EXHIBIT 4.2
AMENDED AND RESTATED MORTGAGES TRUST DEED
DATED [12TH MARCH], 2004
HALIFAX PLC
AND
PERMANENT FUNDING (NO. 1) LIMITED
AND
PERMANENT MORTGAGES TRUSTEE LIMITED
AND
SFM OFFSHORE LIMITED
ALLEN & OVERY
London
CONTENTS
CLAUSE PAGE
1. Definitions and Construction........................................... 1
2. Creation of Mortgages Trust............................................ 2
3. Conditions Precedent................................................... 2
4. Acquisition by Funding 1 of an Increased Interest in the Trust
Property............................................................... 3
5. Initial Funding 1 Share and Initial Seller Share....................... 4
6. Acquisition by Seller of an Interest Relating to Capitalised
Interest............................................................... 5
7. Payment by the Seller to Funding 1 of the Amount Outstanding
under an Intercompany Loan............................................. 5
8. Adjustment of Funding 1 Share Percentage and Seller Share
Percentage on Calculation Dates........................................ 6
9. Minimum Seller Share................................................... 8
10. Allocation and Distribution of Revenue Receipts........................ 10
11. Allocation and Distribution of Principal Receipts...................... 11
12. Allocation of Losses................................................... 12
13. Funding 2 becomes a Beneficiary of the Mortgages Trust................. 13
14. Ledgers................................................................ 13
15. Costs and Expenses of the Mortgages Trustee............................ 13
16. Directions from Beneficiaries.......................................... 14
17. Transfers.............................................................. 14
18. Covenants of the Mortgages Trustee..................................... 15
19. Power to Delegate...................................................... 16
20. Powers of Investment................................................... 17
21. Other Provisions regarding the Mortgages Trustee....................... 17
22. No Retirement of Mortgages Trustee..................................... 18
23. Termination............................................................ 18
24. Further Assurances..................................................... 18
25. Amendments............................................................. 19
26. Non Petition Covenant.................................................. 19
27. No Partnership or Agency............................................... 19
28. Calculations........................................................... 19
29. No Waiver; Remedies.................................................... 19
30. Execution in Counterparts; Severability................................ 19
31. Tax.................................................................... 20
32. Confidentiality........................................................ 20
33. Exclusion of Third Party Rights........................................ 21
34. Addresses for Notices.................................................. 21
35. Governing Law and Submission to Jurisdiction........................... 21
36. Exclusion of Trustee Act 2000.......................................... 22
Signatories.................................................................. 22
THIS AMENDED AND RESTATED MORTGAGES TRUST DEED is made on [12th March], 2004
between:
(1) HALIFAX plc (registered number 2367076), a public limited company
incorporated under the laws of England and Wales whose registered office
is at Trinity Road, Halifax, West Yorkshire HX1 2RG, in its capacities as
Seller, Beneficiary and Cash Manager;
(2) PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a private
limited company incorporated under the laws of England and Wales whose
registered office is at Blackwell House, Guildhall Yard, London EC2V 5AE
in its capacity as a Beneficiary;
(3) PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116) a private
limited company incorporated under the laws of Jersey whose registered
office is at 47 Esplanade, St Helier, Jersey JE1 0BD, Channel Islands, in
its capacity as Mortgages Trustee; and
(4) SFM OFFSHORE LIMITED (registered number 76015) a private limited company
incorporated under the laws of Jersey whose registered office is at 47
Esplanade, St Helier, Jersey JE1 0BD, Channel Islands, in its capacity as
Share Trustee of the Mortgages Trustee.
WHEREAS:
(A) The Mortgages Trust was constituted by the Share Trustee of the Mortgages
Trustee in favour of Funding 1 and the Seller on the terms and subject to
the conditions set out in the Mortgages Trust Deed (as amended and/or
restated by this Deed and from time to time, the MORTGAGES TRUST DEED).
(B) The Mortgages Trustee holds the Trust Property as bare trustee for the
Beneficiaries upon, with and subject to the trusts, powers and provisions
of the Mortgages Trust Deed.
(C) The Seller carries on the business of, inter alia, originating
residential first mortgage loans to individual Borrowers in the United
Kingdom and of managing and administering such mortgage loans. The
Seller assigned the Initial Portfolio to the Mortgages Trustee on 14th
June, 2002 and (from time to time) has sold and may sell New Portfolios
to the Mortgages Trustee, pursuant to the terms of the Mortgage Sale
Agreement. The Initial Portfolio is, and any New Portfolios are and
shall be, held by the Mortgages Trustee (in relation to Scottish Loans,
in its capacity as trustee under a Scottish Declaration of Trust) on
trust for the Beneficiaries upon, with and subject to the trusts, powers
and provisions of the Mortgages Trust Deed.
(D) The parties to the Mortgages Trust Deed have agreed to amend and restate
the terms of the Mortgages Trust Deed as set out herein.
NOW THIS DEED WITNESSES:
1. DEFINITIONS AND CONSTRUCTION
1.1 The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Deed and dated [12th
March], 2004 (as the same may be amended, varied or supplemented from
time to time with the consent of the parties to this Deed) (the MASTER
DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly and specifically
incorporated into this Deed and, accordingly, the expressions defined in
the Master Definitions and Construction Schedule (as so amended, varied
or supplemented from time to time) shall,
1
except where the context otherwise requires and save where otherwise
defined herein, have the same meanings in this Deed, including the
Recitals hereto and this Deed shall be construed in accordance with the
interpretation provisions set out in CLAUSE 2 of the Master Definitions
and Construction Schedule.
1.2 This Deed amends and restates the Mortgages Trust Deed made on 13th June,
2002 as amended and restated on 6th March, 2003 and as further amended
and restated on 25th November, 2003 (the PRINCIPAL DEED). As of the date
of this Deed, any future rights or obligations (excluding such
obligations accrued to the date of this Deed) of a party under the
Principal Deed shall be extinguished and shall instead be governed by
this Deed.
2. CREATION OF MORTGAGES TRUST
2.1 INITIAL TRUST PROPERTY
On 13th June, 2002 the Share Trustee of the Mortgages Trustee settled on
trust the Initial Trust Property to be held on trust absolutely as to
both capital and income by the Mortgages Trustee for the benefit, as
tenants in common, of the Seller as to the Initial Seller Share
Percentage and Funding 1 as to the Initial Funding 1 Share Percentage.
2.2 INITIAL CLOSING TRUST PROPERTY
Pursuant to the provisions of the Mortgage Sale Agreement, the Seller
assigned the Initial Closing Trust Property to the Mortgages Trustee on
the Initial Closing Date.
2.3 FUTURE TRUST PROPERTY
From time to time and pursuant to the Mortgage Sale Agreement, the Seller
has sold and and intends to sell the Future Trust Property to the
Mortgages Trustee.
2.4 TRUST PROPERTY
Subject to CLAUSE 3, the Mortgages Trustee shall hold the Trust Property
as to both capital and income on trust absolutely for Funding 1 (as to
the Funding 1 Share) and for the Seller (as to the Seller Share) as
tenants in common upon, with and subject to all the trusts, powers and
provisions of this Deed.
3. CONDITIONS PRECEDENT
3.1 The Initial Trust Property is held by the Mortgages Trustee on the
Mortgages Trust.
3.2 The Closing Trust Property shall be held by the Mortgages Trustee on the
Mortgages Trust upon the satisfaction of the following conditions
precedent:
(a) due execution and delivery of the Mortgage Sale Agreement as
amended and restated by all parties to it;
(b) due execution and delivery of this Deed by all parties to it; and
(c) in respect of the Funding 1 Share of the Trust Property only,
payment of the Purchase Price by Funding 1 to the Seller.
3.3 The Closing Trust Property and any Future Trust Property shall be held by
the Mortgages Trustee on the Mortgages Trust subject to satisfaction of
the conditions set out in CLAUSE 4.1
2
of the Mortgage Sale Agreement for the sale of New Loans and their New
Related Security to the Mortgages Trustee.
4. ACQUISITION BY FUNDING 1 OF AN INCREASED INTEREST IN THE TRUST PROPERTY
4.1 OFFER TO PAY
On not more than 60 days' written notice nor less than 20 days' written
notice, Funding 1 may offer to make a payment to the Seller so as to
increase Funding 1's share of the Trust Property and to cause a
corresponding decrease in the Seller's share of the Trust Property on the
date specified in that notice. Such offer may only be accepted if the
following conditions precedent are satisfied on such date:
(a) no deficiency is recorded on the Principal Deficiency Ledger as at
the most recent Funding 1 Interest Payment Date;
(b) no Note Event of Default or Intercompany Loan Event of Default
shall have occurred which is continuing or unwaived as at the
relevant date;
(c) the Security Trustee is not aware that the increase in the Funding
1 Share of the Trust Property (or the corresponding decrease in
the Seller Share of the Trust Property) would adversely affect
the then current credit ratings by the Rating Agencies (or any of
them) of the Notes;
(d) the Notes have been issued by the relevant Issuer, the
subscription proceeds received on behalf of the relevant Issuer
and advanced by the relevant Issuer to Funding 1 pursuant to an
Intercompany Loan Agreement, the proceeds of which will be applied
by Funding 1 to make the payment referred to in the notice on the
relevant date;
(e) Funding 1 has entered into, if necessary, a New Start-up Loan and
a New Funding 1 Swap and adjustments have been made, if required,
to the General Reserve Fund;
(f) receipt of a solvency certificate executed by an authorised
signatory of the Seller in form and content acceptable to the
Mortgages Trustee, Funding 1 and the Security Trustee;
(g) as at the relevant date, the aggregate Outstanding Principal
Balance of Loans constituting the Trust Property, in respect of
which the aggregate amount in arrears is more than three times the
monthly payment then due, is less than 5 per cent. of the
aggregate Outstanding Principal Balance of all Loans constituting
the Trust Property;
(h) the Seller has not received written notice that the short term,
unsecured, unguaranteed and unsubordinated debt obligations of the
Seller are not rated at least P-1 by Moody's, A-1 by Standard and
Poor's and F1 by Fitch at the time of, and immediately following,
the payment made by Funding 1 on the relevant date;
(i) the product of the WAFF and WALS for the Loans constituting the
Trust Property calculated on the relevant date in the same way as
for the Initial Portfolio (or as agreed by the Servicer and the
Rating Agencies from time to time) does not exceed the product of
the WAFF and WALS for the Loans constituting the Trust Property
calculated on the most recent previous Closing Date, plus 0.25 per
cent.;
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(j) the loan-to-value ratio of Loans in the Trust Property, after
application of the LTV Test on the relevant date, does not exceed
the loan-to-value ratio (based on the LTV Test) of Loans in the
Trust Property on the most recent previous Closing Date plus 0.25
per cent.; and
(k) the General Reserve Fund has not been debited on or before the
relevant date for the purposes of curing a Principal Deficiency in
respect of the Term Advances in circumstances where the General
Reserve Fund has not been replenished by a corresponding amount by
the relevant date.
Funding 1 may not make a payment to the Seller in consideration of an
increased share of the Trust Property if, as at the relevant date, the
Step-up Date in respect of any Note has been reached and the Issuer who
issued that Note has not exercised its option to redeem that Note as at
the relevant date in accordance with the Terms and Conditions of that
Note. For the avoidance of doubt, this prohibition on Funding 1 making a
payment to the Seller in consideration of an increased share of the Trust
Property shall remain in effect only so long as any such Note remains
outstanding and, upon, its redemption, Funding 1 may again make a payment
to the Seller in consideration of an increased share of the Trust
Property.
4.2 COMPLETION OF ASSIGNMENT
If an offer is made by Funding 1 in accordance with CLAUSE 4.1 above and
that offer is accepted by the Seller, Funding 1 shall, subject to
satisfaction of the conditions precedent set out in CLAUSE 4.1 above, pay
to the Seller an amount equal to the increase in the Funding 1 share of
the Trust Property, the Funding 1 Share of the Trust Property shall
increase by a corresponding amount and the Seller Share of the Trust
Property shall decrease by the same amount.
4.3 AUDIT OF LOANS CONSTITUTING THE TRUST PROPERTY
If the short term, unsecured, unguaranteed and unsubordinated debt
obligations of the Seller fall below A-1 by Standard & Poor's, P-1 by
Moody's and/or F1 by Fitch, then the Beneficiaries shall appoint a firm
of independent auditors (approved by the Rating Agencies) to determine
whether the Loans and their Related Security (or any part of them)
constituting the Trust Property complied with the representations and
warranties set out in Schedule 1 of the Mortgage Sale Agreement as at the
date such Loans were sold to the Mortgages Trustee. The costs of such
independent auditors shall be borne by the Beneficiaries pro rata
according to their respective current percentage shares in the Trust
Property.
5. INITIAL FUNDING 1 SHARE AND INITIAL SELLER SHARE
5.1 INITIAL FUNDING 1 SHARE
The Initial Funding 1 Share of the Trust Property was
{pound-sterling}35.00 as at 13th June, 2002 and
{pound-sterling}3,500,000,035 as at the Initial Closing Date. The
Initial Funding 1 Share Percentage was the Initial Funding 1 Share
expressed as a percentage of the Trust Property as at the Initial Closing
Date, such percentage being 35 per cent.
5.2 INITIAL SELLER SHARE
The Initial Seller Share of the Trust Property was the total amount of
the Trust Property minus the Initial Funding 1 Share as at 13th June,
2002. As at the Initial Closing Date, the Initial Seller Share was
{pound-sterling}6,500,000,065 and the Initial Seller Share Percentage was
equal to
4
100 per cent. minus the Initial Funding 1 Share Percentage, such
percentage being 65 per cent.
6. ACQUISITION BY SELLER OF AN INTEREST RELATING TO CAPITALISED INTEREST
6.1 Any increase in the Outstanding Principal Balance of a Loan due to
Capitalised Interest will be allocated to the Funding 1 Share of the
Trust Property and to the Seller Share of the Trust Property, based on
respectively the Funding 1 Share Percentage and the Seller Share
Percentage in the Trust Property as calculated on the most recent
Calculation Date.
6.2 Prior to an Insolvency Event occurring in respect of the Seller, on each
Distribution Date the Seller shall make a cash payment to Funding 1 in an
amount equal to Funding 1's share of the Capitalised Interest in respect
of those Loans that are subject to Payment Holidays. As a result of
making such payment the Seller Share of the Trust Property will increase
by an amount equal to the amount paid to Funding 1 for Funding 1's Share
of the Capitalised Interest and Funding 1's Share of the Trust Property
will decrease by a corresponding amount. The cash payment shall be made
in accordance with CLAUSE 6.4 below.
6.3 If an Insolvency Event occurs in respect of the Seller, then the Seller
may acquire from Funding 1 its share of the Capitalised Interest in the
same manner as is contemplated in CLAUSE 6.2, but it is not obliged to do
so.
6.4 In respect of the cash payment to be made by the Seller pursuant to
CLAUSE 6.2, the Seller hereby directs the Mortgages Trustee to deduct
from the Seller's Share of the Mortgages Trust Available Revenue Receipts
(allocated to the Seller pursuant to CLAUSE 10.2 of this Deed) an amount
equal to such cash payment and to pay the same to Funding 1 in
satisfaction of the Seller's obligations under CLAUSE 6.2. To the extent
that the Seller's Share of the Mortgages Trust Available Revenue Receipts
is less than the amount required to be paid by it pursuant to CLAUSE 6.2,
then the Seller shall pay an amount equal to the shortfall directly to
Funding 1 from its own resources.
7. PAYMENT BY THE SELLER TO FUNDING 1 OF THE AMOUNT OUTSTANDING UNDER AN
INTERCOMPANY LOAN
7.1 CONDITIONS PRECEDENT TO ACCEPTANCE OF OFFER
On each occasion that the Seller offers to make a payment to Funding 1 of
the amount outstanding under an Intercompany Loan (referred to in this
CLAUSE 7 as the RELEVANT INTERCOMPANY LOAN), then Funding 1 may accept
that offer but only if:
(a) the Security Trustee has received written confirmation from each
of the Rating Agencies that the then current ratings of the Notes
would not be adversely affected by Funding 1 accepting the offer;
(b) Funding 1 would receive the payment from the Seller on a Funding 1
Interest Payment Date; and
(c) Funding 1 will apply the proceeds of the payment to repay the
relevant Intercompany Loan and the relevant Issuer has confirmed
to Funding 1 that on that Funding 1 Interest Payment Date it will
use the proceeds of the relevant payment to repay the
corresponding classes of Notes.
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7.2 ADJUSTMENT TO SHARES IF OFFER ACCEPTED
If Funding 1 accepts the offer as described in CLAUSE 7.1 above, then the
Funding 1 Share of the Trust Property shall decrease by an amount
corresponding to the amount paid by the Seller and the Seller Share of
the Trust Property shall increase by the same amount.
8. ADJUSTMENT OF FUNDING 1 SHARE PERCENTAGE AND SELLER SHARE PERCENTAGE ON
CALCULATION DATES
8.1 DISTRIBUTION
On each Calculation Date, excluding, for the avoidance of doubt, the
Initial Closing Date, the Funding 1 Share Percentage and the Seller Share
Percentage will be recalculated by the Cash Manager (on behalf of the
Mortgages Trustee and the Beneficiaries) based on the aggregate
Outstanding Principal Balance of the Loans constituting the Trust
Property (as adjusted from time to time) as at the close of business on
the London Business Day immediately preceding that Calculation Date. On
each Distribution Date, the Mortgages Trustee will distribute Principal
Receipts and Revenue Receipts in accordance with CLAUSES 10 and 11 hereof.
8.2 CURRENT FUNDING 1 SHARE PERCENTAGE
On each Calculation Date (the RELEVANT CALCULATION DATE) or on the date
that the Mortgages Trust terminates, the Current Funding 1 Share
Percentage will be recalculated and the recalculated amount will take
effect from the next Distribution Date. The "Current Funding 1 Share
Percentage" will be an amount, expressed as a percentage (calculated to
an accuracy of five decimal places (rounded upwards), equal to:
A - B - C + D + E + F
--------------------- x 100
G
where,
A = the Current Funding 1 Share as calculated on the immediately
preceding Calculation Date (or, in the case of the first Calculation
Date, the Initial Funding 1 Share as at the Initial Closing Date);
B = the amount of any Principal Receipts to be distributed to Funding
1 on the Distribution Date immediately following the relevant
Calculation Date in accordance with the provisions described in
CLAUSE 11 below;
C = the amount of any Losses sustained on the Loans in the period from
the last Calculation Date to the relevant Calculation Date and the
amount of any reductions occurring in respect of the Loans as
described in paragraphs to of CLAUSE 8.4(a), in each case allocated
to Funding 1 in the Calculation Period ending on the relevant
Calculation Date;
D = an amount equal to any consideration to be paid by Funding 1 to
the Seller in relation to any New Loans to be sold to the Mortgages
Trustee on the relevant Calculation Date;
E = an amount equal to any consideration to be paid by Funding 1 to
the Seller in relation to any acquisition by Funding 1 from the
Seller on the relevant Calculation Date of an interest in the Trust
Property;
6
F = an amount equal to any Capitalised Interest accruing on a Loan due
to Borrowers taking payment holidays or which has been allocated to
Funding 1 since the immediately preceding Calculation Date, less the
amount to be paid by the Seller on the relevant Distribution Date to
acquire an interest in the Trust Property in accordance with CLAUSE
6 above; and
G = the aggregate Outstanding Principal Balance of all the Loans
constituting the Trust Property as at the relevant Calculation Date
including after making the distributions, allocations and additions
referred to in (B), (C), (D), (E) and (F) above, and after taking
account of any distributions of Principal Receipts to Funding 1 and
the Seller, the amount of any Losses allocated to Funding 1 and the
Seller, the amount of any increase in the balances of the loans
constituting the Trust Property due to capitalisation of insurance
premiums due by Borrowers or Borrowers taking Payment Holidays under
Loans, the adjustments referred to in paragraphs to (inclusive) of
CLAUSE 8.4(a) below and the amount of any other additions or
subtractions to the Trust Property.
8.3 CURRENT FUNDING 1 SHARE
The "Current Funding 1 Share" will be an amount equal to:
A - B - C + D + E + F
where "A", "B", "C", "D", "E" and "F" have the meanings specified in
CLAUSE 8.2 above.
8.4 ADJUSTMENTS TO TRUST PROPERTY
(a) On each relevant Calculation Date, the aggregate Outstanding
Principal Balance of the Loans constituting the Trust Property
shall be reduced or, as the case may be, deemed to be reduced for
the purposes of the calculation set out in "G" above, if any of
the following events has occurred during the Calculation Period
immediately preceding the relevant Calculation Date:
(i) any Borrower exercises a right of set-off in relation to
Loans constituting part of the Trust Property so that the
amount of principal and/or interest owing under a loan is
reduced but no corresponding amount is received by the
Mortgages Trustee in which event the total amount of Trust
Property shall be reduced by an amount equal to the amount
set-off; and/or
(ii) a Loan or its Related Security (i) is in breach of the Loan
Warranties in the Mortgage Sale Agreement, (ii) is the
subject of a Further Advance or (iii) is the subject of a
Product Switch in the circumstances set out in CLAUSE 8.4 of
the Mortgage Sale Agreement or other obligation of the
Seller to repurchase, and if the Seller fails to repurchase
the Loan or Loans under the relevant Mortgage Account and
their Related Security as required by the terms of the
Mortgage Sale Agreement, then the Trust Property shall be
deemed to be reduced for the purposes of the calculation of
"G" in CLAUSE 8.2 above by an amount equal to the
Outstanding Principal Balance of the relevant Loan or Loans
under the relevant Mortgage Account together with Arrears of
Interest and Accrued Interest; and/or
(iii) the Seller would be required to repurchase a Loan and its
Related Security in accordance with the terms of the
Mortgage Sale Agreement, but such Loan and its Related
Security are not capable of repurchase, in which case the
Trust Property shall be deemed to be reduced for the
purposes of the calculation of "G" in CLAUSE 8.3 above by an
amount equal to the Outstanding Principal Balance of the
relevant Loan
7
or Loans under the relevant Mortgage Account together with
Arrears of Interest and Accrued Interest; and/or
(iv) the Seller materially breaches any other material warranty
under the Mortgage Sale Agreement and/or (for so long as it
is the Servicer) the Servicing Agreement, in which event the
aggregate Outstanding Principal Balance of Loans
constituting the Trust Property shall be deemed for the
purposes of the calculation of "G" in CLAUSE 8.2 above to be
reduced by an amount equivalent to all losses, costs,
liabilities, claims, expenses and damages incurred by the
Beneficiaries as a result of such breach.
(b) The reductions and deemed reductions set out in paragraph to
(inclusive) of CLAUSE 8.4(a) above shall be made on the relevant
Calculation Date first to the Seller's Share (including the
Minimum Seller Share) of the Trust Property only, and thereafter
shall be made to the Funding 1 Share of the Trust Property.
(c) If at any time after the Initial Closing Date the Mortgages
Trustee holds, or there is held to its order, or it receives, or
there is received to its order any property, interest, right or
benefit relating to any Loan and its Related Security which is or
has been subject to any reduction or deemed reduction pursuant to
paragraphs to (inclusive) of CLAUSE 8.4(a) above, then such
property, interest, right or benefit shall constitute a Revenue
Receipt under the relevant Loan. Such Revenue Receipt shall belong
to Funding 1 (but only if and to the extent that the related
reductions were applied against the Funding 1 Share of the Trust
Property) and thereafter shall belong to the Seller.
8.5 CURRENT SELLER SHARE PERCENTAGE
On each Calculation Date, the "Current Seller Share Percentage" will be
an amount calculated to the accuracy of five decimal places equal to:
100% - Current Funding 1 Share Percentage.
8.6 CURRENT SELLER SHARE
The "Current Seller Share" will be an amount equal to:
Outstanding Principal Balance of all the Loans in the Trust Property on
the relevant Calculation Date - Current Funding 1 Share.
8.7 FUNDING 1 SHARE/SELLER SHARE
Neither the Funding 1 Share nor the Seller Share may be reduced below
zero. At all times the Funding 1 Share Percentage and the Seller Share
Percentage shall be equal to 100 per cent. of the Trust Property.
9. MINIMUM SELLER SHARE
9.1 INITIAL MINIMUM SELLER SHARE
The Seller Share of the Trust Property includes an amount equal to the
Minimum Seller Share. Unless and until the Funding 1 Share of the Trust
Property is in an amount equal to zero or an Asset Trigger Event occurs,
the Seller will not be entitled to receive Principal Receipts which would
reduce the Seller Share of the Trust Property to an amount less than the
Minimum Seller Share and the Seller consents and directs the Mortgages
Trustee accordingly.
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9.2 FLUCTUATION OF MINIMUM SELLER SHARE ON EACH CALCULATION DATE
At the Initial Closing Date, the Minimum Seller Share was
{pound-sterling}500,000,000. The amount of the Minimum Seller Share will
be recalculated on each Calculation Date in accordance with the following
formula:
X + Y + Z
where:
X = 5% of the aggregate Outstanding Principal Balance of all Loans
comprised in the Trust Property;
Y = the product of: (p x q) x r where:
p = 8%;
q = the FLEXIBLE DRAW CAPACITY, being an amount equal to the excess of
(i) the maximum amount that Borrowers are entitled to draw under
Flexible Loans included in the Trust Property (whether or not drawn)
over (ii) the aggregate principal balance of actual Flexible Loan
advances made to Borrowers in the Trust Property on the relevant
Calculation Date (but excluding the Initial Advances made
thereunder); and
r = 3; and
Z = the aggregate sum of reductions deemed made (if any) in accordance
with paragraphs (ii), (iii) and (iv) of CLAUSE 8.4(a).
9.3 RECALCULATION OF MINIMUM SELLER SHARE FOLLOWING OCCURRENCE OF EXCEPTIONAL
EVENTS
Prior to the occurrence of a Trigger Event:
(a) the calculation of the Minimum Seller Share in accordance with
CLAUSE 9.2 above will be recalculated or increased (in
consultation with the relevant Rating Agencies) if the Seller
merges or otherwise combines its business with another bank or
other financial institution so as to increase the risks associated
with Borrowers holding deposits in Halifax accounts and such
merger or combination would adversely affect the then current
ratings of the Notes and such adverse effect on the then current
ratings of the Notes would be avoided if the Minimum Seller Share
was so recalculated or increased;
(b) the calculation of the Minimum Seller Share in accordance with
CLAUSE 9.2 above will be recalculated or increased (in
consultation with the relevant Rating Agencies) if notice has been
received from one or more of the Rating Agencies that the then
current ratings of the Notes would be downgraded and that such
downgrade would be avoided if the Minimum Seller Share was so
recalculated or increased;
(c) the amount of the Minimum Seller Share as calculated in accordance
with CLAUSE 9.2 above will be decreased (and the calculation
thereof amended accordingly) from time to time at the request of
the Seller or Funding 1 (acting reasonably) provided that the
Security Trustee has received written confirmation from each of
the Rating Agencies that there would be no adverse effect on the
then current ratings of the Notes as a result thereof.
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10. ALLOCATION AND DISTRIBUTION OF REVENUE RECEIPTS
10.1 ALLOCATION AND DISTRIBUTION OF THIRD PARTY AMOUNTS
Pursuant to the Cash Management Agreement, the Cash Manager (at the
direction of the Mortgages Trustee on behalf of the Beneficiaries at
their direction and with their consent) will deduct, as and when
identified, Third Party Amounts from the Revenue Receipts standing to the
credit of the Mortgages Trustee GIC Account, and pay over the same to the
proper recipients thereof. The Mortgages Trustee and the Beneficiaries
hereby consent to such deductions.
10.2 ALLOCATION AND DISTRIBUTION OF MORTGAGES TRUST AVAILABLE REVENUE RECEIPTS
On each Distribution Date the Cash Manager (at the direction of the
Mortgages Trustee and on behalf of the Beneficiaries at their direction
and with their consent) will allocate and distribute Mortgages Trust
Available Revenue Receipts as follows:
(a) firstly, in or towards satisfaction pari passu and pro rata
according to the respective amounts thereof of:
(i) any costs, charges, liabilities and expenses then due or to
become due to the Mortgages Trustee under the provisions of
this Deed together with VAT thereon as provided herein (if
payable); and
(ii) any amounts due and payable by the Mortgages Trustee to
third parties in respect of the Mortgages Trust and incurred
without breach by the Mortgages Trustee of the documents to
which it is a party and for which payment has not been
provided for elsewhere), (including amounts due to H.M
Customs and Excise and/or to the Inland Revenue or any other
taxation authority which has jurisdiction over the Trust
Property or the Mortgages Trustee in respect of any stamp,
issue, registration, documentary and other fees, duties and
taxes (including interest and penalties) payable by the
Mortgages Trustee in connection with (i) the execution and
delivery of this Deed; (ii) any action to be taken by or on
behalf of the Mortgages Trustee to enforce or to resolve any
doubt concerning or, for any other purpose in relation to,
the Mortgages Trust Deed; and (iii) any such tax which is
primarily due from either or both of the Seller and Funding
1 in their capacities as Beneficiaries (and, for the
avoidance of doubt, only in such capacities) in
circumstances where the Mortgages Trustee has made a payment
of such tax (or part thereof) by reason of a failure by the
Seller or Funding 1 to discharge their primary liability in
respect of such tax);
(b) secondly, in or towards satisfaction of any remuneration then due
and payable or to become due and payable during the following
Calculation Period to the Servicer and any costs, charges,
liabilities and expenses then due or to become due to the Servicer
under the provisions of the Servicing Agreement, together with VAT
thereon as provided therein (if payable);
(c) thirdly, to allocate and pay to Funding 1 an amount equal to the
lesser of:
(x) an amount determined by multiplying the total amount of the
remaining Mortgages Trust Available Revenue Receipts by the
Funding 1 Share Percentage of the Trust Property (as
determined on the Relevant Share Calculation Date); and
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(y) the aggregate of Funding 1's obligations on the immediately
succeeding Funding 1 Interest Payment Date as set out under
the Funding 1 Pre-Enforcement Revenue Priority of Payments
or, as the case may be, the Funding 1 Post-Enforcement
Priority of Payments (but excluding any principal amount due
under any Intercompany Loan and/or items (j) and (k) of the
Funding 1 Post-Enforcement Priority of Payments), less (in
each case only to the extent that such amounts of interest
or income would not otherwise be payable under the
Intercompany Loan or, as applicable, the Notes, on the
succeeding Interest Payment Date) the sum of (i) the
interest or other income credited or to be credited to
Funding 1's Bank Accounts on the immediately succeeding
Funding 1 Interest Payment Date and (ii) all other income
(not derived from the distribution of Revenue Receipts under
the Mortgages Trust) which will constitute Funding 1
Available Revenue Receipts on the succeeding Funding 1
Interest Payment Date;
(d) fourthly, to allocate and distribute to the Mortgages Trustee
and/or Funding 1 (as applicable), an amount equal to any Loss
Amount suffered or incurred by it or them (as applicable); and
(e) fifthly, to allocate and distribute to the Seller an amount equal
to (if positive) the Mortgages Trust Available Revenue Receipts
less the amount of such Mortgages Trust Available Revenue Receipts
applied and/or allocated under paragraphs to above.
11. ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS
11.1 ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS
(a) On each Calculation Date (the RELEVANT CALCULATION DATE), prior to
distributing any Principal Receipts, the Cash Manager shall
ascertain:
(i) the amount of Mortgages Trust Available Principal Receipts;
(ii) whether the Distribution Date immediately succeeding the
relevant Calculation Date is within a Cash Accumulation
Period relating to a Bullet Term Advance or a Scheduled
Amortisation Instalment (the Cash Accumulation Period being
calculated separately for each Bullet Term Advance and
Scheduled Amortisation Instalment); and
(iii) Funding 1's Cash Accumulation Requirement and Repayment
Requirement.
(b) On each Distribution Date, the Cash Manager (at the direction of
the Mortgages Trustee acting on behalf of the Beneficiaries at
their direction and with their consent) shall then allocate and
distribute Principal Receipts as provided in this CLAUSE 11.
11.2 ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS PRIOR TO THE OCCURRENCE
OF A TRIGGER EVENT
On each Distribution Date where no Trigger Event has occurred on or
before the immediately preceding Calculation Date, the Cash Manager shall
allocate and distribute Mortgages Trust Available Principal Receipts as
follows:
(a) firstly, where Funding 1 has no Cash Accumulation Requirement and
no Repayment Requirement on that Distribution Date, to allocate
the Mortgages Trust Available
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Principal Receipts to the Seller until the Seller Share of the
Trust Property (as calculated on the Relevant Share Calculation
Date) is equal to the Minimum Seller Share;
(b) secondly, if Funding 1 has a Cash Accumulation Requirement on that
Distribution Date, to allocate the Mortgages Trust Available
Principal Receipts to Funding 1 in an amount up to but not
exceeding Funding 1's Cash Accumulation Requirement on that
Distribution Date;
(c) thirdly, if Funding 1 has a Repayment Requirement on that
Distribution Date, to allocate the Mortgages Trust Available
Principal Receipts to Funding 1 in an amount up to but not
exceeding Funding 1's Repayment Requirement on that Distribution
Date; and
(d) fourthly, to allocate the remainder of the Mortgages Trust
Available Principal Receipts, if any, to the Seller until the
Seller Share of the Trust Property (as calculated on the Relevant
Share Calculation Date) is equal to the Minimum Seller Share.
11.3 ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS ON OR AFTER THE
OCCURRENCE OF A NON-ASSET TRIGGER EVENT BUT PRIOR TO THE OCCURRENCE OF AN
ASSET TRIGGER EVENT
On each Distribution Date where a Non-Asset Trigger Event has occurred on
or before the immediately preceding Calculation Date and an Asset Trigger
Event has not occurred on or before that Calculation Date, all Mortgages
Trust Available Principal Receipts shall be allocated and distributed to
Funding 1 until the Funding 1 Share of the Trust Property (as calculated
on the relevant Share Calculation Date) is zero and shall thereafter be
allocated and paid to the Seller.
11.4 ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS ON OR AFTER THE
OCCURRENCE OF AN ASSET TRIGGER EVENT
On each Distribution Date where an Asset Trigger Event has occurred on or
before the immediately preceding Calculation Date, all Mortgages Trust
Available Principal Receipts shall be allocated and distributed pari
passu and pro rata between Funding 1 and the Seller according to the
Current Funding 1 Share Percentage of the Trust Property (as calculated
on the Relevant Share Calculation Date) and the Current Seller Share
Percentage of the Trust Property (as calculated on the Relevant Share
Calculation Date) respectively until, in the case of Funding 1, the
Funding 1 Share of the Trust Property is zero (and, for the avoidance of
doubt, such payments may reduce the Current Seller Share to an amount
less than the Minimum Seller Share). When the Funding 1 Share of the
Trust Property is zero, the remaining Mortgages Trust Available Principal
Receipts (if any) shall be allocated to the Seller.
12. ALLOCATION OF LOSSES
Subject as provided in this Deed (and in particular, CLAUSE 8), all
Losses sustained on the Loans during a Calculation Period shall be
applied in reducing pro rata both the Funding 1 Share and the Seller
Share of the Trust Property. Funding 1's share and the Seller's share of
the Losses shall be determined by multiplying the Losses in the relevant
Calculation Period by the Current Funding 1 Share Percentage, (as
calculated on the Relevant Share Calculation Date), the product of which
shall be allocated to Funding 1, and the remainder of such Losses shall
be allocated to the Seller, on each Calculation Date, in each case prior
to calculating the allocation of Mortgages Trustee Available Principal
Receipts on that Calculation Date.
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13. FUNDING 2 BECOMES A BENEFICIARY OF THE MORTGAGES TRUST
On not more than 60 days' written notice nor less than 20 days' written
notice to the Mortgages Trustee, Funding 1 and the Seller may direct the
Mortgages Trustee to add Funding 2 as a beneficiary to the Mortgages
Trust. The Mortgages Trustee shall include Funding 2 as a beneficiary of
the Mortgages Trust if Funding 1 (or the Security Trustee) notifies the
Mortgages Trustee in writing that the following conditions precedent are
satisfied on the date of such inclusion:
(a) that the Security Trustee has received written confirmation from
each of the Rating Agencies that the inclusion of Funding 2 as a
beneficiary of the Mortgages Trust would not have an adverse
effect on the then current ratings of the Notes;
(b) no deficiency is recorded on the Principal Deficiency Ledger as at
the most recent Funding 1 Interest Payment Date;
(c) no Note Event of Default or Intercompany Loan Event of Default
shall have occurred which is continuing or unwaived as at the
relevant Distribution Date;
(d) requisite amendments have been made to the Transaction Documents
to enable the inclusion of Funding 2 as a beneficiary to the
Mortgages Trust (including, without limitation, changes to the way
in which the Mortgages Trustee will allocate Mortgages Trust
Revenue Receipts and Mortgages Trust Principal Receipts under this
Deed); and
(e) the General Reserve Fund has not been debited on or before the
relevant Distribution Date for the purposes of curing a Principal
Deficiency in respect of the Term Advances in circumstances where
the General Reserve Fund has not been replenished by a
corresponding amount by the date.
14. LEDGERS
The Mortgages Trustee shall maintain, or shall procure that there are
maintained, the following Mortgages Trustee Ledgers:
(a) the Principal Ledger, which shall record all receipts of Principal
Receipts and distribution of the same to Funding 1 and the Seller;
(b) the Revenue Ledger, which shall record all receipts of Revenue
Receipts and distribution of the same to Funding 1 and the Seller;
(c) the Losses Ledger, which shall record Losses in relation to the
Loans; and
(d) the Funding 1 Share/Seller Share Ledger which shall record the
Current Funding 1 Share, the Current Seller Share of the Trust
Property, the Current Funding 1 Share Percentage and the Current
Seller Share Percentage.
15. COSTS AND EXPENSES OF THE MORTGAGES TRUSTEE
The Mortgages Trustee shall be entitled to charge and be remunerated for
the work undertaken by it as trustee of the trusts created by this Deed.
The remuneration shall be on such terms (if any) as the Mortgages Trustee
may from time to time agree with the Seller and Funding 1 in writing. In
default of such agreement, Funding 1 and the Seller shall indemnify the
Mortgages Trustee from time to time with such regularity as is reasonably
agreed between
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the parties, of the documentable costs and expenses directly and properly
incurred by the Mortgages Trustee in performing its obligations hereunder
together with any amounts in respect of Irrecoverable VAT incurred in
respect of such costs and expenses. The cost of such indemnity shall be
paid in accordance with the priority of payments set out in CLAUSE of
this Deed.
16. DIRECTIONS FROM BENEFICIARIES
16.1 On the Initial Closing Date, the Mortgages Trustee entered into the
Servicing Agreement, the Cash Management Agreement, the Mortgage Sale
Agreement, the Mortgages Trustee Guaranteed Investment Contract and the
Bank Account Agreement.
16.2 Subject to Clause below, the Mortgages Trustee covenants with the Seller
and Funding 1 that the Mortgages Trustee shall take all necessary steps
and do everything which both Funding 1 and the Seller (acting together)
may reasonably request or direct it to do in order to give effect to the
terms of this Deed or the other Transaction Documents to which the
Mortgages Trustee is a party.
16.3 Funding 1 and the Seller covenant with each other that neither shall
direct or request the Mortgages Trustee to do any act or thing which
breaches the terms of, or is otherwise expressly dealt with (such that
the Mortgages Trustee has no discretion) by, any of the Transaction
Documents.
16.4 No requirement to act
The Mortgages Trustee will not be bound and shall have no power to take
any proceedings, actions or steps under or in connection with any of this
Deed or the other Transaction Documents to which it is a party unless:
(a) it shall have been directed to do so by the Beneficiaries or it is
required to do so under any express provision of this Deed or the
other Transaction Documents (but subject to CLAUSE 16.2 in respect
of conflict of directions); and
(b) it shall have been indemnified to its satisfaction against all
liabilities, proceedings, claims and demands to which it may be or
become liable and all costs, charges and expenses which may be
incurred by it in connection therewith and the terms of such
indemnity may include the provision of a fighting fund, non-
recourse loan or other similar arrangement.
16.5 COVENANT OF THE MORTGAGES TRUSTEE
Subject to CLAUSE 16.2, the Mortgages Trustee covenants with each of the
Seller and Funding 1 to exercise all of its rights arising under the
Trust Property (including without limitation any rights of enforcement)
for the benefit of and on behalf of the Beneficiaries.
17. TRANSFERS
17.1 FUNDING 1 SHALL NOT ASSIGN
Subject to the terms of the Transaction Documents (including for the
avoidance of doubt, the Funding 1 Deed of Charge and the Second
Supplemental Funding 1 Deed of Charge) and the right of Funding 1 (or the
Security Trustee or a Receiver on its behalf) to sell the Funding 1 Share
of the Trust Property following the service of an Intercompany Loan
Enforcement Notice (which right is hereby conferred), Funding 1 covenants
with the Seller that it shall not,
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and shall not purport to, sell, assign, transfer, convey, charge, declare
a trust over, create any beneficial interest in, or otherwise dispose of
the Funding 1 Share in the Trust Property and/or its rights under this
Deed, or any of Funding 1's rights, title and interest or benefit in the
Trust Property and/or this Deed to or in favour of a third party.
17.2 SELLER SHALL NOT ASSIGN
Subject to the terms of the Transaction Documents, the Seller covenants
with Funding 1 that it shall not, and shall not purport to, sell, assign,
transfer, convey, charge, declare a trust over, create any beneficial
interest in, or otherwise dispose of the Seller Share in the Trust
Property and/or its rights under this Deed or any of the Seller's rights,
title and interest or benefit in the Trust Property and/or this Deed to
or in favour of a third party, without the prior consent of Funding 1
(such consent not to be unreasonably withheld).
17.3 TRANSFERS TO FUNDING 2
Subject to CLAUSE 13, the parties hereby acknowledge that Funding 2 may
become a beneficiary to the Mortgages Trust after the Initial Closing
Date and if it is to become a such a beneficiary then the Seller and/or
Funding 1 shall be entitled to sell, assign, transfer, convey, charge,
declare a trust over, create a beneficial interest in, or otherwise
dispose of their respective shares in the Trust Property to Funding 2 or,
as the case may be, Funding 1 or the Seller.
18. COVENANTS OF THE MORTGAGES TRUSTEE
Save with the prior written consent of the Beneficiaries or as provided
in or envisaged by this Deed and the other Transaction Documents to which
the Mortgages Trustee is a party, the Mortgages Trustee shall not, so
long as it is acting as Mortgages Trustee hereunder:
(A) NEGATIVE PLEDGE
create or permit to subsist any mortgage, standard security,
pledge, lien, charge, assignation in security or other security
interest whatsoever (unless arising by operation of law), upon the
whole or any part of its assets (including any uncalled capital)
or its undertakings, present or future;
(B) DISPOSAL OF ASSETS
transfer, sell, lend, part with or otherwise dispose of, or deal
with, or grant any option or present or future right to acquire
any of its assets or undertakings or any interest, estate, right,
title or benefit therein or thereto or agree or attempt or purport
to do so;
(C) EQUITABLE INTEREST
permit any person other than the Beneficiaries to have any
equitable or beneficial interest in any of its assets or
undertakings or any interest, estate, right, title or benefit
therein;
(D) BANK ACCOUNTS
have an interest in any bank account, other than as set out in the
Transaction Documents;
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(E) RESTRICTIONS ON ACTIVITIES
carry on any business other than as described in this Deed and the
Mortgage Sale Agreement;
(F) BORROWINGS
incur any indebtedness in respect of borrowed money whatsoever or
give any guarantee or indemnity in respect of any such
indebtedness;
(G) MERGER
consolidate or merge with any other person or convey or transfer
its properties or assets substantially as an entirety to any other
person;
(H) EMPLOYEES OR PREMISES
have any employees or premises or subsidiaries;
(I) FURTHER SHARES
issue any further shares;
(J) ACQUISITIONS
acquire any assets other than pursuant to the terms of the
Mortgage Sale Agreement and this Mortgages Trust Deed (whereby any
New Portfolio shall be held by the Mortgages Trustee subject to
the Mortgages Trust); or
(K) UNITED STATES ACTIVITIES
engage in any activities in the United States (directly or through
agents) or derive any income from United States sources as
determined under United States income tax principles or hold any
property if doing so would cause it to be engaged or deemed to be
engaged in a trade or business within the United States as
determined under United States tax principles.
19. POWER TO DELEGATE
19.1 POWER TO DELEGATE
Subject to CLAUSE 19.2, the Mortgages Trustee may (notwithstanding any
rule of law or equity to the contrary) delegate (revocably or irrevocably
and for a limited or unlimited period of time) the performance of all or
any of its obligations and the exercise of all or any of its powers under
this Deed or imposed or conferred on it by law or otherwise to any person
or body of persons fluctuating in number selected by it and any such
delegation may be by power of attorney or in such other manner as the
Mortgages Trustee may think fit and may be made upon such terms and
conditions (including the power to sub-delegate) as the Mortgages Trustee
may think fit.
19.2 NO FURTHER APPOINTMENTS
Notwithstanding the provisions of CLAUSE 19.1, the Mortgages Trustee
shall not appoint any agent, attorney or other delegate having power to
act in respect of the Trust Property unless it
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is directed in writing to do so by the Beneficiaries. The appointment of
any agent, attorney or other delegate shall terminate immediately upon
the occurrence of a Trigger Event.
20. POWERS OF INVESTMENT
Save as expressly provided for in this Deed, the Mortgages Trustee
Guaranteed Investment Contract and the Bank Account Agreement, the
Mortgages Trustee shall have no further or other powers of investment
with respect to the Trust Property and neither the Trustee Act 2000 nor
any other provision relating to trustee powers of investment implied by
statute or general law shall apply to the Mortgages Trust and, for the
avoidance of doubt, the statutory power to accumulate income conferred on
trustees by Section 31 of the Trustee Act 1925 is expressly excluded.
21. OTHER PROVISIONS REGARDING THE MORTGAGES TRUSTEE
21.1 NO ACTION TO IMPAIR TRUST PROPERTY
Except for actions expressly authorised by this Deed, the Mortgages
Trustee shall take no action reasonably likely to impair the interests of
the Beneficiaries in any Trust Property now existing or hereafter created
or to impair the value of any Loan or its Related Security subject to the
Mortgages Trust.
21.2 LITIGATION
The Mortgages Trustee must not prosecute or defend any legal or other
proceedings anywhere in the world (at the cost of the Trust Property)
unless it obtains legal or other advice that it is in the interests of
the Beneficiaries to do so.
21.3 NO IMPLIED DUTIES
The duties and obligations of the Mortgages Trustee under the Mortgages
Trust shall be determined solely by the express provisions of this Deed
(but without prejudice to the duties and obligations of the Mortgages
Trustee under any of the other Transaction Documents). The Mortgages
Trustee shall not be liable under this Deed except for the performance of
such duties and obligations as shall be specifically set forth in this
Deed. No implied covenants or obligations shall be read into this Deed
against the Mortgages Trustee, and the permissible right of the Mortgages
Trustee to do things set out in this Deed shall not be construed as a
duty.
21.4 NO LIABILITY
Neither the Mortgages Trustee, Funding 1 (in its capacity as a
Beneficiary hereunder) nor the Seller (in its capacity as a Beneficiary
hereunder) shall be liable to each other, in the absence of wilful
default, negligence or breach of the terms of this Deed, in respect of
any loss or damage which arises out of the exercise or attempted or
purported exercise or failure to exercise any of their respective powers.
21.5 RELIANCE ON CERTIFICATES
The Mortgages Trustee may rely on and shall be protected in acting on, or
in refraining from acting in accordance with, any resolution, officer's
certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented to it pursuant to the Transaction Documents by
the proper party or parties.
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21.6 RELIANCE ON THIRD PARTIES
The Mortgages Trustee may, in relation to these presents, act on the
opinion or advice of or a certificate or any information obtained from
any lawyer, banker, valuer, broker, accountant, financial adviser,
securities dealer, merchant bank, computer consultant or other expert in
the United Kingdom or elsewhere and shall not, provided that it shall not
have acted fraudulently or in breach of any of the provisions of the
Transaction Documents, be responsible for any loss occasioned by so
acting. Any such opinion, advice, certificate or information may be sent
or obtained by letter, telemessage, telex, cable or facsimile device and
the Mortgages Trustee shall not be liable for acting on any opinion,
advice, certificate or information purporting to be so conveyed although
the same shall contain some error or shall not be authentic, provided
that such error or lack of authenticity shall not be manifest.
22. NO RETIREMENT OF MORTGAGES TRUSTEE
22.1 NO RETIREMENT
The Mortgages Trustee shall not, and shall not purport to, retire as the
trustee of the Mortgages Trust or appoint any additional trustee of the
Mortgages Trust and shall have no power to retire or appoint any
additional trustee under the Trustee Act 1925 or otherwise.
22.2 NO REPLACEMENT
Neither the Seller nor Funding 1 shall at any time remove or purport to
remove and/or replace the Mortgages Trustee as the trustee of the
Mortgages Trust.
22.3 NO TERMINATION
Prior to the payment by Funding 1 of all amounts owing under the
Intercompany Loan Agreements and under the Transaction Documents, neither
the Seller nor Funding 1 shall at any time, except in accordance with the
provisions of CLAUSES 16 and 23, terminate or purport to terminate the
Mortgages Trust and, in particular, but without prejudice to the
generality of the foregoing, the Seller and Funding 1 shall not in
reliance on their absolute beneficial interests in the Trust Property
call for the transfer to them or vesting in them of the legal estate in
all or any part of the Trust Property.
23. TERMINATION
The Mortgages Trust shall terminate in respect of the Trust Property (if
any then remains) upon the later to occur of:
(a) the date upon which the Funding 1 Share of the Trust Property is
zero; and
(b) any other date agreed in writing by Funding 1 and the Seller.
24. FURTHER ASSURANCES
The parties 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
Deed.
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25. AMENDMENTS
25.1 AMENDMENTS AND WAIVERS
Without prejudice to CLAUSE 25.8 of the Funding 1 Deed of Charge, no
amendment or waiver of any provision of this Deed 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 to
this Deed. In the case of a waiver or consent, such waiver or consent
shall be effective only in the specific instance and as against the party
or parties giving it for the specific purpose for which it is given.
25.2 ENTIRE AGREEMENT
This Deed contains a final and complete integration of all prior
expressions by the parties with respect to the subject matter of this
Deed and constitutes the entire agreement among the parties with respect
to the subject matter of this Deed superseding all prior oral or written
understandings other than the other Transaction Documents.
26. NON PETITION COVENANT
The Seller hereby agrees that it shall not institute against either
Funding 1 or the Mortgages Trustee any winding-up, administration,
insolvency or similar proceedings so long as any sum is outstanding under
any Intercompany Loan Agreement for the duration of one year plus one day
since the last day on which any such sum was outstanding.
27. NO PARTNERSHIP OR AGENCY
Nothing in this Deed shall be taken to constitute or create a partnership
between any of the parties to this Deed or to make or appoint the Seller
the agent of Funding 1 (or vice versa).
28. CALCULATIONS
In the absence of manifest error, any determination or calculation made
by or on behalf of the Mortgages Trustee in connection with the
provisions of this Deed shall be deemed to be conclusive.
29. NO WAIVER; REMEDIES
No failure on the part of any party to this Deed 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 right or remedy
preclude any other or further exercise thereof or the exercise of any
other right or remedy. The remedies in this Deed are cumulative and not
exclusive of any remedies provided by law.
30. EXECUTION IN COUNTERPARTS; SEVERABILITY
30.1 SEVERABILITY
Where any provision in or obligation under this Deed shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations under this
Deed, or of such provision or obligation in any other jurisdiction, shall
not be affected or impaired thereby.
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31. TAX
31.1 Any payment by Funding 1 to the Seller to increase its share of the Trust
Property shall be inclusive of value added tax (if any).
31.2 Any payment by the Seller to Funding 1 which would increase its share of
the Trust Property shall be exclusive of VAT (if any).
31.3 Any stamp duty or stamp duty reserve tax in respect of any increase in
Funding 1's share of the Trust Property shall be payable by the Seller.
32. CONFIDENTIALITY
32.1 GENERAL OBLIGATION OF CONFIDENTIALITY
Unless otherwise required by applicable law, and subject to CLAUSE 32.2
below, each of the parties agrees not to disclose to any person any
information relating to the business, finances or other matters of a
confidential nature of or relating to any other party to this Deed or any
of the Transaction Documents which it may have obtained as a result of
having entered into this Deed or otherwise.
32.2 EXCEPTIONS
The provisions of CLAUSE 32.1 above shall not apply:
(a) to the disclosure of any information to any person who is a party
to any of the Transaction Documents as expressly permitted by the
Transaction Documents;
(b) to the disclosure of any information which is or becomes public
knowledge otherwise than as a result of the wrongful conduct of
the recipient;
(c) to the extent that the recipient is required to disclose the same
pursuant to any law or order of any court or pursuant to any
direction or requirement (whether or not having the force of law)
of any central bank or any governmental or other regulatory or
Taxation authority;
(d) to the disclosure of any information to professional advisers who
receive the same under a duty of confidentiality;
(e) to the disclosure of any information with the consent of the
parties to this Deed;
(f) to the disclosure to the Rating Agencies or any of them of such
information as may be requested by any of them for the purposes of
setting or reviewing the rating assigned to the Notes (or any of
them), provided that no information which would disclose the
identity of a Borrower shall be disclosed to the Rating Agencies
or any of them;
(g) to the disclosure of any information disclosed to a prospective
assignee of Funding 1 (provided that it is disclosed on the basis
that the recipient will hold it confidential); or
(h) to any disclosure for the purposes of collecting in or enforcing
the Trust Property or any of it.
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33. EXCLUSION OF THIRD PARTY RIGHTS
The parties to this Deed do not intend that any term of this Deed should
be enforced, by virtue of the Contracts (Rights of Third Parties) Act
1999, by any person who is not a party to this Deed.
34. ADDRESSES FOR NOTICES
Any notices to be given pursuant to this Deed will be sufficiently served
if sent by prepaid first class post, by hand or facsimile transmission
and will be deemed to be given (in the case of facsimile transmission)
when despatched (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 Seller, to Halifax plc, at Trinity Road,
Halifax, West Yorkshire HX1 2RG (LP/3/3/SEC) (facsimile number +44
(0)113 235 7511) for the attention of the Head of Mortgage
Securitisation with a copy to HBOS Treasury Services plc, 33 Old
Broad Street, London EC2N 1HZ (facsimile number +44 (020) 7574
8784) for the attention of Head of Capital Markets and
Securitisation;
(b) in the case of the Mortgages Trustee, to Permanent Mortgages
Trustee Limited, 47 Esplanade, St Helier, Jersey JE1 0BD, Channel
Islands (facsimile number +44 (0) 1534 726391) for the attention
of the Company Secretary with a copy to HBOS Treasury Services
plc, 33 Old Broad Street, London EC2N 1HZ (facsimile number +44
(020) 7574 8784) for the attention of Head of Capital Markets and
Securitisation;
(c) in the case of Funding 1, to Permanent Funding (No. 1) Limited,
Blackwell House, Guildhall Yard, London, EC2V 5AE (facsimile
number +44 (0) 20 7556 0975) for the attention of the Secretary
with a copy to HBOS Treasury Services plc, 33 Old Broad Street,
London EC2N 1HZ (facsimile number +44 (020) 7574 8784) for the
attention of Head of Capital Markets and Securitisation;
(d) in each case with a copy to The Bank of New York, One Canada
Square, London E14 5AL, (facsimile number +44 (020) 7964 6061 /
6399) for the attention of Global Structured Finance - Corporate
Trust,
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
to the others by written notice in accordance with the provisions of this
CLAUSE 33.
35. GOVERNING LAW AND SUBMISSION TO JURISDICTION
35.1 GOVERNING LAW
This Deed is governed by English law.
35.2 SUBMISSION TO JURISDICTION
Each party to this Deed hereby irrevocably submits to the non-exclusive
jurisdiction of the English courts in any action or proceeding arising
out of or relating to this Deed, and hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and
determined by such courts. Each party to this Deed hereby irrevocably
waives, to the fullest extent it may possibly do so, any defence or claim
that the English courts are an inconvenient
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forum for the maintenance or hearing of such action or proceeding. The
Mortgages Trustee irrevocably appoints Structured Finance Management
Limited at Blackwell House, Guildhall Yard, London EC2V 5AE as its agent
for service of process.
36. EXCLUSION OF TRUSTEE ACT 2000
The Trustee Act 2000 is hereby excluded to the maximum extent
permissible, to the intent that it shall not apply to the trusts
constituted by this Deed and that the parties shall be in the same
position as they would be had that Act not come into force.
IN WITNESS of which this Deed has been executed by the parties hereto as a deed
which has been delivered on the date first appearing on page one.
SIGNATORIES
EXECUTED as a DEED by )
HALIFAX plc )
as Seller, Cash Manager )
and Beneficiary )
acting by its attorney )
in the presence of )
Witness:
Name:
Address:
EXECUTED as a DEED by )
PERMANENT FUNDING (NO. 1) )
LIMITED as Beneficiary )
acting by )
........................
Director
........................
Director/Secretary
EXECUTED as a DEED by )
PERMANENT MORTGAGES TRUSTEE )
LIMITED as Mortgages Trustee )
acting by )
........................
Director
........................
Director/Secretary
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EXECUTED as a DEED by )
SFM OFFSHORE )
LIMITED as Share Trustee of the )
Mortgages Trustee )
acting by )
........................
Director
........................
Director/Secretary
23