discretion in pursuing their respective
enforcement procedures and that the Servicer may exercise such
discretion as would a reasonable and prudent mortgage lender
in applying the Enforcement Procedures to any particular
defaulting Borrower or taking action as aforesaid, provided
that in exercising such discretion the interest of Funding
and/or Funding 2 in the Mortgage Portfolio is not materially
prejudiced; and
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(iii) in any case where any of the Insurance Policies requires exact
compliance with certain enforcement procedures, the Servicer
shall procure the prior written consent of the relevant
insurance company for any deviation by it from such
enforcement procedures.
5.3 Records: The Servicer shall keep and maintain records in relation to the
Mortgage Portfolio, on a Mortgage Loan by Mortgage Loan basis, for the
purposes of identifying amounts paid by each Borrower, any amount due from
a Borrower and the balance from time to time outstanding on a Borrower's
account and such other records as would be kept by a reasonable and
prudent mortgage lender. Subject always to the restrictions and conditions
set forth in Clause 16 (Data Protection), the Servicer will provide such
information to the Mortgages Trustee and/or each Funding Beneficiary
and/or each Funding Security Trustee at any time upon reasonable notice,
subject to the Servicer being reasonably capable of providing such
information without significant additional cost and subject to the
provisions of the Data Protection Act 1998 and other applicable
legislation from time to time, and provided that no duty of confidence and
no industry code of practice will or may be breached thereby.
5.4 Trust:
(a) If the Servicer, in carrying out its functions as Servicer under
this Agreement, receives (including in its capacity as agent for the
Mortgages Trustee as trustee for the Beneficiaries) any money
whatsoever arising from the Mortgage Loans and their Related
Security, which money belongs to the Mortgages Trustee (as trustee
for the Beneficiaries) and is to be paid to the relevant Collection
Account pursuant to this Agreement or any of the other Transaction
Documents or otherwise, it will hold such monies on trust for the
Mortgages Trustee and shall keep such money separate from all other
monies held by the Servicer and shall, as soon as reasonably
practicable and in any event within three (3) London Business Days
of receipt of the same, pay the monies into the relevant Collection
Account.
(b) All other sums received by the Servicer in respect of the Mortgage
Loans and their Related Security shall be held by the Servicer for
itself.
5.5 Together Connections Mortgage Loans and Connections Mortgage Loans:
(a) The Seller shall, upon request, use its reasonable endeavours to:
(i) provide the Mortgages Trustee, each Funding Beneficiary and
the Servicer with such information (including, but not limited
to documentary information) in its possession; and
(ii) do such other acts and things,
that the Mortgages Trustee, each Funding Beneficiary and the
Servicer may require in order for such parties to exercise their
rights and comply with their obligations under the Mortgage
Conditions relating to the Together Connections Mortgage Loans and
the Connections Mortgage Loans and under the Transaction Documents
with respect to the administration of such Mortgage Loans.
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(b) Each of the Mortgages Trustee, each Funding Beneficiary and the
Servicer shall, upon request, use their reasonable endeavours to:
(i) provide the Seller with such information (including, but not
limited to documentary information) in its possession; and
(ii) do such other acts and things,
that the Seller may require in order for the Seller to exercise its
rights and comply with its obligations under the Together Connection
Conditions and the Connection Conditions (where such rights and
obligations are not required to be administered and serviced by the
Mortgages Trustee, any Funding Beneficiary or the Servicer under the
Transaction Documents) and in respect of the products linked to the
Together Connections Mortgage Loans and Connections Mortgage Loans.
(c) Any notice, letter or other communication:
(i) received or given by the Seller under the Together Connection
Conditions or the Connection Conditions shall be copied by the
Seller to the Servicer; and
(ii) received or given by the Mortgages Trustee, any Funding
Beneficiary or the Servicer under the Together Connection
Conditions or the Connection Conditions shall be copied by
such parties to the Seller.
(d) The Servicer shall act in accordance with the instructions of the
Seller in any matter where the powers, rights, obligations or
commercial interests of the Seller under the Together Connection
Conditions or the Connection Conditions or with respect to the
products linked to the Together Connections Mortgage Loan or the
Connections Mortgage Loan may be affected in a material manner. Such
matters may include, but not limited to, the following:
(i) any request from a Borrower to amend the allocation of the
Together Connections Benefit or the Connections Benefit that
may accrue to such Borrower under the terms of the relevant
Together Connection Conditions or Connection Conditions;
(ii) any amendment to the Together Connection Conditions or the
Connection Conditions;
(iii) except where the Servicer is required to act in accordance
with Clause 4.3 (Interest Rate Shortfall), the determination
or variation of the Connection Interest Rate (provided that
such rate shall not at any time be set at a rate which is
higher than the equivalent rate offered by the Seller);
(iv) any change to the availability or amendment to the eligibility
of any product to be linked to a Together Connections Mortgage
Loan or a Connections Mortgage Loan; and
15
(v) the termination of the Together Connection Conditions or the
Connection Conditions.
In all other cases where the Servicer, on behalf of the other
parties hereto is required to exercise its judgment or discretion in
the application of the Together Connection Conditions or the
Connection Conditions, the Servicer shall undertake the same in
consultation with the Seller.
(e) The Seller shall not have any right to provide instructions to the
Servicer in respect of any amendment to the Together Connection
Conditions or Connection Conditions where such amendment will result
in a Product Switch in respect of the applicable Together
Connections Mortgage Loans or Connections Mortgage Loans unless the
Seller has given confirmation in accordance with the terms of the
Mortgage Sale Agreement that it has elected to repurchase such
Together Connections Mortgage Loans or Connections Mortgage Loans.
5.6 Annual Servicer Compliance Statement: On or before March 31 of each
calendar year, commencing in 2007, the Servicer shall deliver to the
Mortgages Trustee a statement of compliance with respect to such calendar
year, which statement will be in the form of an officer's certificate
stating, as to the authorised signatory thereof, that (i) a review of the
activities of the Servicer during the immediately preceding calendar year
(or applicable portion thereof) and of its performance under this
Agreement during such period has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on
such review, the Servicer has fulfilled all of its obligations under this
Agreement in all material respects throughout such calendar year (or
applicable portion thereof), or, if there has been a failure to fulfill
any such obligation in any material respect, specifying each such failure
known to such officer and the nature and status thereof.
5.7 Independent Auditors' Annual Servicer Compliance Certificate: On or before
March 31 of each calendar year, commencing in 2007, the Servicer shall
cause a registered public accounting firm to furnish to the Servicer and
the Mortgages Trustee an attestation report on assessment of compliance
with the Servicing Criteria with respect to the Servicer or any affiliate
thereof during the immediately preceding calendar year delivered by such
accountants pursuant to Rule 13(a)-18 or Rule 15(d)-18 of the Exchange Act
and Item 1122 of Regulation AB; provided, however, that solely with
respect to the fiscal year ending December 31, 2006, the Servicer, in its
sole and absolute discretion, rather than cause the report described above
to be furnished, may cause a registered public accounting firm to furnish
to the Servicer and the Mortgages Trustee:
(a) an attestation report on assessment of compliance with the Servicing
Criteria with respect to the Servicer during the six-month period
ending December 31, 2006 delivered by such accountants pursuant to
Rule 13(a)-18 or Rule 15(d)-18 of the Exchange Act and Item 1122 of
Regulation AB; and
(b) a report substantially to the effect that (a) such accounting firm
has examined certain documents and records of the Servicer relating
to the servicing of Mortgage Loans under this Agreement during the
period from January 1, 2006 to and including May 31, 2006, (b) such
examination (i) included such tests
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and auditing procedures as such firm considered necessary in the
circumstances, and (ii) was conducted in compliance with the
attestation standards of the American Institute of Certified Public
Accountants, (c) management of the Servicer has asserted to such
firm that the Servicer has complied with the minimum servicing
standards set out in Schedule 5 and (d) in the opinion of such firm,
such assertion of the Servicer's management is fairly stated in all
material respects (or, if such assertion of the Servicer's
management is not correct, stating why such assertion is not
correct).
5.8 Report on Assessment of Compliance and Attestation:
(a) On or before March 31 of each calendar year, commencing in 2007, the
Servicer shall:
(i) deliver to the Mortgages Trustee a report regarding the
Servicer's assessment of compliance with the Servicing
Criteria during the immediately preceding calendar year, as
required under Rules 13a-18 and 15d-18 of the Exchange Act and
Item 1122 of Regulation AB. Such report shall be addressed to
the Mortgages Trustee and signed by an authorized officer of
the Servicer, and shall address each of Servicing Criteria
specified on a certification substantially in the form of
Schedule 7 delivered to the Mortgages Trustee concurrently
with the execution of this Agreement. To the extent any of the
Servicing Criteria are not applicable to the Servicer, with
respect to asset-backed securities transactions taken as a
whole involving the Servicer and that are backed by the same
asset type backing the Notes, such report shall include a
statement to that effect;
(ii) deliver to the Mortgages Trustee a report of a registered
public accounting firm reasonably acceptable to the Mortgages
Trustee that attests to, and reports on, the assessment of
compliance made by the Servicer and delivered pursuant to
paragraph (i) above. Such attestation shall be in accordance
with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the
Securities Act and the Exchange Act, including, without
limitation that in the event that an overall opinion cannot be
expressed, such registered public accounting firm shall state
in such report why it was unable to express such an opinion.
Such report must be available for general use and not contain
restricted use language. To the extent any of the Servicing
Criteria are not applicable to the Servicer, with respect to
asset-backed securities transactions taken as a whole
involving the Servicer and that are backed by the same asset
type backing the Notes, such report shall include a statement
to that effect;
(iii) cause each Subcontractor determined by the Servicer pursuant
to Clause 5.8(b) to be "participating in the servicing
function" within the meaning of Item 1122 of Regulation AB, to
deliver to the Mortgages Trustee an assessment of compliance
and accountants' attestation as and when provided in
paragraphs (a) and (b) of this Clause 5.8; and
17
(iv) deliver or cause to be delivered to any Person that will be
responsible for signing the certification (a "Sarbanes
Certification") required by Rules 13a-14(d) and 15d-14(d)
under the Exchange Act (pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 and the rules and regulations of
the Commission promulgated thereunder (including any
interpretations thereof by the Commission's staff) a
certification in the form attached hereto as Schedule 6.
The Servicer acknowledges that any Person identified in clause
(a)(iv) above may rely on the certification provided by the Servicer
pursuant to such clause in signing a Sarbanes Certification and
filing such with the Commission.
(b) Each assessment of compliance provided by a Subcontractor pursuant
to Clause 5.8(a)(iv) shall address each of the Servicing Criteria
specified on a certification substantially in the form of Schedule 6
hereto delivered to the Mortgages Trustee concurrently with the
execution of this Agreement. An assessment of compliance provided by
a Subcontractor pursuant to Clause 5.8(a)(iv) need not address any
elements of the Servicing Criteria other than those specified by the
Servicer pursuant to Clause 5.8(a)(i).
5.9 Use of Subcontractors: The Servicer shall promptly upon request provide
the Mortgages Trustee a written description (in form and substance
satisfactory to the Mortgages Trustee) of the role and function of each
Subcontractor utilized by the Servicer, specifying (i) the identity of
each such Subcontractor, (ii) which (if any) of such Subcontractors are
"participating in the servicing function" within the meaning of Item 1122
of Regulation AB, and (iii) which elements of the Servicing Criteria will
be addressed in assessments of compliance provided by each Subcontractor
identified pursuant to clause (ii) of this paragraph. As a condition to
the utilization of any Subcontractor determined to be "participating in
the servicing function" within the meaning of Item 1122 of Regulation AB,
the Servicer shall cause any such Subcontractor used by the Servicer for
the benefit of the Mortgages Trustee to comply with the provisions of
Clause 5.8 of this Agreement to the same extent as if such Subcontractor
were the Servicer. The Servicer shall be responsible for obtaining from
each Subcontractor and delivering to the Mortgages Trustee any assessment
of compliance and attestation required to be delivered by such
Subcontractor under Clause 5.8, in each case as and when required to be
delivered.
5.10 Moody's Portfolio Variation Test: Where it is so required under the terms
of the Transaction Documents, or where it is otherwise agreed between the
Seller and Moody's, the Servicer shall use reasonable efforts to operate
the Moody's Portfolio Variation Test to the Mortgage Loans in the Mortgage
Portfolio in accordance with instructions provided by Moody's to the
Servicer from time to time. The Servicer will, as soon as practicable
after operating the Moody's Portfolio Variation Test, send written
notification to Moody's of the Moody's Portfolio Variation Test Value
determined thereunder. The Servicer shall be entitled to rely upon the
opinion or advice of Moody's in relation to the Moody's Portfolio
Valuation Test and shall not be responsible for any loss, liability,
damage or expenses that my be caused by the operation of the Moody's
Portfolio Variation Test.
6. No Liability
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6.1 No Guarantee of Mortgage Loan: The Servicer shall have no liability for
any obligation of a Borrower in respect of any Mortgage Loan comprised in
the Mortgage Portfolio or any Related Security and nothing herein shall
constitute a guarantee, or similar obligation, by the Servicer of any
Mortgage Loan, Mortgage or any Borrower.
6.2 No Guarantee to Mortgages Trustee or Beneficiaries: Save as otherwise
provided in this Agreement, the Servicer shall have no liability for the
obligations of the Mortgages Trustee or the Beneficiaries under any of the
Transaction Documents or otherwise and nothing herein shall constitute a
guarantee, or similar obligation, by the Servicer of the Mortgages Trustee
or the Beneficiaries in respect of any of them.
7. New Mortgage Loans
7.1 New Mortgage Portfolio: The Mortgage Portfolio may be augmented from time
to time by the sale and assignment to the Mortgages Trustee on any
Distribution Date of a New Mortgage Portfolio by the Seller.
7.2 Sale and Assignment subject to Terms: The sale and assignment of each New
Mortgage Portfolio to the Mortgages Trustee will in all cases be subject
to the terms set out in the Mortgage Sale Agreement including, without
limitation, the conditions set out in Clause 4 (Sale and Purchase of New
Mortgage Portfolios) of the Mortgage Sale Agreement and the
representations and warranties set out in Clause 8 (Warranties and
Repurchase by the Seller) of the Mortgage Sale Agreement.
8. Product Switching and Further Advances
8.1 Acceptance of Application: The Servicer may accept an application for a
Further Advance or a Product Switch on behalf of the Seller, upon receipt
of written confirmation from the Seller that the Seller would, if invited
to do so by the Mortgages Trustee, purchase the relevant Mortgage Loan and
its Related Security from the Mortgages Trustee.
8.2 Notification: Subject to complying with the terms of Clause 8.1
(Acceptance of Application) herein, where the Servicer accepts a Product
Switch or a Further Advance, the Servicer shall then promptly notify the
Seller and the Mortgages Trustee in writing.
8.3 Existing Borrowers Re-Fix Rate: Notwithstanding Clause 8.1 (Acceptance of
Application) herein, whenever Clause 8.6 (Existing Borrowers' Re-Fix Rate)
of the Mortgage Sale Agreement applies to a Fixed Rate Mortgage Loan, the
Servicer may accept the exercise of an option by a Borrower to set the
Existing Borrowers' Re-Fix Rate, subject to the terms of Clause 4.4
(Existing Borrowers' Re-Fix Rate) herein.
8.4 Procedures: Subject to complying with the terms of Clauses 8.1 (Acceptance
of Application) and 8.3 (Existing Borrowers' Re-Fix Rate) herein, the
Servicer may accept requests from Borrowers for Product Switches and
Further Advances provided that the Servicer acts in accordance with its
then procedure which would be acceptable to a reasonable and prudent
mortgage lender.
9. Redemption of Mortgages
9.1 Receipt or Discharge: Upon repayment in full of all sums secured by a
Mortgage
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and/or other Related Security comprised in the Mortgage Portfolio, the
Servicer shall, and is hereby authorised by the Mortgages Trustee as
trustee for the Beneficiaries to, execute a receipt or discharge or
relevant Form DS1 (of the Land Registry) of the Mortgage and any such
other or further instrument or deed of satisfaction regarding such
Mortgage and/or the Related Security as it considers to be necessary or
advisable and to release the relevant Title Deeds (if any) to the person
or persons entitled thereto.
9.2 Title Deeds: The Servicer undertakes that prior to any actual release by
it of any relevant Title Deeds it will take reasonable and appropriate
steps to satisfy itself that the relevant Title Deeds are being released
to the person or persons entitled thereto.
9.3 Payment of Sums Due: The Servicer shall procure that if, upon completion
of the Enforcement Procedures, an amount in excess of all sums due from
the relevant Borrower is recovered or received, the balance, after
discharge of all sums due from the Borrower, is paid to the person or
persons next entitled thereto.
10. Powers of Attorney
10.1 Appointment: The Mortgages Trustee hereby appoints the Servicer as its
attorney on its behalf, and in its own or the attorney's name, for the
following purposes:
(a) executing all documents necessary for the purpose of discharging a
Mortgage comprised in the Mortgage Portfolio which has been repaid
in full and any Related Security or for the sale of a Mortgaged
Property as Mortgagee;
(b) executing all documents necessary for the purpose of releasing a
Borrower in accordance with Clause 9 (Redemption of Mortgages)
herein;
(c) executing all documents and doing all acts and things which in the
reasonable opinion of the Servicer are necessary or desirable for
the efficient provision of the Services hereunder; and
(d) exercising its rights, powers and discretion under Mortgage
Conditions including the right to fix the rate of interest payable
in respect of the Mortgage Loans or any related rights (but subject,
in relation to the right to set the interest rate under the Base
Rate Pledge and the Existing Borrowers' Re-Fix Rate, to the
limitations, conditions and qualifications set out in the Mortgage
Sale Agreement and the powers of attorney executed pursuant to it),
provided that, for the avoidance of doubt, these powers of attorney shall
not authorise the Servicer to sell any of the Mortgage Loans and/or their
Related Security comprised in the Mortgage Portfolio except as
specifically authorised in the Transaction Documents. For the avoidance of
doubt, neither the Mortgages Trustee nor the Funding Beneficiaries shall
be liable or responsible for the acts of the Servicer or any failure by
the Servicer to act under or in respect of these powers of attorney.
10.2 Appointments Irrevocable: The appointments contained in Clause 10.1
(Appointment) herein shall be irrevocable unless and until the Mortgages
Trustee and/or the Funding Beneficiaries and the Funding Security Trustees
serve notice pursuant to Clause 19 (Termination) herein to terminate the
Servicer's appointment
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under this Agreement upon which the appointments contained in Clause 10.1
(Appointment) herein shall be automatically revoked.
11. Costs and Expenses
The Mortgages Trustee will on each Distribution Date reimburse, in
accordance with Clause 10.2(b) of the Mortgages Trust Deed, the Servicer
for all out-of-pocket costs, expenses and charges (inclusive of any
amounts in respect of Irrecoverable VAT due thereon) properly incurred by
the Servicer in the performance of the Services including any such costs,
expenses or charges not reimbursed to the Servicer on any previous
Distribution Date and the Servicer shall supply the Mortgages Trustee with
an appropriate VAT invoice issued by the person making the supply.
12. Information
12.1 Maintenance of Records:
(a) The Servicer shall keep the Mortgage Loan Files relating to the
Mortgage Portfolio in safe custody and shall take appropriate
technical and organisational measures against the unauthorised or
unlawful processing of personal data and against accidental loss or
destruction of, or damage to, personal data. The Servicer shall
maintain in an adequate form such records as are necessary to
enforce each Mortgage comprised in the Mortgage Portfolio and, where
relevant, any other Related Security. The Servicer shall keep the
Mortgage Loan Files in relation to the Mortgage Portfolio in such a
way that they can be distinguished from information held by the
Servicer for its own behalf as mortgagee or heritable creditor or
for other third persons.
(b) A duplicate of any computer records held by the Servicer which
contains information relating to the Mortgage Loans and the Related
Security shall be lodged by the Servicer on a quarterly basis in a
location separate from that in which the original computer records
are stored and in an environment conducive to the safe storage of
electronic media and which allows the information to be stored in an
incorruptible form, such records to be held to the order of the
Mortgages Trustee and to be replaced by a revised duplicate as and
when the original records are revised. The Servicer shall keep the
Mortgages Trustee informed of the location of the Mortgage Loan
Files and duplicate computer records.
12.2 Use of information technology systems:
(a) The Servicer will use all reasonable endeavours to negotiate with
the relevant parties so that any intellectual property rights not
owned by it but used by it in connection with the performance of its
obligations under this Agreement and in particular all software
programmes used in connection with the Mortgage Loans and the
Related Security therefor and their administration are licensed or
sub-licensed to the Mortgages Trustee as trustee for the
Beneficiaries so as to permit the Mortgages Trustee as trustee for
the Beneficiaries to use such intellectual property rights only in
connection with the administration of the Mortgage Loans free of
charge for so long as any of the Mortgage Loans are outstanding. For
the avoidance of doubt, the Servicer shall not be in breach of
21
its obligations under this Agreement if such rights and/or software
programmes are not so licensed or sub-licensed to the Mortgages
Trustee as trustee for the Beneficiaries at any time after it has
ceased to be the Servicer:
(b) If this Agreement is terminated, then for a period of six months
following such termination (or such shorter period as may be
necessary to allow the administration and servicing of the Mortgage
Loans to be transferred to another person) the Servicer shall use
reasonable endeavours to assist the Mortgages Trustee and/or the
Beneficiaries and/or any substitute or successor Servicer to:
(i) establish and implement a computer system for administering
and servicing the Mortgage Loans; and
(ii) load the data held by the Servicer in relation to Borrowers
and the Mortgage Loans on to such computer system,
and, prior to (i) and (ii) having taken place, the Servicer will
provide all necessary access and assistance to the Mortgages Trustee
and/or the Beneficiaries and/or the substitute Servicer in respect
of its own intellectual property rights in relation to the
administration and servicing of the Mortgage Loans.
(c) Subject always to the restrictions and conditions set forth in
Clause 16, upon termination of the appointment of the Servicer under
this Agreement, the Servicer shall forthwith deliver to the
Mortgages Trustee and/or the Beneficiaries and/or the substitute
Servicer all computer and data records in its possession or under
its control relating to the affairs of or belonging to the Mortgages
Trustee and the Beneficiaries and/or relating to the Mortgage Loans
and the Related Security in a form agreeable to each of the
Servicer, the Mortgages Trustee and/or the Beneficiaries and/or the
substitute Servicer which accords with the standard practice of the
electronic data processing industry at the time the event occurs.
(d) The Servicer covenants that it will take no action, nor omit to take
any action, the effect or likely effect of such action or omission
will be to terminate any existing licence agreement in relation to
any such intellectual property rights, provided that a licence
agreement may be terminated if it is replaced by a substitute
arrangement under which the intellectual property rights, including
rights to computer software, are such that the services resulting
therefrom are equivalent to the previous arrangement.
12.3 Access to Books and Records: Subject to all applicable laws, and subject
always to the restrictions and conditions set forth in Clause 16 (Data
Protection), the Servicer shall permit the Mortgages Trustee (and its
auditors), each Funding Beneficiary (and their auditors), each Funding
Security Trustee and any other person nominated by any of the
Beneficiaries or the Funding Security Trustees (to whom the Servicer has
no reasonable objection) upon reasonable notice during normal office hours
to have access, or procure that such person or persons are granted access,
to all books of record and account (including, for the avoidance of doubt,
the Title Deeds and Mortgage Loan Files) relating to the administration
and servicing of the Mortgage
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Loans and the Related Security comprised in the Mortgage Portfolio and
related matters in accordance with this Agreement.
12.4 Information Covenants:
(a) The Servicer shall, within ten (10) Business Days following each
Monthly Payment Date, provide the Mortgages Trustee, the
Beneficiaries, the Rating Agencies, the Lead Manager, Bloomberg L.P.
(unless otherwise prohibited by law) and any other party as the
Mortgages Trustee may direct with a monthly report in, or
substantially in, the form set out in Schedule 2 (Form of Investors'
Monthly Report) hereto (or such other form reasonably requested by
the Mortgages Trustee and approved by the Beneficiaries and the
Rating Agencies) and shall assist the Cash Manager in the production
of reports substantially in the forms set out in Schedule 3 of the
Cash Management Agreement.
(b) The Servicer shall notify the Rating Agencies in writing of the
details of (i) any material amendment to the Transaction Documents,
(ii) any proposed material change in the valuation procedures or
policies applied or to be applied in relation to Mortgaged
Properties by it in connection with its mortgage business (details
of which change may be included in a report provided under
subparagraph (a) above) and (iii) any other information relating to
its mortgage business and financial condition or the Mortgage
Portfolio as the Rating Agencies may reasonably request in
connection with the ratings of the Notes of any Issuer and other
matters contemplated by the Transaction, provided that such request
does not adversely interfere with the Servicer's day to day
provision of the Services under the other terms of this Agreement.
(c) The Servicer shall, at the request of Funding and the Security
Trustee or Funding 2 and the Funding 2 Security Trustee (where the
Servicer is the Seller) and at the request of any of the
Beneficiaries (where the Servicer is no longer the Seller), furnish
Funding and the Security Trustee and/or Funding 2 and the Funding 2
Security Trustee and/or the Beneficiaries (as appropriate) and the
Rating Agencies with such other information relating to its business
and financial condition as it may be reasonable for Funding and the
Security Trustee and/or Funding 2 and the Funding 2 Security Trustee
and/or the Beneficiaries (as appropriate) to request in connection
with the ratings of the Notes of any Issuer and other matters
contemplated by the Transaction, provided that Funding and the
Security Trustee or Funding 2 and the Funding 2 Security Trustee or
the Beneficiaries (as is appropriate) shall not make such a request
more than once every three months unless, in the belief of Funding
and the Security Trustee or Funding 2 and the Funding 2 Security
Trustee or the Beneficiaries (as is appropriate), an Intercompany
Loan Event of Default or a Termination Event pursuant to Clause 19
(Termination) herein shall have occurred and is continuing or may
reasonably be expected to occur.
13. Remuneration
13.1 Administration Fee: The Mortgages Trustee shall pay to the Servicer for
its Services hereunder an administration fee (the "Administration Fee")
(inclusive of VAT) which:
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(a) shall be calculated in relation to each Trust Calculation Period on
the basis of the number of days elapsed and a 365 day year (or, in
the case of a Trust Calculation Period ending in a leap year, a 366
day year) at the Administration Fee Rate, inclusive of VAT, on the
aggregate amount of the Funding Share and the Funding 2 Share of the
Trust Property as at close of business of such Trust Calculation
Period; and
(b) shall be paid to the Servicer on each Distribution Date in the
manner contemplated by and in accordance with the provisions of
Clause 10 (Distribution of Revenue Receipts) of the Mortgages Trust
Deed.
13.2 Substitute or Successor Servicer: If a substitute or successor Servicer
shall be appointed under this Agreement with respect to any of the
Mortgage Loans, the Mortgages Trustee shall set the Administration Fee
Rate with such substitute or successor Servicer at the time such
substitute or successor Servicer enters into an administration agreement.
14. Insurances
14.1 Administration: The Servicer will administer the arrangements for
insurance to which the Mortgages Trustee is a party or in which either the
Seller or the Mortgages Trustee has an interest and which relate to the
Mortgage Loans and the Mortgages comprised in the Mortgage Portfolio or
the business of the Mortgages Trustee.
14.2 Action of Servicer: The Servicer shall not knowingly take or omit to take
any action which would:
(a) result in the avoidance or termination of any of the Insurance
Policies in relation to any Mortgage Loans and Mortgages to which
any Insurance Policy applies;
(b) reduce the amount payable on any claim made on behalf of the
Mortgages Trustee (as trustee for the Beneficiaries) under any
Insurance Policy; or
(c) invalidate any Insurance Policy.
14.3 Submission of Claims: The Servicer shall prepare and submit any claim
under the Insurance Policies in accordance with the requirements of the
relevant Insurance Policy and otherwise with the usual procedures
undertaken by a reasonable and prudent mortgage lender on behalf of the
Mortgages Trustee as trustee for the Beneficiaries and shall comply with
the other requirements of the insurer under the relevant Insurance Policy.
14.4 Proceeds: The Servicer shall use its reasonable endeavours to credit to
the relevant Collection Account all proceeds received from any claim made
under each Insurance Policy in relation to any Mortgage Loan by close of
business on the London Business Day which immediately follows the day on
which such amounts are received or credited by the Servicer (and in any
event within three (3) London Business Days of such receipt) and which is
applied either in whole or in part in repayment of a Mortgage Loan.
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14.5 MIG Policies:
(a) Without prejudice to Clause 3 (The Administration Services) herein,
the Mortgages Trustee as trustee for the Beneficiaries acknowledges
that the Servicer may settle or compromise claims on a Mortgage Loan
by Mortgage Loan basis in respect of any MIG Policy in a manner
consistent with its normal practice in respect of mortgage indemnity
polices, provided that the Servicer shall not, without the prior
written consent of the Mortgages Trustee, settle any claims or
initiate any legal proceedings or other legal process in respect of
a group of class of mortgages or in respect of the MIG Policies as a
whole and provided further that each such MIG Policy and all
proceeds thereof remain as Trust Property.
If the Enforcement Procedures require the Servicer to make a claim
under the relevant MIG Policy and the Servicer has failed to make
such a claim, then the Beneficiaries may direct the Mortgages
Trustee on their behalf to direct the Servicer to make a claim or,
in default thereof by the Servicer, the Beneficiaries may direct the
Mortgages Trustee to make a claim itself under such policy and the
Servicer shall, within ten (10) London Business Days of receiving a
written request from the Mortgages Trustee (as trustee for the
Beneficiaries), provide the Mortgages Trustee with such information
as the Mortgages Trustee may require to enable it to make a claim
under the relevant MIG Policy.
(b) Without prejudice to the rights of the Servicer under Clause 14.5(b)
herein, the Servicer shall, in administering and servicing the
Mortgage Loans, ensure that the cover under any MIG Policy relating
to any Mortgage is not adversely affected.
14.6 Buildings Policies:
(a) Upon receipt of notice that any Borrower whose Mortgage Loan is
secured by a mortgage of a leasehold (or, in Scotland, a standard
security of a long leasehold) Mortgaged Property has failed to make
a payment when due of any sums due under the relevant lease in
respect of the insurance of the property, the Servicer may debit
such Borrower's account with the relevant amount which shall then be
paid to the relevant landlord.
(b) If the Servicer becomes aware that a Borrower has failed to pay
premiums due under any Buildings Policy, the Servicer shall take
such action as would a reasonable and prudent mortgage lender with a
view to ensuring that the relevant Mortgaged Property continues to
be insured in accordance with the applicable Mortgage Terms or the
Alternative Insurance Requirements.
14.7 Life Policies:
(a) The Servicer shall use its reasonable endeavours to ensure that upon
maturity of a Life Policy or on the death of a Borrower, if earlier,
all sums which it is agreed between the Seller and the relevant
Borrower are due to be paid under the Life Policy are paid by the
relevant insurance company in repayment of
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the Mortgage for which such Life Policy is collateral security and
credited to the relevant Collection Account.
(b) If so requested by a Borrower the Servicer may, on behalf of the
Beneficiaries, exercise its discretion as a reasonable and prudent
mortgage lender to agree to the release of a Life Policy from the
relevant legal or equitable charge granted by the related Borrower
in favour of the Seller.
15. Title Deeds
15.1 Custody: To the extent not held in electronic form by the Land Registry or
the Registers of Scotland, the Servicer shall keep the Title Deeds
relating to the Mortgage Portfolio in safe custody and shall not without
the prior written consent of the Mortgages Trustee and the Beneficiaries
part with possession, custody or control of them otherwise than to a
Subcontractor or delegate appointed pursuant to Clause 3.2 (Sub-Contracts)
herein or to a solicitor, licensed or qualified conveyancer or authorised
practitioner, subject to the usual undertaking to hold them to the order
of the Seller (who in turn will hold them to the order of the Mortgages
Trustee (as trustee for the Beneficiaries)) or to the Land Registry or the
Registers of Scotland or, upon repayment in full of the relevant Mortgage
Loan, to the order of the Borrower.
15.2 Identification: Subject to Clause 15.1 (Custody), the Title Deeds relating
to the Mortgage Portfolio shall be kept in a manner such that a computer
record is maintained of their location and they are identifiable and
retrievable by reference to an account number and pool identifier and
identifiable and distinguishable from the title deeds relating to other
properties and mortgages in respect of which the Servicer is mortgagee or
heritable creditor or Servicer.
15.3 Access: Subject to Clause 15.1 (Custody), the Servicer shall provide
access, or procure that access is provided to, the Title Deeds relating to
the Mortgage Portfolio to the Mortgages Trustee, the Beneficiaries and
their respective agents at all reasonable times and upon reasonable
notice. The Servicer acknowledges that the Title Deeds and Mortgage Loan
Files relating to the Mortgage Portfolio in its possession, custody or
control will be held to the order of the Mortgages Trustee (as trustee for
the Beneficiaries) and that it has, in its capacity as Servicer, no
beneficial interest therein and the Servicer (in its capacity as such but
not in its capacity as a Beneficiary) irrevocably waives any rights or any
Security Interest which it might have therein or to which it might at any
time be entitled.
15.4 Delivery upon Termination: Subject to Clause 15.1 (Custody), the Servicer
shall, forthwith on the termination of the appointment of the Servicer
pursuant to Clause 19 (Termination) herein, deliver the Title Deeds and
Mortgage Loan Files to or to the order of the Mortgages Trustee or to such
person as the Mortgages Trustee elects as a substitute Servicer in
accordance with the terms of this Agreement upon written request by the
Mortgages Trustee made at any time on or after notice of, or on or after,
termination of the appointment of the Servicer pursuant to Clause 19
(Termination) herein.
16. Data Protection
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The Servicer represents that as at the date hereof the Servicer has and
hereafter it will maintain on behalf of itself and on behalf of the
Mortgages Trustee (as trustee for the Beneficiaries) all appropriate
registrations, licences and authorities (if any) required under the Data
Protection Act 1998 to enable each of them to perform their respective
obligations under this Agreement. In addition to the foregoing and
notwithstanding any of the other provisions of this Agreement, each of the
Servicer and the Mortgages Trustee hereby agree and covenant as follows:
(a) that only "non-personal data" (as described in the Data Protection
Act 1998) may be transferred by the Servicer to the Mortgages
Trustee or any other entity located in Jersey (unless Jersey is
declared an "approved state" by the European Commission, in which
case the Servicer may transfer such personal data to the Mortgages
Trustee in Jersey);
(b) that, to the extent that circumstances enable the Mortgages Trustee
to exercise its right to demand that the Servicer transfer inter
alia personal data to the Mortgages Trustee, the Servicer shall only
transfer such personal data to an agent of the Mortgages Trustee
that is located in the United Kingdom and maintains all appropriate
registrations, licences and authorities (if any) required under the
Data Protection Act 1998 (unless Jersey is declared an "approved
state" by the European Commission, in which case the Servicer may
transfer such personal data to the Mortgages Trustee in Jersey);
(c) that, to the extent that circumstances enable the Mortgages Trustee
to exercise its right to demand that the Servicer transfer inter
alia personal data to the Mortgages Trustee, the Servicer notify
each Borrower that the Mortgages Trustee is a "data controller" (as
defined in the Data Protection Act 1998) and provide each such
Borrower with the address of the Mortgages Trustee;
(d) that the Servicer and the Mortgages Trustee will only use any data
in relation to the Mortgage Loans and the related Borrowers for the
purposes of administering and/or managing the Mortgage Portfolio,
and will not sell such data to any third party or allow any third
party to use such data other than in compliance with the conditions
stated in this Clause 16 and for the sole purpose of administering
and/or managing the Mortgage Portfolio;
(e) that the Mortgages Trustee will comply with the provisions of the
Data Protection (Jersey) Law 1987 (as amended) and (so long as the
provisions of the Data Protection Act 1998 do not conflict with the
provisions of the Data Protection (Jersey) Law 1987) with the
provisions of the Data Protection Act 1998 (as amended);
(f) that, upon the request of a Borrower, the Servicer will inform such
Borrower that both the Servicer and the Mortgages Trustee are "data
controllers" as described in the Data Protection Act 1998; and
(g) that both the Servicer and the Mortgages Trustee shall maintain a
written record of their reasons for applying the Data Protection
Order 2000 (as set forth under the Conditions under paragraph 3 of
Part II of Schedule I of such Order).
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17. Covenants and Representations and Warranties of Servicer
17.1 Covenants: The Servicer hereby covenants with and undertakes to the
Mortgages Trustee, each Beneficiary and each Funding Security Trustee
that, without prejudice to any of its specific obligations hereunder, it
will:
(a) administer and service the Mortgage Loans and their Related Security
as if the same had not been sold and assigned to the Mortgages
Trustee but had remained on the books of the Seller;
(b) provide the Services in such manner and with the same level of
skill, care and diligence as would a reasonable and prudent mortgage
lender;
(c) comply with any reasonable directions, orders and instructions which
the Mortgages Trustee or the Beneficiaries may from time to time
give to it in accordance with the provisions of this Agreement and,
in the event of any conflict, those of the Mortgages Trustee shall
prevail;
(d) keep in force all licences, approvals, authorisations, permissions
and consents which may be necessary in connection with the
performance of the Services and prepare and submit all necessary
applications and requests for any further approval, authorisation,
consent or licence required in connection with the performance of
the Services and in particular any necessary registrations under the
Data Protection Act 1998;
(e) not knowingly fail to comply with any legal requirements in the
performance of the Services;
(f) make all payments required to be made by it pursuant to this
Agreement on the due date for payment thereof in pounds sterling (or
as otherwise required under the Transaction Documents) in
immediately available funds for value on such day without set-off
(including, without limitation, any fees owed to it) or
counterclaim, but subject to any deductions required by law;
(g) not without the prior written consent of the Mortgages Trustee amend
or terminate any of the Transaction Documents save in accordance
with their terms;
(h) whilst the Seller is the Servicer, forthwith upon becoming aware of
any event which may reasonably give rise to an obligation of the
Seller to repurchase any Mortgage Loan pursuant to Clause 8
(Warranties and Repurchase by the Seller) of the Mortgage Sale
Agreement, notify the Mortgages Trustee and the Beneficiaries in
writing of such event;
17.2 Covenants to Survive: The covenants of the Servicer in Clause 17.1
(Covenants) herein shall remain in force until this Agreement is
terminated but without prejudice to any right or remedy of the Mortgages
Trustee and/or the Seller and/or each Funding Beneficiary arising from
breach of any such covenant prior to the date of termination of this
Agreement.
17.3 Representations and Warranties: The Servicer hereby makes the
representations and warranties to the Mortgages Trustee, each Beneficiary
and each Funding Security
28
Trustee that are specified on Schedule 3 (Servicer Representations and
Warranties) hereto.
18. Services Non-exclusive
Nothing in this Agreement shall prevent the Servicer from rendering or
performing services similar to those provided for in this Agreement to or
for itself or other persons or from carrying on business similar to or in
competition with the business of the Mortgages Trustee and the
Beneficiaries.
19. Termination
19.1 Termination Event: If any of the following events (each a "Termination
Event") shall occur:
(a) default is made by the Servicer in the payment on the due date of
any payment due and payable by it under this Agreement and such
default continues unremedied for a period of five London Business
Days after the Servicer becoming aware of such default;
(b) default is made by the Servicer in the performance or observance of
any of its other covenants and material obligations under this
Agreement or any of the other Transaction Documents, where:
(i) the Security Trustee, having been informed thereof in
accordance with Clause 19.5 (Notification of Termination
Event), is of the opinion that such default is materially
prejudicial to the interests of the holders of the Notes
issued by the Funding Issuers and then outstanding; and/or
(ii) the Funding 2 Security Trustee, having been informed thereof
in accordance with Clause 19.5 (Notification of Termination
Event), is of the opinion that such default is materially
prejudicial to the interests of the holders of the Notes
issued by the Funding 2 Issuers and then outstanding,
and such default continues unremedied for a period of twenty (20)
days after the Servicer becoming aware of such default, provided
however that where the relevant default occurs as a result of a
default by any person to whom the Servicer has sub-contracted or
delegated part of its obligations hereunder, such default shall not
constitute a Termination Event if within such twenty (20) day period
the Servicer replaces the relevant Subcontractor or delegate with an
entity capable of remedying such default or alternatively
indemnifies the Mortgages Trustee and the Beneficiaries against the
consequences of such default;
(c) the Servicer at any time fails to obtain or maintain the necessary
license, permission or regulatory approval required by any UK
mortgage or credit regulatory regime which would be required in
order to enable it to continue administering and servicing the
Mortgage Loans; or
(d) the Servicer becomes subject to an Insolvency Event,
29
then the Mortgages Trustee and/or Funding and the Security Trustee and/or
Funding 2 and the Funding 2 Security Trustee may at once or at any time
thereafter while such default continues, by notice in writing to the
Servicer, terminate its appointment as Servicer under this Agreement with
effect from a date (not earlier than the date of the notice) specified in
such notice. Upon termination of the appointment of the Servicer, the
Funding Security Trustees shall use their reasonable endeavours (subject
to the terms of the Funding Beneficiary Deed) to appoint a substitute
Servicer that satisfies the conditions set forth in Clause 19.2(c), (d)
and (e), provided that in the event the Funding Security Trustees have
not, having used reasonable endeavours (subject to the terms of the
Funding Beneficiary Deed) appointed a substitute Servicer, they shall have
no liability to any person and, notwithstanding any other provision of the
Transaction Documents, shall not themselves be required to perform any
duties of the Servicer.
19.2 Resignation: The Servicer may resign under this Agreement at any time
following the expiry of not less than 12 months' notice of resignation
given by the Servicer to the Mortgages Trustee and the Beneficiaries
provided that:
(a) the Mortgages Trustee and the Beneficiaries consent in writing to
such termination;
(b) a substitute Servicer is appointed by the Mortgages Trustee, the
Funding Beneficiaries and the Funding Security Trustees (and in the
event of failure to agree, by the Funding Security Trustees), such
appointment to be effective not later than the date of such
termination (and the Servicer shall notify the Rating Agencies in
writing of the identity of such substitute Servicer);
(c) if required to be qualified to act as Servicer under the FSMA, such
substitute Servicer is so qualified;
(d) if possible, such substitute Servicer has experience in
administering and servicing mortgage loans secured on residential
property in England, Wales and Scotland and, in any event (in so far
as is required by any applicable laws and regulations) has all
authorisations, permissions and licences for the purposes of
administering and servicing mortgages of residential property in
England, Wales and Scotland;
(e) such substitute Servicer enters into an agreement on substantially
the same terms as the relevant provisions of this Agreement and the
Servicer shall not be released from its obligations under the
relevant provisions of this Agreement until such substitute Servicer
has entered into such new agreement; and
(f) the then current ratings (if any) of the Notes of any Issuer are not
reduced, withdrawn or qualified as a result thereof, unless
otherwise agreed by an Extraordinary Resolution (as defined in the
applicable Note Trust Deed) of the holders of the relevant class or
classes of Notes.
19.3 Termination of Authority: On and after resignation by, or termination of
the appointment of, the Servicer under this Agreement pursuant to this
Clause 19, all authority and power of the Servicer under this Agreement
and each other Transaction
30
Document to which it is a party shall be terminated and be of no further
effect and the Servicer shall not thereafter hold itself out in any way as
the agent of the Mortgages Trustee and/or the Beneficiaries pursuant to
this Agreement and each other Transaction Document to which it is a party.
19.4 Delivery of Files: Upon resignation by, or termination of the appointment
of, the Servicer under this Agreement pursuant to this Clause 19, the
Servicer shall:
(a) forthwith deliver to (and in the meantime hold on trust for, and to
the order of) the Mortgages Trustee or as it shall direct the
Mortgage Loan Files, the Title Deeds (if any), all books of account,
papers, records, registers, correspondence and documents in its
possession or under its control relating to the affairs of, or
belonging to, the Mortgages Trustee (as trustee for the
Beneficiaries) and the Mortgages in the Mortgage Portfolio and any
other Related Security, (if practicable, on the date of receipt) any
monies then held by the Servicer on behalf of the Mortgages Trustee
and any other assets of the Mortgages Trustee as trustee for the
Beneficiaries;
(b) take such further action as the Mortgages Trustee, the Funding
Beneficiaries and the Funding Security Trustees may reasonably
direct at the expense of the Beneficiaries (including in relation to
the appointment of a substitute Servicer) provided that neither the
Mortgages Trustee nor each Funding Security Trustee shall be
required to take or direct to be taken such further action unless it
has been indemnified to its satisfaction;
(c) provide all relevant information contained on computer records in
the form of magnetic tape, together with details of the layout of
the files encoded on such magnetic tapes; and
(d) co-operate and consult with and assist the Mortgages Trustee, each
Funding Beneficiary, each Funding Security Trustee and their
nominees (which shall, for the avoidance of doubt, include any new
Servicer appointed by any of them) for the purposes of explaining
the file layouts and the format of the magnetic tapes generally
containing such computer records on the computer system of the
Mortgages Trustee or such nominee.
19.5 Notification of Termination Event: The Servicer shall notify the Mortgages
Trustee, each Funding Security Trustee and each Beneficiary as soon as
reasonably practicable but in any event within five (5) days of becoming
aware of any Termination Event or any event which with the giving of
notice or lapse of time or certification would constitute the same. Such
notification shall specify which event in Clause 19 (Termination) occurred
and was the cause of such Termination Event (or any event which with the
giving of notice or lapse of time or certification would constitute a
Termination Event), a description of the details of such Termination
Event, and a reference to the provision in this Agreement or the other
Transaction Documents which the Servicer has breached.
19.6 No Prejudice: Termination of this Agreement or the appointment of the
Servicer under this Agreement shall be without prejudice to the
liabilities of the Mortgages Trustee as trustee for the Beneficiaries to
the Servicer or vice versa incurred before the date of such termination.
The Servicer shall have no right of set-off or any lien in
31
respect of such amounts against amounts held by it on behalf of the
Mortgages Trustee.
19.7 Automatic Termination: This Agreement shall terminate at such time as the
Mortgages Trustee has no further interest in any of the Mortgage Loans or
the Mortgages which have been comprised in the Mortgage Portfolio.
19.8 Further Compensation: Upon resignation by, or termination of the
appointment of, the Servicer under the provisions of this Clause 19, the
Servicer shall be entitled to receive all fees and other monies accrued up
to the date of resignation or termination, as the case may be, but shall
not be entitled to any other or further compensation. Such monies so
receivable by the Servicer shall be paid by the Mortgages Trustee on the
dates on which they would otherwise have fallen due hereunder. For the
avoidance of doubt, such resignation or termination shall not affect the
Servicer's rights to receive payment of all amounts (if any) due to it
from the Mortgages Trustee other than under this Agreement.
19.9 Co-operation: Prior to termination of this Agreement, the Servicer, the
Seller, the Mortgages Trustee and the Funding Beneficiaries shall
co-operate to obtain the agreement of the Borrowers to a new bank mandate
permitting the Mortgages Trustee to operate the Direct Debiting Scheme.
19.10 Survival of Terms: Any provision of this Agreement which is stated to
continue after termination of the Agreement shall remain in full force and
effect notwithstanding termination.
19.11 No Supervision: Neither Funding Security Trustee shall be obliged to
monitor or supervise the performance by any substitute Servicer of its
duties hereunder or in relation to the other Transaction Documents, nor
shall the Funding Security Trustees be responsible or liable for any act
or omission of such substitute Servicer or for any loss caused thereby.
20. Further Assurances
20.1 Co-operation: The parties hereto agree that they will co-operate fully to
do all such further acts and things and execute any further documents as
may be necessary or desirable to give full effect to the arrangements
contemplated by this Agreement.
20.2 Powers of Attorney: Without prejudice to the generality of Clause 20.1
(Co-Operation) herein, the Mortgages Trustee as trustee for the
Beneficiaries shall upon request by the Servicer forthwith give to the
Servicer such further powers of attorney or other written authorisations,
mandates or instruments as are necessary to enable the Servicer to perform
the Services.
20.3 Notice to Rating Agencies: In the event that there is any change in the
identity of the Mortgages Trustee or an additional Mortgages Trustee is
appointed, the remaining Mortgages Trustee and/or the retiring Mortgages
Trustee, as the case may be, shall execute such documents with any other
parties to this Agreement and take such actions as such new Mortgages
Trustee may reasonably require for the purposes of vesting in such new
Mortgages Trustee the rights of the Mortgages Trustee under this Agreement
and releasing the retiring Mortgages Trustee from further obligations
32
thereunder and while any Note remains outstanding shall give notice
thereof to the Rating Agencies.
20.4 No Obligations: Nothing herein contained shall impose any obligation or
liability on the Mortgages Trustee to assume or perform any of the
obligations of the Servicer hereunder or render it liable for any breach
hereof.
21. Miscellaneous
21.1 Insufficient Funds: Subject to Clause 21.2 (Reduction of Fees) herein, in
the event that the funds available to the Mortgages Trustee on any
Distribution Date are not sufficient to satisfy in full the aggregate
amount payable to the Servicer by the Mortgages Trustee on such
Distribution Date then the amount payable to the Servicer on such
Distribution Date shall be reduced by the amount of the shortfall and such
shortfall shall (subject always to the provisions of this Clause 21) be
payable on the immediately succeeding Distribution Date.
21.2 Reduction of Fees: In the event that:
(a) after redemption in full of the Intercompany Loans; or
(b) after service of an Intercompany Loan Enforcement Notice and payment
of all other prior claims,
the remaining sums available to the Mortgages Trustee or remaining
proceeds of enforcement are insufficient to satisfy in full the
outstanding fees or other claims of the Servicer, such fees shall be
reduced by the amount of the deficiency.
21.3 Set-Off: Each of the Seller and the Servicer agrees that it will not:
(a) set off or purport to set off any amount which the Mortgages
Trustee, each Funding Beneficiary or each Issuer is or will become
obliged to pay to it under any of the Transaction Documents against
any amount from time to time standing to the credit of or to be
credited to any Collection Account, any Mortgages Trustee Bank
Account, any Funding Bank Account, any Funding 2 Bank Account, any
Issuer Transaction Account or in any other account prior to transfer
to any Collection Account, any Mortgages Trustee Bank Account, any
Funding Bank Account, any Funding 2 Bank Account or any Issuer
Transaction Account, as appropriate; or
(b) make or exercise any claims or demands, any rights of counterclaim
or any other equities against or withhold payment of any and all
sums of money which may at any time and from time to time be
standing to the credit of any Collection Account, any Mortgages
Trustee Bank Account, any Funding Bank Account, any Funding 2 Bank
Account or any Issuer Transaction Account.
21.4 No Petition: The Servicer agrees that for so long as any Notes of any
Issuer are outstanding it will not petition nor commence proceedings for
the administration or winding up of the Mortgages Trustee, any Funding
Beneficiary or any Issuer nor participate in any ex parte proceedings with
regard thereto.
21.5 Limited Recourse: In relation to all sums due and payable by the Mortgages
Trustee
33
to the Servicer, the Servicer agrees that it shall have recourse only to
sums paid to or received by (or on behalf of) the Mortgages Trustee
pursuant to the provisions of the Mortgage Sale Agreement, the other
Transaction Documents and in relation to the Mortgages.
21.6 No Prejudice: For the avoidance of doubt, no Beneficiary shall be liable
to pay any amounts due under Clauses 11 (Costs and Expenses) or 13
(Remuneration) herein without prejudice to the obligations of the
Mortgages Trustee in respect of such amounts.
21.7 Termination: Notwithstanding any other provisions of this Agreement:
(a) all obligations to, and rights of, Funding under or in connection
with this Agreement (other than its obligations under Clause 22
(Confidentiality) herein) shall automatically terminate upon the
discharge in full of all amounts owing by it under any Funding
Intercompany Loan Agreement, provided that this shall be without
prejudice to any claims in respect of such obligations and rights
arising on or prior to such date; and
(b) all obligations to, and rights of, Funding 2 under or in connection
with this Agreement (other than its obligations under Clause 22
(Confidentiality) herein) shall automatically terminate upon the
discharge in full of all amounts owing by it under any Funding 2
Intercompany Loan Agreement provided that this shall be without
prejudice to any claims in respect of such obligations and rights
arising on or prior to such date.
22. Confidentiality
From the date of this Agreement and notwithstanding its termination, each
of the Mortgages Trustee and the Beneficiaries shall use its best
endeavours not to disclose to any person whatsoever any information
relating to the business, finances or other matters of a confidential
nature of any other party hereto of which it may by virtue of being party
to the Transaction Documents have become possessed and shall use all
reasonable endeavours to prevent any such disclosure as aforesaid,
provided however that the provisions of this Clause 22 shall not apply:
(a) to any information already known to the Mortgages Trustee or the
Beneficiaries otherwise than as a result of entering into any of the
Transaction Documents;
(b) to any information subsequently received by the Mortgages Trustee or
the Beneficiaries which it would otherwise be free to disclose;
(c) to any information which is or becomes public knowledge otherwise
than as a result of the conduct of the Mortgages Trustee or the
Beneficiaries;
(d) to the extent that any of the Mortgages Trustee or the Beneficiaries
is required to disclose the same pursuant to any Transaction
Document, pursuant to any law or order of any court or pursuant to
any direction, request or requirement (whether or not having the
force of law) of any central bank or any
34
governmental or other authority (including, without limitation, any
official bank examiners or regulators);
(e) to the extent that any of the Mortgages Trustee or the Beneficiaries
needs to disclose the same for determining the existence of, or
declaring, an Intercompany Loan Event of Default or a Termination
Event, the protection or enforcement of any of its rights under any
of the Transaction Documents or in connection herewith or therewith
or for the purpose of discharging, in such manner as it thinks fit,
its duties under or in connection with such agreements in each case
to such persons as require to be informed of such information for
such purposes; or
(f) in relation to any information disclosed to the professional
advisers of the Mortgages Trustee or the Beneficiaries or (in
connection with the review of current ratings of the Notes of any
Issuer or with a prospective rating of any debt to be issued by an
Issuer) to any credit rating agency or any prospective new Servicer
or Mortgages Trustee.
23. No Partnership
It is hereby acknowledged and agreed by the parties that nothing in this
Agreement shall be construed as giving rise to any partnership between
any of the parties.
24. Assignment
24.1 Consent: The Mortgages Trustee may not assign or transfer any of its
rights and obligations under this Agreement without the prior written
consent of each of the Beneficiaries.
24.2 Agreement: The Servicer may not assign or transfer any of its rights or
obligations under this Agreement (a) without the prior written consent of
the Mortgages Trustee (as trustee for the Beneficiaries) and each of the
Beneficiaries and (b) other than to a person who agrees to be bound by the
provisions contained in Clause 5 of the Funding Deed of Charge and Clause
5 of the Funding 2 Deed of Charge as if such person had been named as an
original party thereto in place of Northern Rock but without prejudice to
their obligations under such Clause.
24.3 Assignment of Rights to Security Trustee: The Servicer acknowledges that
Funding has assigned its rights under this Agreement to the Security
Trustee pursuant to the Funding Deed of Charge and acknowledges that
pursuant to the terms of the Funding Deed of Charge, Funding has, inter
alia, authorised the Security Trustee, following the Funding Security
becoming enforceable, to exercise, or refrain from exercising, all of
Funding's rights, powers, authorities, discretions and remedies under or
in respect of the Funding Transaction Documents, including this Agreement,
in such manner as in the Security Trustee's absolute discretion it shall
think fit.
24.4 Assignment of Rights to Funding 2 Security Trustee: The Servicer
acknowledges that Funding 2 has assigned its rights under this Agreement
to the Funding 2 Security Trustee pursuant to the Funding 2 Deed of Charge
and acknowledges that pursuant to the terms of the Funding 2 Deed of
Charge, Funding 2 has, inter alia, authorised the Funding 2 Security
Trustee, following the Funding 2 Security becoming enforceable,
35
to exercise, or refrain from exercising, all of Funding 2's rights,
powers, authorities, discretions and remedies under or in respect of the
Funding 2 Transaction Documents, including this Agreement, in such manner
as in the Funding 2 Security Trustee's absolute discretion it shall think
fit.
25. Security Trustee; Authorised Third Party
25.1 Vesting of Rights: If there is any change in the identity of the security
trustee in accordance with the Funding Deed of Charge, the Servicer, the
Seller, each Funding Beneficiary, the Funding 2 Security Trustee and the
Mortgages Trustee shall execute such documents and take such action as the
successor security trustee and the outgoing security trustee may
reasonably require for the purpose of vesting in the successor security
trustee the rights and obligations of the outgoing security trustee under
this Agreement and releasing the outgoing security trustee from its future
obligations under this Agreement. If there is any change in the identity
of the security trustee in accordance with the Funding 2 Deed of Charge,
the Servicer, the Seller, each Funding Beneficiary, the Security Trustee
and the Mortgages Trustee shall execute such documents and take such
action as the successor security trustee and the outgoing security trustee
may reasonably require for the purpose of vesting in the successor
security trustee the rights and obligations of the outgoing security
trustee under this Agreement and releasing the outgoing security trustee
from its future obligations under this Agreement.
25.2 No Assumption: It is hereby acknowledged and agreed that by its execution
of this Agreement, each Funding Security Trustee shall not assume or have
any of the obligations or liabilities of the Servicer, the Seller, each
Funding Beneficiary, the Mortgages Trustee or the other Funding Security
Trustee under this Agreement. Furthermore, any liberty or power which may
be exercised or any determination which may be made hereunder by each
Funding Security Trustee may, subject to the terms of the Funding
Beneficiary Deed:
(a) in relation to the Security Trustee, be exercised or made in the
Security Trustee's absolute discretion without any obligation to
give reasons therefor, but in any event must be exercised or made in
accordance with the provisions of the Funding Deed of Charge and
Schedule 4 (Authorised Third Party) hereto;
(b) in relation to the Funding 2 Security Trustee, be exercised or made
in the Funding 2 Security Trustee's absolute discretion without any
obligation to give reasons therefor, but in any event must be
exercised or made in accordance with the provisions of the Funding 2
Deed of Charge and Schedule 4 (Authorised Third Party) hereto.
25.3 Delegation: Each Funding Security Trustee may delegate the performance of
all or any of its powers and obligations under all or any of the Operating
Agreements pursuant to the terms of Schedule 4 (Authorised Third Party) of
this Agreement and subject always to the provisions of the Funding Deed of
Charge or the Funding 2 Deed of Charge (as applicable) and the Funding
Beneficiary Deed.
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26. New Intercompany Loan Agreements
On each occasion that a Funding Beneficiary enters into an Intercompany
Loan Agreement or is the recipient of a loan advance under an Intercompany
Loan Agreement, then the Servicer, the Seller, each Funding Beneficiary,
each Funding Security Trustee and the Mortgages Trustee shall execute such
documents and take such action as may be necessary or required by the
Rating Agencies for the purpose of including the relevant Issuer, any Swap
Provider, any Start-up Loan Provider and any other person who has executed
an Accession Undertaking or any such Intercompany Loan Agreement in the
Transaction Documents or to take account of such Intercompany Loan or loan
advance.
27. Non Petition Covenant; Limited Recourse
27.1 Non Petition Covenant: Each of the parties hereto (except for, in the case
of Funding, the Security Trustee and, in the case of Funding 2, the
Funding 2 Security Trustee) hereby agrees that it shall not institute
against any Funding Beneficiary or the Mortgages Trustee any winding-up,
administration, insolvency or similar proceedings so long as any sum is
outstanding under any Intercompany Loan Agreement of any Issuer or for two
years plus one day since the last day on which any such sum was
outstanding.
27.2 Limited Recourse: Each of the parties hereto agrees that:
(a) in relation to the Mortgages Trustee, any amount payable by the
Mortgages Trustee to any other party to this Agreement under this
Agreement not being an amount payable out of the Trust Property in
accordance with the terms of the Mortgages Trust Deed shall only be
payable to the extent that on that date the Mortgages Trustee has
sufficient funds to pay such amount out of fees paid to it under the
Mortgages Trust Deed; and
(b) in relation to Funding:
(i) only the Security Trustee may enforce the security created in
favour of the Security Trustee under the Funding Deed of
Charge in accordance with the provisions thereof;
(ii) notwithstanding any other provision of this Agreement or any
other Transaction Document, no sum due or owing to any party
to this Agreement from or by Funding under this Agreement
shall be payable by Funding except to the extent that Funding
has sufficient funds available or (following enforcement of
the Funding Security) the Security Trustee has realised
sufficient funds from the Funding Security to pay such sum
subject to and in accordance with the relevant Funding
Priority of Payments and provided that all liabilities of
Funding required to be paid in priority thereto or pari passu
therewith pursuant to such Funding Priority of Payments have
been paid, discharged and/or otherwise provided for in full;
and
(iii) it shall not take any steps for the purpose of recovering any
amount payable by Funding or enforcing any rights arising out
of this
37
Agreement against Funding otherwise than in accordance with
the Funding Deed of Charge.
(c) in relation to Funding 2:
(i) only the Funding 2 Security Trustee may enforce the security
created in favour of the Funding 2 Security Trustee under the
Funding 2 Deed of Charge in accordance with the provisions
thereof;
(ii) notwithstanding any other provision of this Agreement or any
other Transaction Document, no sum due or owing to any party
to this Agreement from or by Funding 2 under this Agreement
shall be payable by Funding 2 except to the extent that
Funding 2 has sufficient funds available or (following
enforcement of the Funding 2 Security) the Funding 2 Security
Trustee has realised sufficient funds from the Funding 2
Security to pay such sum subject to and in accordance with the
relevant Funding 2 Priority of Payments and provided that all
liabilities of Funding 2 required to be paid in priority
thereto or pari passu therewith pursuant to such Funding 2
Priority of Payments have been paid, discharged and/or
otherwise provided for in full; and
(iii) it shall not take any steps for the purpose of recovering any
amount payable by Funding 2 or enforcing any rights arising
out of this Agreement against Funding 2 otherwise than in
accordance with the Funding 2 Deed of Charge.
27.3 Corporate Obligations: To the extent permitted by law, no recourse under
any obligation, covenant, or agreement of any person contained in this
Agreement shall be had against any shareholder, officer or director of
such person as such, by the enforcement of any assessment or by any legal
proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that this Agreement is a corporate obligation of
each person expressed to be a party hereto and no personal liability shall
attach to or be incurred by the shareholders, officers, agents or
directors of such person as such, or any of them, under or by reason of
any of the obligations, covenants or agreements of such person contained
in this Agreement, or implied therefrom, and that any and all personal
liability for breaches by such person of any of such obligations,
covenants or agreements, either under any applicable law or by statute or
constitution, of every such shareholder, officer, agent or director is
hereby expressly waived by each person expressed to be a party hereto as a
condition of and consideration for the execution of this Agreement.
28. Amendments and Waiver
28.1 Entire Agreement: This Agreement sets out the entire agreement and
understanding between the parties with respect to the subject matter of
this Agreement superseding all prior oral or written understandings other
than the other Transaction Documents.
28.2 Amendments and Waiver: No amendment or waiver of any provision of this
Agreement nor consent to any departure by any of the parties therefrom
shall in any event be effective unless the same shall be in writing and
signed by each of the parties hereto. In the case of a waiver or consent,
such waiver or consent shall be effective
38
only in the specific instance and as against the party or parties giving
it for the specific purpose for which it is given.
28.3 Rights Cumulative: The respective rights of each of the parties to this
Agreement are cumulative and may be exercised as often as they consider
appropriate. No failure on the part of any party to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right preclude any other
or further exercise thereof or the exercise of any other right. The
remedies in this Agreement are cumulative and not exclusive of any
remedies provided by law.
28.4 Variation or Waiver: No variation or waiver of this Agreement shall be
made if the same would adversely affect the then current ratings of any of
the Notes.
29. Notices
Any notices or other communication or document to be given or delivered
pursuant to this Agreement to any of the parties hereto shall be
sufficiently served if sent by prepaid first class post, by hand or by
facsimile transmission and shall be deemed to be given (in the case of
facsimile transmission) when despatched or (where delivered by hand) on
the day of delivery if delivered before 17.00 hours on a London Business
Day or on the next London Business Day if delivered thereafter or (in the
case of first class post) when it would be received in the ordinary course
of the post and shall be sent:
(a) in the case of the Servicer and the Seller, to Northern Rock PLC,
Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL
(facsimile number: 0191 213 2203) for the attention of the Group
Secretary;
(b) in the case of the Mortgages Trustee, to Granite Finance Trustees
Limited, c/o 22 Grenville Street, St. Helier, Jersey JE4 8PX,
Channel Islands (facsimile number 01534 609 333) for the attention
of the Company Secretary;
(c) in the case of Funding, to Granite Finance Funding Limited, 8th
Floor, 68 King William Street, London EC4N 7DZ (facsimile number 020
7469 8199) for the attention of the Company Secretary;
(d) in the case of the Security Trustee, to The Bank of New York, 40th
Floor, One Canada Square, London E14 5AL (facsimile number 020 7964
4637) for the attention of the Trustee Administration Manager;
(e) in the case of Funding 2, to Granite Finance Funding 2 Limited at
Fifth Floor, 100 Wood Street, London, EC2V 7EX (facsimile number 020
7606 0643) for the attention of the Company Secretary (with a copy
to the Seller in accordance with (a) above);
(f) in the case of the Funding 2 Security Trustee, to The Bank of New
York, 40th Floor, One Canada Square, London, E14 5AL (facsimile
number 020 7964 4637) for the attention of the Trustee
Administration Manager;
39
(g) in the case of Fitch, to Fitch Ratings Ltd., at Eldon House, 2 Eldon
Street, London EC2M 7UA (facsimile number 020 7417 6262) for the
attention of European Structured Finance Surveillance;
(h) in the case of Moody's, to Moody's Investors Services, Inc., at 1st
Floor, 2 Minster Court, Mincing Lane, London EC3R 7XB (facsimile
number 020 7772 5400) for the attention of RMBS Monitoring;
(i) in the case of S&P, to Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., at Garden House, 18
Finsbury Circus, London EC2M 7NJ (facsimile number 020 7826 3598)
for the attention of Andre Vollmann;
or to such other address or facsimile number or for the attention of such
other person or entity as may from time to time be notified by any party
or by any Rating Agency to the others by written notice in accordance with
the provisions of this Clause 29. All notices served under this Agreement
shall be simultaneously copied to each Funding Security Trustee by the
person serving the same.
30. Third Party Rights
A person who is not a party to this Agreement may not enforce any of its
terms under the Contracts (Rights of Third Parties) Act 1999, but this
shall not affect any right or remedy of a third party which exists or is
available apart from that Act.
31. Execution in Counterparts; Severability
31.1 Counterparts: This Agreement may be executed in any number of counterparts
(manually or by facsimile) and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the
same instrument.
31.2 Severability: Where any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations under this Agreement, or of such provision or obligation in
any other jurisdiction, shall not be affected or impaired thereby.
32. Governing Law and Submission to Jurisdiction
32.1 Governing Law: This Agreement is governed by, and shall be construed in
accordance with, English law.
32.2 Submission to Jurisdiction: Each of the parties hereto irrevocably agrees
that the courts of England shall have jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may
arise out of or in connection with this Agreement and, for such purposes,
irrevocably submits to the jurisdiction of such courts.
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33. Process Agent
The Mortgages Trustee irrevocably and unconditionally appoints Mourant &
Co. Capital (SPV) Limited at 8th Floor, 68 King William Street, London
EC4N 7DZ or otherwise at its registered office for the time being as its
agent for service of process in England in respect of any proceedings in
respect of this Agreement and undertakes that in the event of Mourant &
Co. Capital (SPV) Limited ceasing so to act it will appoint another person
with a registered office in London as its agent for service of process.
34. Appropriate Forum
Each of the parties hereto irrevocably waives any objection which it might
now or hereafter have to the courts of England being nominated as the
forum to hear and determine any Proceedings and to settle any disputes,
and agrees not to claim that any such court is not a convenient or
appropriate forum.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed as a
deed the day and year first before written.
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SCHEDULE 1
THE SERVICES
In addition to the Services set out in the body of the Administration Agreement,
the Servicer shall:
(a) keep records (written or computerised) and books of account for the
Mortgages Trustee in relation to the Mortgage Loans comprised in the
Mortgage Portfolio;
(b) keep records for all taxation purposes and VAT;
(c) notify relevant Borrowers of any change in their Monthly Payments;
(d) assist the auditors of the Mortgages Trustee and each Funding Beneficiary
and provide information to them upon reasonable request;
(e) provide a redemption statement to a Borrower or any person acting on the
Borrower's behalf, in each case upon written request or otherwise at the
discretion of the Servicer;
(f) notify relevant Borrowers of any other matter or thing which the
applicable Mortgage Conditions or Offer Conditions require them to be
notified of in the manner and at the time required by the relevant
Mortgage Terms;
(g) subject to the provisions of this Agreement (including, without
limitation, Clause 5.2 herein (Administration and Enforcement of
Mortgages)) take all reasonable steps to recover all sums due to the
Mortgages Trustee including without limitation by the institution of
proceedings and/or the enforcement of any Mortgage Loan comprised in the
Mortgage Portfolio or any New Mortgage Portfolio or any Related Security;
(h) take all other action and do all other things which it would be reasonable
to expect a reasonable and prudent mortgage lender to do in administering
and servicing its mortgages;
(i) keep a Mortgage Account for each Mortgage Loan which shall record all
proceeds received in respect of that Mortgage Loan and all amounts debited
to such Mortgage Account;
(j) at its discretion, prepare and send on request an annual statement to
Borrowers in relation to each calendar year in the agreed form; and
(k) assist the Cash Manager in the preparation of the reports substantially in
the form set out in the Cash Management Agreement.
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SCHEDULE 2
FORM OF INVESTORS' MONTHLY REPORT
[On file with the Servicer]
43
SCHEDULE 3
SERVICER REPRESENTATIONS AND WARRANTIES
The Servicer makes the following representations and warranties to the Mortgages
Trustee, each Funding Beneficiary and each Funding Security Trustee:
1. Status: It is a public limited company duly incorporated, validly existing
and registered under the laws of the jurisdiction in which it is
incorporated, capable of being sued in its own right and not subject to
any immunity from any proceedings, and it has the power to own its
property and assets and to carry on its business as it is being conducted.
2. Powers and authority: It has the power to enter into, perform and deliver,
and has taken all necessary corporate and other action to authorise the
execution, delivery and performance by it of each of the Transaction
Documents to which it is or will be a party, and each such Transaction
Document has been duly executed and delivered by it.
3. Legal validity: Each Transaction Document to which it is or will be a
party constitutes or when executed in accordance with its terms will
constitute its legal, valid and binding obligation.
4. Non-conflict: The execution by it of each of the Transaction Documents to
which it is a party and the exercise by it of its rights and the
performance of its obligations under such Transaction Documents will not:
(a) result in the existence or imposition of, nor oblige it to create,
any Security Interest in favour of any person over all or any of its
present or future revenues or assets;
(b) conflict with any document which is binding upon it or any of its
assets;
(c) conflict with its constitutional documents; or
(d) conflict with any law, regulation or official or judicial order of
any government, governmental body or court, domestic or foreign,
having jurisdiction over it.
5. No litigation: It is not a party to any material litigation, arbitration
or administrative proceedings and, to its knowledge, no material
litigation, arbitration or administrative proceedings are pending or
threatened against it.
6. Consents and Licences: All governmental consents, licences and other
approvals, permissions and authorisations required by it (in its capacity
as Servicer) in connection with the entry into, performance, validity and
enforceability of, and the transactions contemplated by, the Transaction
Documents have been obtained or effected (as appropriate) and are in full
force and effect.
7. Solvency: No Insolvency Event has occurred in respect of the Servicer, and
the Servicer is not insolvent.
44
8. Financial Statements: The most recent financial statements of the
Servicer:
(a) were prepared in accordance with accounting principles generally
accepted in England and Wales consistently applied;
(b) disclose all liabilities (contingent or otherwise) and all
unrealised and or anticipated losses of the Servicer; and
(c) save as disclosed therein, give a true and fair view of the
financial condition and operations of the Servicer during the
relevant financial year.
9. No Adverse Change: Since the date as of which the most recent financial
statements of the Servicer were stated to be prepared, there has been:
(a) no significant change in the financial position of the Servicer; and
(b) no material adverse change in the financial position or prospects of
the Servicer.
10. Ranking of Claims
Under the laws of England and Wales in force as at the date of making this
representation, claims against the Servicer under the Transaction
Documents will rank at least pari passu with the claims of all its other
unsecured and unsubordinated creditors, save those whose claims are
preferred solely by any bankruptcy, liquidation or other similar laws of
general application.
11. Information in Prospectus and Reg S Prospectus:
(a) All information in the Prospectus and the Reg S Prospectus with
regard to the Servicer, its business and its experience in
administering and servicing mortgage loans (including its arrears
and repossession experience) are true and accurate in all material
respects and not misleading in any material respect.
(b) Any opinions, predictions and intentions expressed in the Prospectus
and/or the Reg S Prospectus on the part of the Servicer are honestly
held and not misleading in any material respect.
(c) Each of the Prospectus and the Reg S Prospectus does not omit to
state any material fact necessary to make such information,
opinions, predictions or intentions not misleading in any material
respect.
(d) The Servicer has made all proper inquiries to ascertain and to
verify the foregoing.
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SCHEDULE 4
AUTHORISED THIRD PARTY
1. Agreement to Allow Delegation
1.1. The Seller and the Servicer agree (subject to the other provisions of this
Schedule, including paragraph 2 (Appointment and Payment) and subject to
the Funding Deed of Charge or the Funding 2 Deed of Charge, as applicable)
that a Funding Security Trustee may appoint or facilitate the appointment
of an Authorised Third Party to implement, administer and carry out the
duties and powers of such Funding Security Trustee:
(a) under the Seller's Power of Attorney;
(b) in connection with and following a Completion Event; and
(c) in connection with and following a Termination Event,
(together the "Back-up Functions").
1.2. Each of the Seller and the Servicer shall authorise such Authorised Third
Party on their behalf and in their name or otherwise to sign or execute or
make any alteration or addition or deletion in or to any agreements or
documents or certificates or instructions or notices which they are
entitled or required to give, receive, implement, transact or become a
party to in relation to the Back-up Functions or for doing any other act
or thing required to be done by them under or in connection with the
Back-up Functions and otherwise generally to sign, seal and deliver any
agreement, assurance, document, certificate, instruction or act which may
be required by such Authorised Third Party acting in connection with the
Back-up Functions.
2. Appointment and Payment
The appointment of such Authorised Third Party shall be on the terms and
conditions as negotiated between the relevant Funding Security Trustee,
the Seller and/or the Servicer (as the case may be) and such Authorised
Third Party. The fees, costs and expenses payable to such Authorised Third
Party shall be considered as part of the additional remuneration and
expenses of the relevant Funding Security Trustee and therefore shall be
payable in the manner contemplated, in the case of the Security Trustee,
by and in accordance with Clause 18 of the Funding Deed of Charge from
funds that the Security Trustee receives in accordance with the Funding
Priority of Payments and in the case of the Funding 2 Security Trustee, by
and in accordance with Clause 17 of the Funding 2 Deed of Charge from
funds that the Funding 2 Security Trustee receives in accordance with the
Funding 2 Priority of Payments.
3. Delegation
3.1. On the appointment by a Funding Security Trustee of one or more persons to
act as an Authorised Third Party in respect of its Back-up Functions (on
any terms other than the power to appoint a delegate), references in the
Operating Agreements to the
46
"Security Trustee" or the "Funding 2 Security Trustee" (as applicable)
shall be construed accordingly and, unless the context does not permit,
include such Authorised Third Party. The appointment of such Authorised
Third Party may be revoked by the Funding Security Trustee at any time.
3.2. In the event that a Funding Security Trustee has not, having used such
reasonable endeavours, appointed such Authorised Third Party, such Funding
Security Trustee shall have no liability to any person and,
notwithstanding any other provision of the Operating Agreements, shall not
itself be required to perform any Back-up Functions or any other duties of
the Seller or the Servicer either during the period it is seeking to
appoint an Authorised Third Party or thereafter.
3.3. As conditions precedent to the appointment of such Authorised Third Party,
the arrangements to be entered into between such Authorised Third Party
and the Seller or Servicer (as the case may be) shall provide that (1) the
Authorised Third Party shall make timely transfer of information to the
Seller or Servicer (as appropriate); and (2) each Funding Security Trustee
shall provide any Authorised Third Party appointed by it hereunder with a
copy of the Operating Agreements and, where the Security Trustee is the
Funding Security Trustee, the Funding Deed of Charge or, where the Funding
2 Security Trustee is the Funding Security Trustee, the Funding 2 Deed of
Charge, and shall request such Authorised Third Party to confirm in
writing to the Seller, the Servicer and the relevant Funding Security
Trustee that it has read and understood the terms of this Agreement and
the other Operating Agreements.
4. Ratification
Each of the Seller and the Servicer shall, upon the written request of a
Funding Security Trustee or its Authorised Third Party, ratify and confirm
all documents, deeds, certificates, instructions, acts and things which
such Funding Security Trustee or such Authorised Third Party shall execute
or do in the exercise of any of the powers conferred, or purported to be
conferred, on him by this Agreement and the other Operating Agreements.
The terms of appointment of such Authorised Third Party shall oblige the
Authorised Third Party to provide information concerning its activities on
a regular basis and on request to:
(a) the Seller;
(b) the Servicer;
(c) where the Security Trustee is the Funding Security Trustee, Funding
and the Security Trustee; and
(d) where the Funding 2 Security Trustee is the Funding Security
Trustee, Funding 2 and the Funding 2 Security Trustee.
5. Limitations on the Responsibility of the Funding Security Trustee
A Funding Security Trustee shall not be obliged to monitor or supervise
the performance by any Authorised Third Party appointed by it hereunder of
its duties hereunder or in relation to the Operating Agreements and shall
not be responsible or liable for any act or omission of such Authorised
Third Party or for any loss caused
47
thereby, provided that if any party to a Transaction Document notifies a
Funding Security Trustee that an Authorised Third Party appointed by it is
implementing, administering or carrying out the duties and powers of that
Funding Security Trustee in breach of the terms and conditions of the
relevant Operating Agreement pursuant to which such duties and powers are
to be performed, that Funding Security Trustee shall use its reasonable
endeavours to appoint or facilitate the appointment of a substitute
Authorised Third Party to implement, administer and carry out such duties
and powers. The terms of appointment of an Authorised Third Party and the
appointing Funding Security Trustee's responsibilities in relation thereto
as set out in this Schedule 4 shall apply to the appointment of a
substitute Authorised Third Party. Nothing in this Schedule constitutes a
Funding Security Trustee in its role as specified in this schedule as
trustee or fiduciary for any person. Each Funding Security Trustee shall
assume, until it receives notice thereof pursuant to the relevant
Operating Agreement, that no Back-up Trigger Event has occurred and until
such time that it receives such notification and is first indemnified
and/or secured to its satisfaction, is not entitled to take any action in
respect of the Back-up Functions under the Operating Agreements.
6. Exoneration
6.1. Without limiting paragraph 6.2 below, each Funding Security Trustee shall
not be liable to any Person for any action taken or not taken by it or its
Authorised Third Party under or in connection with the Operating
Agreements, other than in respect of any loss, liability, claim, expense
or damage suffered or incurred by such Person in respect of the gross
negligence or wilful default of the Funding Security Trustee or such
Authorised Third Party in carrying out its functions under the relevant
Operating Agreement.
6.2. No Person may take any proceedings against any officer, employee or agent
of a Funding Security Trustee in respect of any claim it might have
against such Funding Security Trustee in respect of any act or omission of
any kind by their officer, employee or agent.
7. Controlling Beneficiary Deed
The rights and powers in respect of a Funding Security Trustee which have
been delegated to an Authorised Third Party hereunder shall be delegated
subject to the terms of the Funding Beneficiary Deed.
48
SCHEDULE 5
MINIMUM SERVICING STANDARDS
The following list sets forth (i) certain of the Services provided for in the
body of the Administration Agreement and (ii) certain of the functions required
of the Cash Manager under the terms of the Cash Management Agreement, which
together are known as the "minimum servicing standards" for purposes of Clause
5.7(b) (Independent Auditors' Annual Servicer Compliance Certificate) of the
Administration Agreement.
1. (Maintain records) keep and maintain records in relation to the Mortgage
Portfolio on a Mortgage Loan by Mortgage Loan basis for the purposes of
identifying amounts paid by each Borrower, any amount due from a Borrower
and the balance from time to time outstanding on a Borrower's account
(5.3).
2. (Collections) using reasonable endeavours credit all monthly payments made
by a Borrower to the relevant Collection Account within three (3) London
Business Days of receipt (5.1).
3. (Qualifications and compliance of laws) maintain all licences, approvals,
authorisations and consents necessary in connection with the Servicer's
performance of its obligations under the Administration Agreement and not
knowingly to fail to comply with any legal requirements in the performance
of those obligations. (17.1(d) and (e)).
4. (Enforcement) in relation to any default by a Borrower in relation to a
Mortgage Loan or a Mortgage, enforce the terms of such Mortgage Loan or
Mortgage in accordance with the Enforcement Procedures and as otherwise
provided in the Administration Agreement (5.2).
5. (Insurance) (a) administer the arrangements for insurance in which the
Mortgages Trustee or the Seller has an interest (14.1); (b) not knowingly
take or omit to take any action that could result in avoidance,
termination or invalidity of any Insurance Policy in relation to any
Mortgage Loans and Mortgages or reduce the amount payable on any claim
made on behalf of the Mortgage Trustees under any Insurance Policy (14.2);
(c) prepare and submit any claim under the Insurance Policies in
accordance with their terms (14.3); and (d) use reasonable endeavours to
credit all proceeds received under any Insurance Policy to the relevant
Collection Account within three (3) London Business Days of such receipt
(14.4).
6. (Determination of interest rates) (a) determine the Standard Variable Rate
chargeable to Borrowers from time to time and the Existing Borrowers'
Re-Fix Rate in accordance with section 4.1 of the Administration
Agreement; and (b) take all steps necessary pursuant to the relevant
Mortgage Conditions or applicable law to bring such change in the Standard
Variable Rate to the attention of the relevant borrowers and notify
details of such change to the Mortgages Trustee, the Security Trustee, the
Funding 2 Security Trustee and the Beneficiaries (4.2).
49
7. (Provision of information) provide such information from its records in
relation to the Mortgage Loans to the Mortgages Trustee, Funding, Funding
2, the Security Trustee or the Funding 2 Security Trustee at any time upon
reasonable notice, subject to the conditions set forth in the
Administration Agreement (5.3).
8. (Access to books and records) permit the Mortgages Trustee, Funding,
Funding 2 (and their auditors), the Security Trustee and the Funding 2
Security Trustee and any other person nominated by the beneficiaries (to
whom the Servicer has no reasonable objection) upon reasonable notice
during normal office hours to have access to all books of record and
account (including Title Deeds and Mortgage Loan Files) relating to the
administration of the Mortgage Loans and the Related Security, subject to
applicable law and the conditions set forth in the Administration
Agreement (12.3).
9. (Custody of records) keep the Mortgage Loan Files relating to the Mortgage
Portfolio in safe custody and shall take appropriate technical and
organisational measures against the unauthorised or unlawful processing of
personal data and against accidental loss or destruction of, or damage to,
personal data. The Servicer shall maintain in an adequate form such
records as are necessary to enforce each Mortgage comprised in the
Mortgage Portfolio and, where relevant, any other Related Security. The
Servicer shall keep the Mortgage Loan Files in relation to the Mortgage
Portfolio in such a way that they can be distinguished from information
held by the Servicer for its own behalf as mortgagee or heritable creditor
or for other third persons (12.1(a)).
10. (Ledgers)
(a) establish and maintain memorandum ledgers in the books of the
Mortgages Trustee to enable the ongoing identification and
segregation of principal, revenue, and overpayments;
(b) on a monthly basis ensure that the memorandum ledgers are reconciled
to the Mortgages Trustee Bank Accounts;
(c) establish and maintain memorandum ledgers in the books of Funding to
enable the ongoing identification and segregation of principal,
revenue and amounts constituting the Funding Reserve Fund and any
Issuer Reserve Funds and any Issuer Liquidity Reserve Funds;
(d) establish and maintain memorandum ledgers in the books of Funding 2
to enable the ongoing identification and segregation of principal,
revenue and amounts constituting the Funding 2 Reserve Fund and the
Funding 2 Liquidity Reserve Fund;
(e) on a monthly basis ensure that the memorandum ledgers are reconciled
to the Funding Bank Accounts and the Funding 2 Bank Accounts (as
applicable); and
(f) establish and maintain ledgers in the books of Funding, Funding 2
and each Issuer to record the Intercompany Loans and, where
applicable, the Loan Tranches and subsequent payments of interest
and principal on each of the Intercompany Loans and, where
applicable, the Loan Tranches.
50
SCHEDULE 6
FORM OF ANNUAL CERTIFICATION
Re: Eight Amended and Restated Administration Agreement (as amended,
supplemented or otherwise modified from time to time, the "Administration
Agreement") dated as of 19 January, 2006, among Northern Rock plc, as
Seller and Servicer, the Mortgages Trustee, the Beneficiaries and the Bank
of New York
I, ________________________________, the _______________________ of [NAME
OF COMPANY], certify that:
(1) I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Servicer's compliance with
the servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and 15d-18
under Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Item 1122 of Regulation AB (the "Servicing Assessment"), the registered
public accounting firm's attestation report provided in accordance with
Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of
Regulation AB (the "Attestation Report"), and all servicing reports,
officer's certificates and other information relating to the servicing of
the Mortgage Loans by the Servicer during 200[ ] that were delivered by
the Servicer to the Mortgages Trustee pursuant to the Administration
Agreement (collectively, the "Servicing Information");
(2) Based on my knowledge, the Servicing Information, taken as a whole,
does not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made, in the
light of the circumstances under which such statements were made, not
misleading with respect to the period of time covered by the Servicing
Information;
(3) Based on my knowledge, all of the Servicing Information required to be
provided by the Servicer under the Administration Agreement has been
provided to the Mortgages Trustee;
(4) I am responsible for reviewing the activities performed by the
Servicer and based on my knowledge and the Compliance Statement required
in this report under Item 1123 of Regulation AB, and except as disclosed
in the Compliance Statement, the Servicing Assessment or the Attestation
Report, the Servicer has fulfilled its obligations under the Agreement in
all material respects; and
(5) The Compliance Statement, the Servicing Assessment and Attestation
Report required to be provided by the Servicer pursuant to the Agreement,
have been provided to the Mortgages Trustee. Any material instance of
noncompliance with the Servicing Criteria has been disclosed in such
reports.
51
Date: _________________________
By:
Name: ________________________________
Title: ________________________________
52
SCHEDULE 7
FORM OF SERVICING CRITERIA
TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE STATEMENT
The assessment of compliance to be delivered by the Servicer shall
address, at a minimum, the criteria identified as below as "Applicable
Servicing Criteria":
- ------------------------------------------------------------------------------------------------------------------------
Applicable
Servicing Criteria Servicing Criteria
- ------------------------------------------------------------------------------------------------------------------------
Reference Criteria
- ------------------------------------------------------------------------------------------------------------------------
General Servicing Considerations
- --------------------- -------------------------
Policies and procedures are instituted to monitor any performance or
other triggers and events of default in accordance with the transaction
1122(d)(1)(i) agreements.
- --------------------- -------------------------
If any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party's
1122(d)(1)(ii) performance and compliance with such servicing activities.
- --------------------- -------------------------
Any requirements in the transaction agreements to maintain a back-up
1122(d)(1)(iii) servicer for the mortgage loans are maintained.
- --------------------- -------------------------
A fidelity bond and errors and omissions policy is in effect on the
party participating in the servicing function throughout the reporting
period in the amount of coverage required by and otherwise in accordance
1122(d)(1)(iv) with the terms of the transaction agreements.
- --------------------- -------------------------
Cash Collection and Administration
- --------------------- -------------------------
Payments on mortgage loans are deposited into the appropriate custodial
bank accounts and related bank clearing accounts no more than two
business days following receipt, or such other number of days specified
1122(d)(2)(i) in the transaction agreements.
- --------------------- -------------------------
Disbursements made via wire transfer on behalf of an obligor or to an
1122(d)(2)(ii) investor are made only by authorized personnel.
- --------------------- -------------------------
Advances of funds or guarantees regarding collections, cash flows or
distributions, and any interest or other fees charged for such advances,
are made, reviewed and approved as specified in the transaction
1122(d)(2)(iii) agreements.
- --------------------- -------------------------
The related accounts for the transaction, such as cash reserve accounts
or accounts established as a form of overcollateralization, are
separately maintained (e.g., with respect to commingling of cash) as set
1122(d)(2)(iv) forth in the transaction agreements.
- --------------------- -------------------------
Each custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes of
this criterion, "federally insured depository institution" with respect
to a foreign financial institution means a foreign financial institution
that meets the requirements of Rule 13k-1(b)(1) of the Securities
1122(d)(2)(v) Exchange Act.
- --------------------- -------------------------
53
- ------------------------------------------------------------------------------------------------------------------------
Applicable
Servicing Criteria Servicing Criteria
- ------------------------------------------------------------------------------------------------------------------------
Reference Criteria
- ------------------------------------------------------------------------------------------------------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized access.
- --------------------- -------------------------
Reconciliations are prepared on a monthly basis for all asset-backed
securities related bank accounts, including custodial accounts and
related bank clearing accounts. These reconciliations are (A)
mathematically accurate; (B) prepared within 30 calendar days after the
bank statement cutoff date, or such other number of days specified in
the transaction agreements; (C) reviewed and approved by someone other
than the person who prepared the reconciliation; and (D) contain
explanations for reconciling items. These reconciling items are resolved
within 90 calendar days of their original identification, or such other
1122(d)(2)(vii) number of days specified in the transaction agreements.
- --------------------- -------------------------
Investor Remittances and Reporting
- --------------------- -------------------------
Reports to investors, including those to be filed with the Commission,
are maintained in accordance with the transaction agreements and
applicable Commission requirements. Specifically, such reports (A) are
prepared in accordance with timeframes and other terms set forth in the
transaction agreements; (B) provide information calculated in accordance
with the terms specified in the transaction agreements; (C) are filed
with the Commission as required by its rules and regulations; and (D)
agree with investors' or the trustee's records as to the total unpaid
1122(d)(3)(i) principal balance and number of mortgage loans serviced by the Servicer.
- --------------------- -------------------------
Amounts due to investors are allocated and remitted in accordance with
timeframes, distribution priority and other terms set forth in the
1122(d)(3)(ii) transaction agreements.
- --------------------- -------------------------
Disbursements made to an investor are posted within two business days to
the Servicer's investor records, or such other number of days specified
1122(d)(3)(iii) in the transaction agreements.
- --------------------- -------------------------
Amounts remitted to investors per the investor reports agree with
1122(d)(3)(iv) cancelled checks, or other form of payment, or custodial bank statements.
- --------------------- -------------------------
Pool Asset Administration
- --------------------- -------------------------
Collateral or security on mortgage loans is maintained as required by
1122(d)(4)(i) the transaction agreements or related mortgage loan documents.
- --------------------- -------------------------
Mortgage loan and related documents are safeguarded as required by the
1122(d)(4)(ii) transaction agreements.
- --------------------- -------------------------
Any additions, removals or substitutions to the asset pool are made,
reviewed and approved in accordance with any conditions or requirements
1122(d)(4)(iii) in the transaction agreements.
- --------------------- -------------------------
Payments on mortgage loans, including any payoffs, made in accordance
with the related mortgage loan documents are posted to the Servicer's
obligor records maintained no more than two business days after receipt,
or such other number of days specified in the transaction agreements,
and allocated to principal, interest or other items (e.g., escrow) in
1122(d)(4)(iv) accordance with the related mortgage loan documents.
- --------------------- -------------------------
The Servicer's records regarding the mortgage loans agree with the
1122(d)(4)(v) Servicer's records with respect to an obligor's unpaid principal balance.
- --------------------- -------------------------
Changes with respect to the terms or status of an obligor's mortgage
loans (e.g., loan modifications or re-agings) are made, reviewed and
approved by authorized personnel in accordance with the transaction
1122(d)(4)(vi) agreements and related pool asset documents.
- --------------------- -------------------------
Loss mitigation or recovery actions (e.g., forbearance plans,
modifications and deeds in lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated, conducted and concluded in
accordance with the timeframes or other requirements established by the
1122(d)(4)(vii) transaction agreements.
54
- ------------------------------------------------------------------------------------------------------------------------
Applicable
Servicing Criteria Servicing Criteria
- ------------------------------------------------------------------------------------------------------------------------
Reference Criteria
- ------------------------------------------------------------------------------------------------------------------------
- --------------------- -------------------------
Records documenting collection efforts are maintained during the period
a mortgage loan is delinquent in accordance with the transaction
agreements. Such records are maintained on at least a monthly basis, or
such other period specified in the transaction agreements, and describe
the entity's activities in monitoring delinquent mortgage loans
including, for example, phone calls, letters and payment rescheduling
plans in cases where delinquency is deemed temporary (e.g., illness or
1122(d)(4)(viii) unemployment).
- --------------------- -------------------------
Adjustments to interest rates or rates of return for mortgage loans with
1122(d)(4)(ix) variable rates are computed based on the related mortgage loan documents.
- --------------------- -------------------------
Regarding any funds held in trust for an obligor (such as escrow
accounts): (A) such funds are analyzed, in accordance with the obligor's
mortgage loan documents, on at least an annual basis, or such other
period specified in the transaction agreements; (B) interest on such
funds is paid, or credited, to obligors in accordance with applicable
mortgage loan documents and state laws; and (C) such funds are returned
to the obligor within 30 calendar days of full repayment of the related
mortgage loans, or such other number of days specified in the
1122(d)(4)(x) transaction agreements.
- --------------------- -------------------------
Payments made on behalf of an obligor (such as tax or insurance
payments) are made on or before the related penalty or expiration dates,
as indicated on the appropriate bills or notices for such payments,
provided that such support has been received by the servicer at least 30
calendar days prior to these dates, or such other number of days
1122(d)(4)(xi) specified in the transaction agreements.
- --------------------- -------------------------
Any late payment penalties in connection with any payment to be made on
behalf of an obligor are paid from the servicer's funds and not charged
to the obligor, unless the late payment was due to the obligor's error
1122(d)(4)(xii) or omission.
- --------------------- -------------------------
Disbursements made on behalf of an obligor are posted within two
business days to the obligor's records maintained by the servicer, or
1122(d)(4)(xiii) such other number of days specified in the transaction agreements.
- --------------------- -------------------------
Delinquencies, charge-offs and uncollectible accounts are recognized
1122(d)(4)(xiv) and recorded in accordance with the transaction agreements.
- --------------------- -------------------------
Any external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth in
1122(d)(4)(xv) the transaction agreements.
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
[NAME OF SERVICER]
Date: ______________________
By: __________________________
Name:
Title:
55
EXECUTION PAGE
as Servicer, Seller and Beneficiary
EXECUTED for and on behalf of )
NORTHERN ROCK PLC )
by: )
- -------------------------
Name:
as Mortgages Trustee
EXECUTED for and on behalf of )
GRANITE FINANCE TRUSTEES LIMITED )
by: )
- -------------------------
Name:
as Seller and Beneficiary
EXECUTED for and on behalf of )
NORTHERN ROCK PLC )
by: )
- -------------------------
Name:
56
as Beneficiary
EXECUTED for and on behalf of )
GRANITE FINANCE FUNDING LIMITED )
by: )
- -------------------------
Name:
as Beneficiary
EXECUTED for and on behalf of )
GRANITE FINANCE FUNDING 2 LIMITED )
by: )
- -------------------------
Name:
as Security Trustee and Funding 2 Security Trustee
EXECUTED for and on behalf of )
THE BANK OF NEW YORK )
by: )
- -------------------------
Name:
57