Exhibit 1.1
EXECUTION COPY
$4,936,000,000
PERMANENT MASTER ISSUER PLC
$1,000,000,000 Series 1 Class A Floating Rate Notes due January 2008
$1,500,000,000 Series 2 Class A1 Floating Rate Notes due January 2016
$1,000,000,000 Series 2 Class A2 Floating Rate Notes due January 2016
$1,350,000,000 Series 4 Class A Floating Rate Notes due October 2033
$43,000,000 Series 1 Class B Floating Rate Notes due July 2042
$43,000,000 Series 1 Class C Floating Rate Notes due July 2042
Underwriting Agreement
23 February 2007
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
Deutsche Bank Securities Inc.
60 Wall Street
New York, New York 10005
UBS Securities LLC
1285 Avenue of the Americas
New York, New York 10019
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4 World Financial Center
New York, New York 10080
ABN AMRO Bank N.V., London Branch
250 Bishopsgate
London EC2M 4AA
Credit Suisse Securities (Europe) Limited
One Cabot Square
London E14 4QJ
Ladies and Gentlemen:
Permanent Master Issuer PLC, a public limited company incorporated under
the laws of England and Wales (the MASTER ISSUER), proposes to issue and sell
to (i) the Class A Underwriters listed in Schedule I hereto (the CLASS A
UNDERWRITERS), for whom Lehman Brothers Inc. are acting as representatives (the
CLASS A REPRESENTATIVES), $1,000,000,000 Series 1 Class A Notes due January
2008](the SERIES 1 CLASS A NOTES), $1,500,000,000 Series 2 Class A1 Notes due
January 2016 (the SERIES 2 CLASS A1 NOTES) and $1,350,000,000 Series 4 Class A
Notes due October 2033 (the SERIES 4 CLASS A NOTES and, together with the
Series 1 Class A Notes and the Series 2 Class A1 Notes, the CLASS A OFFERED
NOTES) as set forth in Schedule I hereto; (ii) Deutsche Bank Securities Inc.,
Lehman Brothers Inc. and UBS Securities LLC acting as joint lead underwriters
(the CLASS A2 JOINT LEAD UNDERWRITERS), $1,000,000,000 Series 2 Class A2 Notes
due January 2016 (the CLASS A2 OFFERED NOTES) as set forth in Schedule I hereto
and (iii) Lehman Brothers Inc. and UBS Securities LLC acting
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as joint lead underwriters (the CLASS B/C JOINT LEAD UNDERWRITERS and, together
with the Class A Underwriters and the Class A2 Joint Lead Underwriters, the
UNDERWRITERS and, the Class B/C Joint Lead Underwriters together with the Class
A Representatives and the Class A2 Joint Lead Underwriters, the
REPRESENTATIVES), $43,000,000 Series 1 Class B Notes due July 2042 (the SERIES 1
CLASS B NOTES) and $43,000,000 Series 1 Class C Notes due July 2042 (the SERIES
1 CLASS C NOTES and, together with the Series 1 Class B Notes, the CLASS B/C
OFFERED NOTES and, the Class B/C Offered Notes together with the Class A Offered
Notes and the Class A2 Offered Notes, the OFFERED NOTES) as set forth in
Schedule I hereto.
The Offered Notes will be denominated in U.S. dollars and in
denominations of $100,000 plus integral multiples of $1,000. The Offered Notes
will be issued on the date and at the time specified in the Prospectus
Supplement (as defined herein), or at such other time and/or date as the Master
Issuer and the Representatives on behalf of the applicable Underwriters may
agree (the ISSUE 2007-1 CLOSING DATE). The issue of the Offered Notes is
referred to in this Agreement as the ISSUE.
Simultaneously with the Issue, the Master Issuer intends to (i) issue
other series and classes of notes (the CLASS A REG S NOTES) specified in the
subscription agreement dated on or about the date hereof (the CLASS A
SUBSCRIPTION AGREEMENT) among the Master Issuer, Halifax plc (HALIFAX),
Permanent Funding (No. 2) Limited (FUNDING 2), Permanent Mortgages Trustee
Limited (the MORTGAGES TRUSTEE) and the respective managers named therein (the
CLASS A MANAGERS) and (ii) issue other series and classes of notes (the CLASS
B/C REG S NOTES and, together with the Class A Notes, the REG S NOTES)
specified in the subscription agreement dated on or about the date hereof (the
CLASS B/C SUBSCRIPTION AGREEMENT and, together with the Class A Subscription
Agreement, the SUBSCRIPTION AGREEMENTS) among the Master Issuer, Halifax,
Funding 2, the Mortgages Trustee and Deutsche Bank AG, London Branch (the CLASS
B/C MANAGER and, together with the Class A Managers, the MANAGERS). The
Managers have agreed to subscribe and pay for the Reg S Notes upon the terms
and subject to the conditions contained in the Subscription Agreements dated 23
February 2007 and in the programme agreement dated 11 October 2006 among the
Master Issuer, Halifax, Funding 2, the Mortgages Trustee and the respective
dealers named therein (the PROGRAMME AGREEMENT). The Offered Notes, together
with the Reg S Notes, are referred to herein as the NOTES.
The Notes will be constituted by, issued subject to and have the benefit
of, a trust deed (the MASTER ISSUER TRUST DEED) dated 17 October 2006 (the
PROGRAMME DATE) between the Master Issuer and The Bank of New York as trustee
for the Noteholders (the NOTE TRUSTEE) as supplemented by the supplemental
trust deed (the SUPPLEMENTAL MASTER ISSUER TRUST DEED) dated 12 January 2007
between the Master Issuer and the Note Trustee.
The Notes (together with the Master Issuer's obligations to its other
creditors) will be secured by the benefit of security interests created under a
deed of charge and assignment by way of security (the MASTER ISSUER DEED OF
CHARGE) entered into on the Programme Date by the Master Issuer, the Note
Trustee, Citibank, N.A. London Branch (in its capacity as the PRINCIPAL PAYING
AGENT, the US PAYING AGENT, the REGISTRAR, the TRANSFER AGENT and the AGENT
BANK) Halifax in its capacity as cash manager to the Master Issuer (the MASTER
ISSUER CASH MANAGER), Deutsche Bank AG, London Branch as dollar currency swap
provider to the Master Issuer in respect of the dollar denominated Notes issued
on 17 October 2006 (the 2006-1 NOTES) (the 2006-1 MASTER ISSUER DOLLAR CURRENCY
SWAP PROVIDER), Credit Suisse International as Canadian dollar currency swap
provider to the Master Issuer in respect of the Canadian dollar denominated
2006-1 Notes (the 2006-1 MASTER ISSUER CANADIAN DOLLAR CURRENCY SWAP PROVIDER),
Barclays Bank PLC as euro currency swap provider to the Master Issuer in
respect of the euro denominated 2006-1 Notes (the 2006-1 MASTER ISSUER EURO
CURRENCY SWAP PROVIDER), Bank of Scotland in its capacity as account bank to
the Master Issuer (the MASTER ISSUER ACCOUNT BANK) and Structured Finance
Management Limited in its capacity as corporate services provider to the Master
Issuer (the MASTER ISSUER CORPORATE SERVICES PROVIDER), as supplemented by a
deed of accession to be entered into on or about 1 March 2007 between such
parties and Credit Suisse (USA) Inc. and Deutsche Bank AG, London Branch as
dollar currency swap providers to the Master Issuer in respect of the Offered
Notes (the 2007-1 MASTER ISSUER DOLLAR
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CURRENCY SWAP PROVIDERS) and Citibank NA, London Branch as euro currency swap
provider to the Master Issuer in respect of the euro denominated Reg S Notes
(the 2007-1 MASTER ISSUER EURO CURRENCY SWAP PROVIDER).
Payments of principal of, and interest on, the Offered Notes will be made
by or on behalf of the Master Issuer to the US Paying Agent and by the US
Paying Agent to holders of the Offered Notes on behalf of the Master Issuer
under a paying agent and agent bank agreement dated the Programme Date (the
MASTER ISSUER PAYING AGENT AND AGENT BANK AGREEMENT) between the Master Issuer,
the Note Trustee, the Agent Bank, the paying agents named therein, the Transfer
Agent and the Registrar.
Each class of the Offered Notes will be in fully registered permanent
global form. The Registrar will maintain a register (the REGISTER) in respect
of the Offered Notes in accordance with the Master Issuer Paying Agent and
Agent Bank Agreement. The issuer notes representing the Offered Notes (the
GLOBAL NOTES) will be deposited on behalf of the beneficial owners of the
Offered Notes with Citibank, N.A London Branch as custodian for, and registered
in the name of Cede & Co. as nominee of, The Depository Trust Company (DTC).
The Master Issuer will use an amount equal to the aggregate of the gross
proceeds of the Issue and the gross proceeds of the Reg S Notes issue to make a
loan to Funding 2 pursuant to an intercompany loan agreement dated the
Programme Date between the Master Issuer, Funding 2, the Agent Bank and The
Bank of New York as security trustee (the FUNDING 2 SECURITY TRUSTEE) (the
MASTER INTERCOMPANY LOAN AGREEMENT and each loan made thereunder a LOAN
TRANCHE). Reference to the Master Intercompany Loan Agreement shall include
reference to a loan tranche supplement in respect of the Master Intercompany
Loan Agreement to be entered into on or about the Issue 2007-1 Closing Date
among Funding 2 and the Master Issuer.
On the Issue 2007-1 Closing Date, Funding 2 will pay the gross proceeds
of the Loan Tranches to Halifax in its capacity as the seller (the SELLER), or
to its order, as consideration for an increase in Funding 2's share of the
Trust Property (which will result in a corresponding decrease in the Seller's
share of the Trust Property).
On 14 June 2002 and on several subsequent dates (each an ASSIGNMENT
DATE), Halifax completed the sale of first residential mortgage loans (the
LOANS) and an interest in their related insurances and their related security
(together, the RELATED SECURITY and, together with the Loans, any accrued
interest on the Loans and other amounts derived from the Loans, the PORTFOLIO,
being the SCOTTISH PORTFOLIO to the extent that such Portfolio relates to Loans
(SCOTTISH LOANS) which are secured by a standard security over a property in
Scotland and being the ENGLISH PORTFOLIO to the extent that such Portfolio
relates to Loans (ENGLISH LOANS) which are secured by a mortgage over a
property in England and Wales) to the Mortgages Trustee pursuant to the
mortgage sale agreement dated 14 June 2002 as amended and restated at the
Programme Date, among Halifax, the Mortgages Trustee, Funding 1, Funding 2, The
Bank of New York in its capacity as the FUNDING 1 SECURITY TRUSTEE and the
Funding 2 Security Trustee (the MORTGAGE SALE AGREEMENT as the same may be
amended, restated, supplemented, or otherwise modified from time to time).
As at the Programme Date, each of the Mortgages Trustee, Funding 1,
Funding 2, the Funding 1 Security Trustee and the Funding 2 Security Trustee
has appointed Halifax as servicer (the SERVICER) to service the Portfolio
pursuant to a Servicing Agreement dated 14 June 2002, as amended and restated
as at the Programme Date (the SERVICING AGREEMENT as the same may be amended,
restated, supplemented or otherwise modified from time to time). The Mortgage
Sale Agreement and certain other documents incorporate by reference definitions
appearing in a master definitions and construction schedule which was signed on
14 June 2002 by way of identification for and on behalf of Allen & Overy LLP
and Sidley Austin Brown & Wood, as amended and restated as at the Programme
Date (the MASTER DEFINITIONS SCHEDULE as the same may be amended, restated,
supplemented or otherwise modified from time to time).
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From the Programme Date, the Mortgages Trustee held the Portfolio on a
bare trust for the benefit of Funding 1, Funding 2 and the Seller as tenants in
common pursuant to the mortgages trust deed dated 13 June 2002 as amended and
restated at the Programme Date, among the Seller, Funding 1, Funding 2 and the
Mortgages Trustee (the MORTGAGES TRUST DEED as the same may be amended,
restated, supplemented or otherwise modified from time to time). The Mortgages
Trustee entered into a guaranteed investment contract in respect of its
principal bank account with Bank of Scotland (in such capacity, the MORTGAGES
TRUSTEE GIC PROVIDER) dated 14 June 2002, as amended and restated as at the
Programme Date (the MORTGAGES TRUSTEE GUARANTEED INVESTMENT CONTRACT as the
same may be amended, restated, supplemented or otherwise modified from time to
time).
Funding 2's obligations to the Master Issuer under the Master
Intercompany Loan Agreement and to Funding 2's other creditors are secured with
the benefit of security interests created by a deed of charge and assignment
dated the Programme Date, which includes any deed of accession entered into in
connection therewith or supplemental thereto (the FUNDING 2 DEED OF CHARGE as
the same may be amended, restated, supplemented or otherwise modified from time
to time) entered into by Funding 2, the Master Issuer, Halifax in its capacity
as swap provider (the FUNDING 2 SWAP PROVIDER), Bank of Scotland in its
capacity as GIC provider to Funding 2 (the FUNDING 2 GIC PROVIDER), the Funding
2 Security Trustee, Halifax in its capacity as cash manager to the Mortgages
Trustee, Funding 1 and Funding 2 (the CASH MANAGER), Bank of Scotland in its
capacity as account bank to the Mortgages Trustee, Funding 1 and Funding 2 (in
such capacities, the ACCOUNT BANK), Halifax in its capacity as start-up loan
provider to Funding 2 (the FUNDING 2 START-UP LOAN PROVIDER) and Structured
Finance Management Limited in its capacity as corporate services provider to
Funding 2 (the FUNDING 2 CORPORATE SERVICES PROVIDER).
In connection with Funding 2's purchase of an increased share of the
Trust Property and the issue of certain notes by the Master Issuer, Funding 2,
in addition to the documents described above, entered into on the Programme
Date, (1) an amended and restated cash management agreement with the Cash
Manager, the Mortgages Trustee, the Seller, Funding 1, the Funding 1 Security
Trustee and the Funding 2 Security Trustee (the CASH MANAGEMENT AGREEMENT as
the same may be amended, restated, supplemented, or otherwise modified from
time to time); (2) an amended and restated bank account agreement with the
Account Bank, the Mortgages Trustee, the Cash Manager, Funding 1, the Funding 1
Security Trustee and the Funding 2 Security Trustee (the BANK ACCOUNT AGREEMENT
as the same may be amended, restated, supplemented, or otherwise modified from
time to time); (3) an amended and restated guaranteed investment contract with
the Funding 2 GIC Provider (the FUNDING 2 GUARANTEED INVESTMENT CONTRACT as the
same may be amended, restated, supplemented, or otherwise modified from time to
time); (4) an amended and restated corporate services agreement between
Permanent Holdings Limited (HOLDINGS), SFM Corporate Services Limited (the
SHARE TRUSTEE), Permanent PECOH Limited, in its capacity as the post-
enforcement call option holder (the POST-ENFORCEMENT CALL OPTION HOLDER),
Halifax, Structured Finance Management Limited (the FUNDING 1 CORPORATE
SERVICES PROVIDER), the Funding 1 Security Trustee, Funding 2 Security Trustee
and the Funding 2 Corporate Services Provider (the CORPORATE SERVICES AGREEMENT
as the same may be amended, restated, supplemented, or otherwise modified from
time to time); (5) the Scottish Declaration of Trust Agreement, a Scottish
declaration of trust with Halifax, the Mortgages Trustee and Funding 1 pursuant
to the Mortgage Sale Agreement (such Scottish declaration of trust together
with any further Scottish declaration of trust previously or subsequently
entered into from time to time pursuant to the Mortgage Sale Agreement, each a
SCOTTISH DECLARATION OF TRUST); and (6) an ISDA Master Agreement including the
Schedule thereto and confirmations thereunder in the respect of the Funding 2
(mortgage rates) basis rate swap and Funding 2 (LIBOR rate) basis rate swap
with Funding 2, the Funding 2 Swap Provider and the Funding 2 Security Trustee
(the FUNDING 2 SWAP AGREEMENT as the same may be amended, restated,
supplemented or otherwise modified from time to time), each of which will
remain in effect, as applicable, in respect of the issue of the Notes.
The Master Issuer executed and delivered on the Programme Date (1) a
corporate services agreement among Holdings, the Master Issuer, Halifax, the
Master Issuer Security Trustee, the Note Trustee and the Master Issuer
Corporate Services Provider (the MASTER ISSUER CORPORATE SERVICES
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AGREEMENT as the same may be amended, restated, supplemented or otherwise
modified from time to time); (2) a cash management agreement among the Master
Issuer, the Master Issuer Cash Manager and the Master Issuer Security Trustee
(the MASTER ISSUER CASH MANAGEMENT AGREEMENT as the same may be amended,
restated, supplemented or otherwise modified from time to time); (3) a bank
account agreement (the MASTER ISSUER BANK ACCOUNT AGREEMENT as the same may be
amended, restated, supplemented or otherwise modified from time to time) among
the Master Issuer Account Bank, the Master Issuer Cash Manager, the Master
Issuer Security Trustee and the Master Issuer; (4) a post-enforcement call
option agreement (the MASTER ISSUER POST-ENFORCEMENT CALL OPTION AGREEMENT as
the same may be amended, restated, supplemented or otherwise modified from time
to time), among the Master Issuer, the Note Trustee, the Master Issuer Security
Trustee and the Post-Enforcement Call Option Holder.
In connection with the issue of the Notes, the Master Issuer will execute
and deliver, on or before the Issue 2007-1 Closing Date, (1) the Global Notes
relating to each series and class of the Notes; (2) ISDA Master Agreements
including the schedules thereto and confirmations thereunder in respect of
Dollar/Sterling currency swaps among the Master Issuer, the 2007-1 Master
Issuer Dollar Currency Swap Providers and the Master Issuer Security Trustee
(each a 2007-1 MASTER ISSUER DOLLAR CURRENCY SWAP AGREEMENT as the same may be
amended, restated, supplemented or otherwise modified from time to time); and
(3) ISDA Master Agreements including the schedules thereto and confirmations
thereunder in respect of Euro/Sterling currency swaps among the Master Issuer,
the 2007-1 Master Issuer Euro Currency Swap Provider and the Master Issuer
Security Trustee (each a 2007-1 MASTER ISSUER EURO CURRENCY SWAP AGREEMENT as
the same may be amended, restated, supplemented or otherwise modified from time
to time) and, together with each 2007-1 Master Issuer Dollar Currency Swap
Agreement, the 2007-1 MASTER ISSUER SWAP AGREEMENTS).
As required, the Master Issuer, Funding 2, the Mortgages Trustee and/or
Halifax have entered or will enter into any other relevant documents to be
signed and delivered on or before the Issue 2007-1 Closing Date (such
documents, together with the Mortgage Sale Agreement, the Scottish Declarations
of Trust, the corporate services agreement entered into between the Mortgages
Trustee, the Funding 1 Security Trustee and SFM Offshore Limited (the MORTGAGES
TRUSTEE CORPORATE SERVICES AGREEMENT as the same may be amended, restated,
supplemented or otherwise modified from time to time), the Mortgages Trust
Deed, the Funding 2 Swap Agreement, the Servicing Agreement, the Mortgages
Trustee Guaranteed Investment Contract, the Master Intercompany Loan Agreement,
the Funding 2 Guaranteed Investment Contract, the Corporate Services Agreement,
the Funding 2 Start-up Loan Agreement, the Loan Tranche Supplements, the Cash
Management Agreement, the Bank Account Agreement, the Funding 2 Deed of Charge,
the Master Issuer Deed of Charge, the Master Issuer Trust Deed, the Master
Issuer Post-Enforcement Call Option Agreement, the Master Issuer Cash
Management Agreement, the Master Issuer Paying Agent and Agent Bank Agreement,
the Master Issuer Bank Account Agreement, the Master Issuer Corporate Services
Agreement, the Master Issuer Swap Agreements, this Agreement, the Programme
Agreement and the Subscription Agreements, each as they have been or may be
amended, restated, varied or supplemented from time to time, are collectively
referred to herein as the LEGAL AGREEMENTS).
To the extent not defined herein, capitalized terms used herein have the
meanings assigned to such terms in the Registration Statement and the
Prospectus (each as defined below). In addition, for the purposes of this
Agreement:
(a) CONTRACT OF SALE has the meaning set forth under Rule 159 under
the Securities Act;
(b) CORRECTED PROSPECTUS means, if, subsequent to the Time of Sale and
prior to the Issue 2007-1 Closing Date, the Preliminary Prospectus included an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and as a result
investors in the Offered Notes may terminate their old Contracts of Sale for
any Offered Notes and the Underwriters enter into new Contracts of Sale with
investors in the Offered Notes, the information conveyed to investors at
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the time of entry into the first such new Contract of Sale, in an amended
preliminary prospectus approved by the Master Issuer (together with Funding 2
and the Mortgages Trustee) and the Representatives that corrects such material
misstatements or omissions;
(c) INVESTOR PRESENTATION MATERIAL means the investor presentation in
respect of the Notes prepared by Halifax for purposes of investor meetings in
the United States beginning on 15 February 2007;
(d) PRELIMINARY PROSPECTUS means the preliminary prospectus supplement
dated 14 February 2007 2007 together with the Base Prospectus (as defined
below) and the information referred to under the caption "Static Pool Data" in
Annex F therein regardless of whether it is deemed a part of the Registration
Statement or Prospectus; provided, however, that if, subsequent to the Time of
Sale and prior to the Issue 2007-1 Closing Date, the Preliminary Prospectus
included an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and as a result
investors in the Offered Notes may terminate their old Contracts of Sale for
any Offered Notes and the Underwriters enter into new Contracts of Sale with
investors in the Offered Notes, then "Preliminary Prospectus" shall refer to
the related Corrected Prospectus; and
(e) TIME OF SALE means 4 p.m. Greenwich Mean Time on 21 February,
2007, which is deemed to be the time when sales of the Offered Notes to
investors were first made for purposes of Rule 159 under the Securities Act;
provided, however, that if a Corrected Prospectus is required to be delivered,
Time of Sale shall mean the time and date on which the first such new Contract
of Sale was entered into.
The Master Issuer hereby confirms its agreement with the Underwriters
concerning the purchase and sale of the Offered Notes, as follows:
1. Purchase of the Offered Notes by the Underwriters.
(a) The Offered Notes will be issued at a price equal to the aggregate
of 100 per cent. of the aggregate principal amount of each of the Offered Notes
(the ISSUE PRICE). The Master Issuer agrees to sell the Class A Offered Notes
to the several Class A Underwriters, the Class A2 Offered Notes to the several
Class A2 Joint Lead Underwriters and the Class B/C Offered Notes to the Class
B/C Joint Lead Underwriters as provided in this Agreement, and each
Underwriter, on the basis of the representations, warranties and agreements set
forth herein and subject to the conditions set forth herein, agrees, severally
and not jointly, to purchase from the Master Issuer the respective principal
amount of each Series and Class of the Offered Notes set forth opposite such
Underwriter's name in Schedule I hereto at the Issue Price. The Master Issuer
will not be obligated to deliver any of the Offered Notes except upon payment
for all the Offered Notes to be purchased as provided herein.
(b) The Master Issuer understands that the Underwriters intend to make
a public offering of their respective portions of the Offered Notes as soon
after the effectiveness of this Agreement as in the judgment of each of the
Representatives is advisable, and initially to offer the Offered Notes on the
terms set forth in the Prospectus. The Master Issuer acknowledges and agrees
that the Underwriters may offer and sell Offered Notes to or through any
affiliate of an Underwriter and that any such affiliate may offer and sell the
Offered Notes purchased by it to or through any Underwriter.
(c) Upon receipt of payment for the Offered Notes, delivery of such
Offered Notes will be made at the offices of Allen & Overy LLP at 1:00 P.M.,
London time, on the Issue 2007-1 Closing Date, or at such other time on the
Issue 2007-1 Closing Date as the Master Issuer and the Representatives on
behalf of the Underwriters may agree.
(d) In consideration of the obligations undertaken herein by the
Underwriters, the Master Issuer agrees to pay to the relevant Underwriters a
selling commission (the SELLING COMMISSION) of:
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0.0418 per cent. of the aggregate principal amount of the Series 1 Class
A Notes;
0.0418 per cent. of the aggregate principal amount of the Series 2 Class
A1 Notes;
0.0418 per cent. of the aggregate principal amount of the Series 2 Class
A2 Notes;
0.0418 per cent. of the aggregate principal amount of the Series 4 Class
A Notes;
0.1667 per cent. of the aggregate principal amount of the Series 1 Class
B Notes; and
0.2667 per cent. of the aggregate principal amount of the Series 1 Class
C Notes,
respectively, and a combined management and underwriting commission (the
MANAGEMENT AND UNDERWRITING COMMISSION) of:
0.0209 per cent. of the aggregate principal amount of the Series 1 Class
A Notes;
0.0209 per cent. of the aggregate principal amount of the Series 2 Class
A1 Notes;
0.0209 per cent. of the aggregate principal amount of the Series 2 Class
A2 Notes;
0.0209 per cent. of the aggregate principal amount of the Series 4 Class
A Notes;
0.0833 per cent. of the aggregate principal amount of the Series 1 Class
B Notes; and
0.1333 per cent. of the aggregate principal amount of the Series 1 Class
C Notes.
(e) The Master Issuer undertakes and covenants that on the Issue 2007-
1 Closing Date it (or a third party on its behalf) will pay to the Class A
Representatives the aggregate Selling Commission in respect of the Class A
Offered Notes and the aggregate Management and Underwriting Commission in
respect of the Class A Offered Notes calculated in accordance with paragraph
(d) above. The Master Issuer undertakes and covenants that on the Issue 2007-1
Closing Date it (or a third-party on its behalf) will pay to the Class A2 Joint
Lead Underwriters the aggregate selling commission in respect of the Class A2
Offered Notes and the aggregate Management and Underwriting Commission in
respect of the Class A2 Offered Notes calculated in accordance with paragraph
(d) above. The Master Issuer undertakes and covenants that on the Issue 2007-1
Closing Date it (or a third-party on its behalf) will pay to the Class B/C
Joint Lead Underwriters the aggregate selling commission in respect of the
Class B/C Offered Notes and the aggregate Management and Underwriting
Commission in respect of the Class B/C Offered Notes calculated in accordance
with paragraph (d) above.
(f) Against delivery of the Offered Notes (in the form of one or more
Global Notes) to Citibank, N.A London Branch, as custodian for, and registered
in the name of Cede & Co. as nominee of DTC, for the account of (i) the Class A
Underwriters (with respect to the Class A Offered Notes), (ii) the Class A2
Joint Lead Underwriters (with respect to the Class A2 Offered Notes) or (iii)
the Class B/C Joint Lead Underwriters (with respect to the Class B/C Offered
Notes), (1) the Class A Underwriters will pay to the Class A Representatives
the gross underwriting proceeds for the Class A Offered Notes and (2) the Class
A Representatives (with respect to the Class A Offered Notes), the Class A2
Joint Lead Underwriters (with respect to the Class A2 Offered Notes) and the
Class B/C Joint Lead Underwriters (with respect to the Class B/C Offered Notes)
will pay to or for the account of the Master Issuer the gross underwriting
proceeds for the Offered Notes net of any applicable transfer taxes payable in
connection with the sale of such Offered Notes. Such payment shall be made by
the Class A Representatives (with respect to the Class A Offered Notes), the
Class A2 Joint Lead Underwriters (with respect to the Class A2 Offered Notes)
and the Class B/C Joint Lead Underwriters (with respect to the Class B/C
Offered Notes) in U.S. Dollars in immediately available funds, to the
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account of the 2007-1 Master Issuer Dollar Currency Swap Providers (being such
account details of which are notified in writing to the Representatives for this
purpose prior to the Issue 2007-1 Closing Date) and shall be evidenced by a
confirmation from the Class A Representatives, the Class A2 Joint Lead
Underwriters or the Class B/C Joint Lead Underwriters, as applicable, that they
have so made that payment to or for the account of the Master Issuer. The Global
Notes shall be made available for inspection by the Class A Representatives, the
Class A2 Joint Lead Underwriters and the Class B/C Joint Lead Underwriters, as
applicable, not later than 1:00 P.M., London time, on the London Business Day
prior to the Issue 2007-1 Closing Date.
(g) The Master Issuer acknowledges and agrees that the Underwriters
are acting solely in the capacity of an arm's length contractual counterparty
to the Master Issuer with respect to the offering of Notes contemplated hereby
(including in connection with determining the terms of the offering) and not as
a financial advisor or a fiduciary to, or an agent of, the Master Issuer or any
other person. Additionally, no Underwriter is advising the Master Issuer or
any other person as to any legal, tax, investment, accounting or regulatory
matters in any jurisdiction. The Master Issuer may consult with its own
advisors concerning such matters and shall be responsible for making its own
independent investigation and appraisal of the transactions contemplated
hereby, and the Underwriters shall have no responsibility or liability to the
Master Issuer with respect thereto. Any review by the Underwriters of the
Master Issuer, the transactions contemplated hereby or other matters relating
to such transactions will be performed solely for the benefit of the
Underwriters and shall not be on behalf of the Master Issuer.
2. Selling Restrictions
(a) United States. It is understood that several Underwriters propose
to offer the Offered Notes for sale to the public in the United States as set
forth in the Preliminary Prospectus and the Prospectus. Any Underwriters that
are not U.S. registered broker dealers will offer and sell the Offered Notes in
the United States only through U.S. registered broker dealers.
(b) United Kingdom. Each of the Master Issuer, Funding 2 and Halifax
and each Class A Underwriter (with respect to the Class A Offered Notes only),
each Class A2 Joint Lead Underwriter (with respect to the Class A2 Offered
Notes only) and each Class B/C Joint Lead Underwriter (with respect to the
Class B/C Offered Notes only) severally represents and agrees that:
(i) it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activities (within the meaning of
Section 21 of the Financial Services and Markets Act 2000, as amended
(the FSMA)) received by it in connection with the issue or sale of any
Offered Notes in circumstances in which Section 21(1) of the FSMA does
not apply to the Master Issuer; and
(ii) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in relation
to the Offered Notes in, from or otherwise involving the United Kingdom.
(c) Norway. Each of the Master Issuer, Funding 2 and Halifax and each
Class A Underwriter (with respect to the Class A Offered Notes only), each
Class A2 Joint Lead Underwriter (with respect to the Class A2 Offered Notes
only) and each Class B/C Joint Lead Underwriter (with respect to the Class B/C
Offered Notes only) severally represents and agrees that it has not, directly
or indirectly, offered or sold and will not, directly or indirectly, offer or
sell in the Kingdom of Norway any Offered Notes other than to persons who are
registered with the Oslo Stock Exchange as professional investors.
(d) Republic of Italy. Each of the Master Issuer, Funding 2 and
Halifax and each Class A Underwriter (with respect to the Class A Offered Notes
only), each Class A2 Joint Lead Underwriter
8
(with respect to the Class A2 Offered Notes only) and each Class B/C Joint Lead
Underwriter (with respect to the Class B/C Offered Notes only) acknowledges that
the offering of the Offered Notes has not been registered pursuant to Italian
securities legislation and, accordingly, no Offered Notes may be offered, sold
or delivered, nor may copies of the Prospectus or of any other document relating
to the Offered Notes be distributed in the Republic of Italy, except:
(i) to professional investors (operatori qualificati) (the
PROFESSIONAL INVESTORS), as defined in Article 31, second paragraph, of
CONSOB (the Italian Securities Exchange Commission) Regulation No. 11522
of 1 July 1998, as amended (REGULATION NO. 11522); or
(ii) in circumstances which are exempted from the rules on solicitation
of investments pursuant to Article 100 of Legislative Decree No. 58 of 24
February 1998, as amended (the FINANCIAL SERVICES ACT) and Article 33,
first paragraph, of CONSOB Regulation No. 11971 of 14 May 1999, as
amended (REGULATION NO. 11971).
Any offer, sale or delivery of the Offered Notes or distribution of copies of
the Prospectus or any other document relating to the Notes in the Republic of
Italy under (i) or (ii) above must be:
(a) made by an investment firm, bank or financial intermediary
permitted to conduct such activities in the Republic of Italy in
accordance with the Financial Services Act, Regulation No. 11522 and
Legislative Decree No. 385 of 1 September 1993, as amended (the BANKING
ACT); and
(b) in compliance with Article 129 of the Banking Act and the
implementing guidelines of the Bank of Italy, as amended from time to
time, pursuant to which the Bank of Italy may request information on the
issue or the offer of securities in the Republic of Italy; and
(c) in compliance with any other applicable laws and regulations or
requirement imposed by CONSOB.
(e) Sweden. Each of the Master Issuer, Funding 2 and Halifax and each
Class A Underwriter (with respect to the Class A Offered Notes only), each
Class A2 Joint Lead Underwriter (with respect to the Class A2 Offered Notes
only) and each Class B/C Joint Lead Underwriter (with respect to the Class B/C
Offered Notes only) severally represents and agrees that it will not, directly
or indirectly, offer for subscription or purchase or issue invitations to
subscribe for or buy Offered Notes or distribute any draft or definite document
in relation to any such offer, invitation or sale except in circumstances that
will not result in a requirement to prepare a prospectus or an offer to the
public pursuant to the provisions of the Swedish Financial Instruments Trading
Act (lag (1991:980) om handel med finansiella instrument).
(f) Hong Kong. Each of the Master Issuer, Funding 2 and Halifax and
each Class A Underwriter (with respect to the Class A Offered Notes only), each
Class A2 Joint Lead Underwriter (with respect to the Class A2 Offered Notes
only) and each Class B/C Joint Lead Underwriter (with respect to the Class B/C
Offered Notes only) severally represents and agrees that:
(i) it has not offered or sold and will not offer or sell in
Hong Kong, by means of any document, any Offered Notes other than (A) to
persons whose ordinary business it is to buy or sell shares or
debentures (whether as principal or agent); or (B) to "professional
investors" as defined in the Securities and Futures Ordinance (Cap. 571)
of Hong Kong and any rules made under that Ordinance; or (C) in other
circumstances which do not result in the document being a "prospectus"
as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do
not constitute an offer to the public within the meaning of that
Ordinance; and
9
(ii) it has not issued or had in its possession for the purposes
of issue and will not issue or have in its possession for the purposes
of issue, whether in Hong Kong or elsewhere, any advertisement,
invitation or document relating to the Offered Notes, which is directed
at, or in the contents of which are likely to be accessed or read by,
the public in Hong Kong (except if permitted to do so under the
securities laws of Hong Kong) other than with respect to Offered Notes
which are or are intended to be disposed of only to persons outside Hong
Kong or only to "professional investors" within the meaning of the
Securities and Futures Ordinance (Cap.571) and any rules made under that
Ordinance.
(g) Japan. Each of the Master Issuer, Funding 2 and Halifax and each
Class A Underwriter (with respect to the Class A Offered Notes only), Class A2
Joint Lead Underwriter (with respect to the Class A2 Offered Notes only) and
each Class B/C Joint Lead Underwriter (with respect to the Class B/C Offered
Notes only) severally represents and agrees that the Offered Notes have not
been and will not be registered under the Securities and Exchange Law of Japan
and it has not offered or sold and will not offer or sell any Offered Notes,
directly or indirectly, in Japan or to, or for the benefit of, any resident of
Japan (which term as used herein means any person resident in Japan, including
any corporation or other entity organised under the laws of Japan) or to others
for re-offering or resale, directly or indirectly, in Japan or to, or for the
benefit of, any resident of Japan, except pursuant to an exemption from the
registration requirements of, and otherwise in compliance with, the Securities
and Exchange Law and any other applicable laws, regulations and ministerial
guidelines of Japan.
(h) People's Republic of China. Each of the Master Issuer, Funding 2
and Halifax and each Class A Underwriter (with respect to the Class A Offered
Notes only), each Class A2 Joint Lead Underwriter (with respect to the Class A2
Offered Notes only) and each Class B/C Joint Lead Underwriter (with respect to
the Class B/C Offered Notes only) severally represents and agrees that neither
it nor any of its affiliates has offered or sold or will offer or sell any of
the Offered Notes in the People's Republic of China (excluding Hong Kong, Macau
and Taiwan, the PRC) as part of the initial distribution of the Offered Notes.
(i) Singapore. Each of the Master Issuer, Funding 2 and Halifax and
each Class A Underwriter (with respect to the Class A Offered Notes only), each
Class A2 Joint Lead Underwriter (with respect to the Class A2 Offered Notes
only) and each Class B/C Joint Lead Underwriter (with respect to the Class B/C
Offered Notes only) severally represents and agrees that the Prospectus has not
been registered as a prospectus with the Monetary Authority of Singapore under
the Securities and Futures Act, Chapter 289 of Singapore (the SECURITIES AND
FUTURES ACT) and, accordingly, the Offered Notes may not be offered or sold or
made the subject of an invitation for subscription or purchase, nor may the
Prospectus or any other document or material in connection with the offer or
sale or invitation for subscription or purchase, of such Offered Notes be
circulated or distributed, whether directly or indirectly, to the public or any
member of the public in Singapore other than (i) to an institutional investor
or other person falling within section 274 of the Securities and Futures Act,
(ii) to a relevant person, or any person pursuant to section 275(1A) of the
Securities and Futures Act, and in accordance with the conditions specified in
section 275 of the Securities and Futures Act or (iii) otherwise than pursuant
to, and in accordance with the conditions of, any other applicable provision of
the Securities and Futures Act.
3. (I) Representations and Warranties of the Master Issuer. The
Master Issuer represents and warrants to, and agrees with, the Underwriters,
and each of them that:
(a) Registration Statement and Prospectus. Funding 2 has prepared and
filed with the Commission a Registration Statement on Form S-3 (No. 333-
137495). The Registration Statement as amended at the time when it became
effective, or, if a post-effective amendment is filed with respect thereto, as
amended by such post-effective amendment at the time of its effectiveness,
including all exhibits thereto, is referred to in this Agreement as the
REGISTRATION STATEMENT. The Registration
10
Statement has been declared effective by the Commission under the Securities Act
and no stop order suspending the effectiveness of the Registration Statement has
been issued by the Commission and no proceeding for that purpose has been
instituted or, to the best knowledge of the Master Issuer, threatened by the
Commission. Funding 2 has filed with the Commission pursuant to Rule 424(b) the
Preliminary Prospectus and has done so within the applicable period of time
required under the Securities Act and the rules and regulations of the
Commission thereunder (the RULES AND REGULATIONS). Funding 2 also proposes to,
and shall, file with the Commission pursuant to Rule 424(b) under the Securities
Act a prospectus supplement dated 23 February 2007 (together with information
referred to under the caption "Static Pool Data" in Annex F therein regardless
of whether it is deemed a part of the Registration Statement or Prospectus, the
PROSPECTUS SUPPLEMENT) to the prospectus dated 13 February 2007 (the BASE
PROSPECTUS and, as amended or supplemented to the date hereof, and as further
supplemented by the Prospectus Supplement, the PROSPECTUS) relating to the
Offered Notes and the method of distribution thereof. The Registration
Statement, at the time it became effective, any post-effective amendment
thereto, at the time it became effective, the Preliminary Prospectus, as of its
date and as of the Time of Sale, and the Prospectus, as of the date of the
Prospectus Supplement, complied and on the Issue 2007-1 Closing Date, the
Registration Statement, the Preliminary Prospectus and the Prospectus (and any
amendments or supplements thereto) will comply, in all material respects with
the applicable requirements of the Securities Act, the Exchange Act and the
Trust Indenture Act of 1939, as amended (the TRUST INDENTURE ACT), and the
respective rules thereunder; and the Registration Statement as of the applicable
effective date as to each part of the Registration Statement and any amendment
thereto pursuant to Rule 430B(f)(2) under the Securities Act, did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; the Preliminary Prospectus (except for the omission of any pricing
related information), as of its date and as of the Time of Sale, did not contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Prospectus as
of the date of the Prospectus Supplement did not, and on the Issue 2007-1
Closing Date will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided in each case that the Master Issuer makes no representation and
warranty with respect to any statements or omissions made: (i) in that part of
the Registration Statement which constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Note Trustee, (ii)
in reliance upon and in conformity with information relating to any Underwriter
furnished to the Master Issuer in writing by or on behalf of any Underwriter
through the Representatives expressly for use in the Registration Statement, the
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto
or (iii) in the documents incorporated by reference under the heading "Issuing
entity swap providers" in the Preliminary Prospectus and the Prospectus. The
information and statements contained in (A) the Investor Presentation Material
and (B) any other marketing material relating to the Offered Notes approved by
and containing information provided by the Master Issuer, Funding 2, the
Mortgages Trustee or Halifax for use in the marketing of the Offered Notes,
other than rating agency pre-sale reports and sales memoranda or term sheets
prepared by the Underwriters for their internal use (the MARKETING MATERIALS
and, together with the Investor Presentation Material, the INVESTOR INFORMATION)
did not as of the Time of Sale, and will not, as of the Issue 2007-1 Closing
Date, contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Master Issuer
further represents and warrants that the Master Issuer was not, as of any date
on or after which a bona fide offer (as used in Rule 164(h)(2) under the
Securities Act) of the Offered Notes was made, an "ineligible issuer", as
defined in Rule 405 under the Securities Act.
(b) No Material Adverse Change. As of the date on which the public
offering price of the Offered Notes was determined and (if different) as of the
date of this Agreement, there has not been any material adverse change or any
development involving a prospective material adverse change, in or affecting
the business, prospects, management, financial or trading position,
shareholders' equity or results of operations of the Master Issuer, other than
as set forth in the
11
Preliminary Prospectus, with respect to the date on which the public offering
price of the Offered Notes was determined, or in the Prospectus, with respect to
the date of this Agreement.
(c) Incorporation and Good Standing. The Master Issuer has been duly
incorporated and is a validly existing organization in good standing under the
laws of its jurisdiction of organization, is duly qualified to do business in
England and Wales and has full right, power and authority necessary to conduct
its business as described in the Preliminary Prospectus and the Prospectus,
except where the failure to be so qualified or have such power or authority
would not, individually or in the aggregate, have a material adverse effect on
the transactions contemplated herein or in the Legal Agreements (a MASTER
ISSUER MATERIAL ADVERSE EFFECT). The Master Issuer has not taken any corporate
action nor (to the best of its knowledge and belief) have any other steps been
taken or legal proceedings been started or threatened against it for its
winding-up, dissolution or reorganization or for the appointment of a receiver,
administrator, administrative receiver or similar officer of it or of any or
all of its assets or revenues.
(d) The Notes. The Offered Notes have been duly authorized by the
Master Issuer and, when duly executed, authenticated, issued and delivered as
provided in the Master Issuer Trust Deed and the Master Issuer Paying Agent and
Agent Bank Agreement and paid for as provided herein, will be duly and validly
issued and outstanding and will constitute valid and legally binding
obligations of the Master Issuer enforceable against the Master Issuer in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability (collectively, the ENFORCEABILITY EXCEPTIONS) and the Master
Issuer Trust Deed has been duly qualified under the Trust Indenture Act.
(e) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Master Issuer.
(f) Legal Agreements. Each of the Legal Agreements to which the
Master Issuer is a party will be duly authorized by the Master Issuer on or
prior to the Issue 2007-1 Closing Date and when duly executed and delivered in
accordance with its terms by each of the parties thereto, will constitute a
valid and legally binding agreement of the Master Issuer enforceable against
the Master Issuer in accordance with its terms, subject to the Enforceability
Exceptions.
(g) Descriptions of Legal Agreements. Each Legal Agreement conforms
in all material respects to the description thereof contained in the
Preliminary Prospectus and the Prospectus.
(h) No Violation or Default. The Master Issuer is not (i) in
violation of its Memorandum and Articles of Association; (ii) in default in any
material respect, and no event has occurred that, with notice or lapse of time
or both, would constitute such a default, in the due performance or observance
of any term, covenant or condition contained in its Memorandum and Articles of
Association or in any agreement or instrument to which the Master Issuer is a
party or by which the Master Issuer is bound or to which any of the property or
assets of the Master Issuer is subject; or (iii) in violation of any applicable
law or statute or any judgment, decree, authorisation, order, license, rule or
regulation of any court or governmental agency or any other body or person
having jurisdiction over the Master Issuer, or any of its properties (MASTER
ISSUER GOVERNMENTAL AUTHORITY), except, in the case of clauses (ii) and (iii)
above, for any such default or violation that would not, individually or in the
aggregate, have a Master Issuer Material Adverse Effect.
(i) No Conflicts with Existing Instruments. The execution, delivery
and performance by the Master Issuer of each of the Legal Agreements, the
issuance and sale of the Offered Notes on the terms set forth in this Agreement
and compliance by the Master Issuer with the terms thereof will not (i)
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Master Issuer
(other than those created in, or imposed by, the Legal Agreements themselves)
12
pursuant to, any indenture, mortgage, trust deed, loan agreement or other
agreement or instrument to which the Master Issuer is a party or by which the
Master Issuer is bound or to which any of the property or assets of the Master
Issuer is subject, (ii) result in any violation of the provisions of the
Memorandum and Articles of Association of the Master Issuer or (iii) result in
the violation of any applicable law or statute or any judgment, decree,
license, authorisation, rule, notification, order or regulation of any Master
Issuer Governmental Authority, except, in the case of clauses (i) and (iii)
above, for any such conflict, breach or violation that would not, individually
or in the aggregate, have a Master Issuer Material Adverse Effect.
(j) No Consents Required. No consent, license, notification,
approval, authorization, order, registration or qualification of or with any
Master Issuer Governmental Authority is required for the execution, delivery
and performance by the Master Issuer of each of the Legal Agreements, the
issuance and sale of the Offered Notes and compliance by the Master Issuer with
the terms thereof and the consummation of the transactions contemplated by the
Legal Agreements, except for (i) the registration of the Offered Notes under
the Securities Act, and such consents, approvals, authorizations, orders and
registrations or qualifications as may be required under applicable state
securities, Blue Sky or similar laws in connection with the purchase and
distribution of the Class A Offered Notes by the Class A Underwriters, of the
Class A2 Offered Notes by the Class A2 Joint Lead Underwriters and of the Class
B/C Offered Notes by the Class B/C Joint Lead Underwriters and (ii) those which
have been, or will prior to the Issue 2007-1 Closing Date be taken, fulfilled
or done, and which are, or will on the Issue 2007-1 Closing Date be, in full
force and effect, other than registration required under Section 395 of the UK
Companies Act 1985.
(k) Legal Proceedings. Except as described in the Preliminary
Prospectus and the Prospectus, there are no legal, arbitration, governmental or
regulatory investigations, actions, suits or proceedings pending to which the
Master Issuer is a party or to which any property of the Master Issuer is the
subject that, individually or in the aggregate, if determined adversely to the
Master Issuer, could reasonably be expected to have a Master Issuer Material
Adverse Effect; to the best knowledge of the Master Issuer, no such
investigations, actions, suits or proceedings are threatened by any Master
Issuer Governmental Authority or threatened by others.
(l) Investment Company Act. The Master Issuer is not and, after
giving effect to the offering and sale of the Offered Notes and the application
of the proceeds thereof as described in the Prospectus, will not be an
"investment company" or an entity "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
INVESTMENT COMPANY ACT).
(m) Representations in Legal Agreements. The representations and
warranties of the Master Issuer contained in the Legal Agreements are true and
correct in all material respects.
(n) Taxation. Save as described in the legal opinions referred to in
Section 5(g) of this Agreement, no stamp or other similar duty is assessable or
payable in the United Kingdom, and no withholding or deduction for any taxes,
duties, assessments or governmental charges of whatever nature is imposed or
made for or on account of any income, registration, transfer or turnover taxes,
customs or other duties or taxes of any kind in connection with the
authorization, execution or delivery of the Legal Agreements or with the
authorization, issue, sale or delivery of the Notes and (except as disclosed in
the Prospectus) the performance of the Master Issuer's, Funding 2's and/or, as
the case may be, the Mortgages Trustee's obligations under the Legal Agreements
and the Notes. This warranty does not apply to any United Kingdom corporation
tax which may be levied, collected, withheld or assessed in connection with the
authorization, execution or delivery of the Legal Agreements or with the
authorization, issue, sale or delivery of the Notes.
(o) Events of Default. No event has occurred or circumstance arisen
which, had the Notes already been issued, would (whether or not with the giving
of notice and/or the passage of time
13
and/or the fulfillment of any other requirement) constitute an Event of Default
as set out in the Conditions of the Notes.
(p) No Subsidiaries. The Master Issuer has no subsidiaries or
subsidiary undertakings within the meanings of Sections 258 and 736 of the UK
Companies Act 1985.
(q) No Activities. The Master Issuer has not engaged in any
activities since its incorporation other than (i) those incidental to any
registration or re-registration as a public limited company under the UK
Companies Acts 1985 and 1989 and various changes to its name, directors,
secretary, registered office, Memorandum and Articles of Association; (ii) the
authorization, execution and, in certain cases, amendment of the Legal
Agreements to which it is a party; (iii) the activities referred to or
contemplated in the Legal Agreements to which it is a party or in the
Prospectus and (iv) the authorization and issue by it of the Notes. The Master
Issuer has not (other than as set out in the Prospectus) prepared any accounts
and has neither paid any dividends nor made any distributions since the date of
its incorporation.
(r) Prospectus Rules. The Prospectus (combined with the related
United Kingdom supplement) has been (i) approved by the UK Listing Authority as
an approved prospectus for the purposes of Section 85(2) of the FSMA and the
Prospectus Rules made under Part VI of the FSMA (the PROSPECTUS RULES) and (ii)
published and made available to the public in accordance with the Prospectus
Rules.
(s) No Prior Security. Save as set out in any of the Legal
Agreements, there exists no mortgage, lien, pledge, assignation or other charge
on or over the assets of the Master Issuer and, other than the Legal
Agreements, the Master Issuer has not entered into any indenture or trust deed.
(t) Security for the Notes. Without prejudice to the Reservations as
to matters of English law only in the Allen & Overy LLP legal opinion and Scots
law only in the Shepherd and Wedderburn LLP legal opinion as to the enforcement
of security (and, for the avoidance of doubt, excluding from such Reservations
the factual assumptions on which they are made (including the assumptions as to
the solvency of the Master Issuer)), which Reservations the Master Issuer
represents are not material in the context of the Transaction (except to the
extent disclosed in the Prospectus), but subject to Reservations 4 and 6 of the
Allen & Overy LLP legal opinion, the Master Issuer has created the following
security interests in the Master Issuer Deed of Charge: (i) an assignment by
way of first fixed security of the Master Issuer's right, title, interest and
benefit in the Master Intercompany Loan Agreement, the Master Issuer Swap
Agreements, the Funding 2 Deed of Charge, the Master Issuer Trust Deed, the
Master Issuer Paying Agent and Agent Bank Agreement, the Master Issuer Cash
Management Agreement, the Master Issuer Corporate Services Agreement, the
Master Issuer Bank Account Agreement, the Master Issuer Post-Enforcement Call
Option Agreement and any other of the Legal Agreements to which the Master
Issuer is a party; (ii) an assignment by way of first ranking fixed charge
(which may take effect as a floating charge) over the Master Issuer Bank
Accounts; (iii) a first ranking fixed charge (which may take effect as a
floating charge) over the Master Issuer's right, title, interest and benefit to
any authorized investments made with moneys standing to the credit of any of
the Master Issuer Bank Accounts; and (iv) a first floating charge over the
whole of the assets and undertaking of the Master Issuer which are not
otherwise effectively subject to any fixed charge or assignment by way of
security but extending over all of the Master Issuer's Scottish assets.
(u) Capitalization. The authorized capital of the Master Issuer is
as set out in the Prospectus.
(v) United States Income Tax. The Master Issuer has not engaged in
any activities in the United States (directly or through agents), derived any
income from United States sources as determined under the U.S. Internal Revenue
Code of 1986, as amended (the CODE), and has not held
14
nor currently holds any property which would cause it to be engaged or deemed to
be engaged in a trade or business within the United States as determined under
the Code.
(w) Financial Condition. Since the date of incorporation of the
Master Issuer, there has been no change (nor any development or event involving
a prospective change of which the Master Issuer is, or might reasonably be
expected to be, aware) which is materially adverse to the condition (financial
or other), prospects, results of operations or general affairs of the Master
Issuer.
(II) Representations and Warranties of Funding 2 and the Mortgages
Trustee. Each of Funding 2 and the Mortgages Trustee severally represents and
warrants (in respect of itself only) to, and agrees with, the Underwriters, and
each of them that:
(a) Registration Statement and Prospectus. Funding 2 has filed with
the Commission the Registration Statement. The Registration Statement has been
declared effective by the Commission under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement has been issued by
the Commission and no proceeding for that purpose has been instituted or, to
the best knowledge of Funding 2, threatened by the Commission. Funding 2 has
filed with the Commission pursuant to Rule 424(b) the Preliminary Prospectus
and has done so within the applicable period of time required under the
Securities Act and the Rules and Regulations; and Funding 2 also proposes to,
and shall, file with the Commission pursuant to Rule 424(b) under the
Securities Act the Prospectus relating to the Offered Notes and the method of
distribution thereof. The Registration Statement, at the time it became
effective, any post-effective amendment thereto, at the time it became
effective, the Preliminary Prospectus, as of its date and as at the Time of
Sale, and the Prospectus, as of the date of the Prospectus Supplement, complied
and on the Issue 2007-1 Closing Date, the Registration Statement, the
Preliminary Prospectus and the Prospectus (and any amendments or supplements
thereto), will comply in all material respects with the applicable requirements
of the Securities Act, the Exchange Act and the Trust Indenture Act and the
respective rules thereunder; the Registration Statement, as of the applicable
effective date as to each part of the Registration Statement and any amendment
thereto pursuant to Rule 430B(f)(2) under the Securities Act, did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; the Preliminary Prospectus (except for the omission of any pricing
related information), as of its date and as of the Time of Sale, did not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Prospectus,
as of the date of the Prospectus Supplement, did not, and on the Issue 2007-1
Closing Date will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided in each case that Funding 2 and the Mortgages Trustee make no
representation and warranty with respect to any statements or omissions made:
(i) in that part of the Registration Statement which constitutes the Statement
of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of
the Note Trustee, (ii) in reliance upon and in conformity with information
relating to any Underwriter furnished to the Master Issuer in writing by or on
behalf of any Underwriter through the Representatives expressly for use in the
Registration Statement, the Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto or (iii) in the documents incorporated by
reference under the heading "Issuing entity swap providers" in the Preliminary
Prospectus and the Prospectus; and the conditions to the use by Funding 2 of a
registration statement on Form S-3 under the Securities Act, as set forth in
the General Instructions to Form S-3, have been satisfied. The Investor
Information did not, as of the Time of Sale and will not, as of the Issue 2007-
1 Closing Date, contain an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(b) No Material Adverse Change. As of the date on which the public
offering price of Offered Notes was determined and (if different) as of the
date of this Agreement, there has not been any material adverse change or any
development involving a prospective material adverse change, in
15
or affecting the business, prospects, management, financial position,
shareholders' equity or results of operations of either Funding 2 or the
Mortgages Trustee, other than as set forth in the Preliminary Prospectus, with
respect to the date on which the public offering price of the Offered Notes was
determined, or in the Prospectus, with respect to the date of this Agreement.
(c) Incorporation and Good Standing. Each of Funding 2 and the
Mortgages Trustee has been duly incorporated and is a validly existing
organization in good standing under the laws of its jurisdiction of
organization, is duly qualified to do business in England and Wales (with
respect to Funding 2) and Jersey (with respect to the Mortgages Trustee) and
has full right, power and authority necessary to conduct its business as
described in the Preliminary Prospectus and the Prospectus, except where the
failure to be so qualified or have such power or authority would not,
individually or in the aggregate, have a material adverse effect on the
transactions contemplated herein or in the Legal Agreements (a FUNDING 2
MATERIAL ADVERSE EFFECT or a MORTGAGES TRUSTEE MATERIAL ADVERSE EFFECT, as the
case may be). Neither has taken any corporate action nor (to the best of its
knowledge and belief) have any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrator,
administrative receiver or similar officer of it or of any or all of its assets
or revenues.
(d) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by each of Funding 2 and the Mortgages Trustee.
(e) Legal Agreements. Each of the Legal Agreements to which Funding 1
or the Mortgages Trustee is a party will be duly authorized by each of Funding
2 and the Mortgage Trustee on or prior to the Issue 2007-1 Closing Date and
when duly executed and delivered in accordance with its terms by each of the
parties thereto, will constitute a valid and legally binding agreement of
Funding 2 or the Mortgages Trustee, as the case may be, enforceable against
Funding 2 or the Mortgages Trustee, as the case may be, in accordance with its
terms, subject to the Enforceability Exceptions.
(f) Descriptions of Legal Agreements. Each Legal Agreement to which
Funding 2 or the Mortgages Trustee is a party conforms in all material respects
to the description thereof contained in the Preliminary Prospectus and the
Prospectus.
(g) No Violation or Default. Neither Funding 2 nor the Mortgages
Trustee is (i) in violation of its Memorandum and Articles of Association or
similar organizational documents; (ii) in default in any material respect, and
no event has occurred that, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in its Memorandum and Articles of Association
or in any other agreement or instrument to which Funding 2 or the Mortgages
Trustee, as the case may be, is a party or by which Funding 2 or the Mortgages
Trustee, as the case may be, is bound or to which any of the property or assets
of Funding 1 or the Mortgages Trustee, as the case may be, is subject; or (iii)
in violation of any applicable law or statute or any judgment, decree, order,
authorisation, license, rule or regulation of any court or governmental agency
or any other body or person having jurisdiction over Funding 1 or the Mortgages
Trustee, as the case may be, or any of its properties (FUNDING 2 GOVERNMENTAL
AUTHORITY or MORTGAGES TRUSTEE GOVERNMENTAL AUTHORITY, as the case may be),
except, in the case of clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a Funding 2
Material Adverse Effect or a Mortgages Trustee Material Adverse Effect, as the
case may be.
(h) No Conflicts with Existing Instruments. The execution, delivery
and performance by each of Funding 2 and the Mortgages Trustee of each of the
Legal Agreements to which each is a party and compliance by each of them with
the terms thereof will not (i) conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of Funding 2 or the Mortgages Trustee (other than those created in, or
imposed by, the Legal Agreements themselves), as
16
the case may be, pursuant to, any indenture, mortgage, trust deed, loan
agreement or other agreement or instrument to which Funding 2 or the Mortgages
Trustee, as the case may be, is a party or by which Funding 2 or the Mortgages
Trustee, as the case may be, is bound or to which any of the property or assets
of Funding 2 or the Mortgages Trustee, as the case may be, is subject, (ii)
result in any violation of the provisions of the Memorandum and Articles of
Association of Funding 2 or the Mortgages Trustee, as the case may be, or (iii)
result in the violation of any applicable law or statute or any judgment,
decree, license, authorisation, rule, notification, order or regulation of any
Funding 2 Governmental Authority or Mortgages Trustee Governmental Authority, as
the case may be, except, in the case of clauses (i) and (iii) above, for any
such conflict, breach or violation that would not, individually or in the
aggregate, have a Funding 2 Material Adverse Effect or a Mortgages Trustee
Material Adverse Effect, as the case may be.
(i) No Consents Required. No consent, license, notification,
approval, authorization, order, registration or qualification of or with any
Funding 2 Governmental Authority or Mortgages Trustee Governmental Authority,
as the case may be, is required for the execution, delivery and performance by
Funding 2 or the Mortgages Trustee of each of the Legal Agreements and
compliance by Funding 2 or the Mortgages Trustee, as the case may be, with the
terms thereof and of the Notes and the consummation of the transactions
contemplated by the Legal Agreements, except for (i) the registration of the
Offered Notes under the Securities Act, and such consents, approvals,
authorizations, orders and registrations or qualifications as may be required
under applicable state securities Blue Sky or similar laws in connection with
the purchase and distribution of the Class A Offered Notes by the Class A
Underwriters, of the Class A2 Offered Notes by the Class A2 Joint Lead
Underwriters and of the Class B/C Offered Notes by the Class B/C Joint Lead
Underwriters and (ii) those which have been, or will prior to the Issue 2007-1
Closing Date be, taken, fulfilled or done, and which are, or will on the Issue
2007-1 Closing Date be, in full force and effect, other than registration under
Section 395 of the UK Companies Act 1985.
(j) Legal Proceedings. Except as described in the Preliminary
Prospectus and the Prospectus, there are no legal, arbitration, governmental or
regulatory investigations, actions, suits or proceedings pending to which
either Funding 2 or the Mortgages Trustee is a party or to which any property
of either Funding 2 or the Mortgages Trustee is the subject that, individually
or in the aggregate, if determined adversely to either Funding 2 or the
Mortgages Trustee, as the case may be, could reasonably be expected to have a
Funding 2 Material Adverse Effect or a Mortgages Trustee Material Adverse
Effect, as the case may be; to the best knowledge of Funding 2 or the Mortgages
Trustee, as the case may be, no such investigations, actions, suits or
proceedings are threatened by any Funding 2 Governmental Authority or Mortgages
Trustee Governmental Authority, as the case may be, or threatened by others.
(k) Investment Company Act. Neither Funding 2 nor the Mortgages
Trustee is and, after giving effect to the offering and sale of the Offered
Notes and the application of the proceeds thereof as described in the
Prospectus, will be an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act.
(l) Representations in Legal Agreements. The representations and
warranties of each of Funding 2 and the Mortgages Trustee contained in the
Legal Agreements are true and correct in all material respects.
(m) Events of Default. With respect to Funding 2, no event has
occurred or circumstance arisen which, had the Master Intercompany Loan
Agreement already been entered into, would (whether or not with the giving of
notice and/or the passage of time and/or the fulfillment of any other
requirement) constitute an Event of Default as set out in the Master
Intercompany Loan Agreement.
(n) No Subsidiaries. Neither Funding 2 nor the Mortgages Trustee has
any subsidiaries or subsidiary undertakings within the meanings of Sections 258
and 736 of the Companies Act 1985.
17
(o) No Activities. Neither Funding 2 nor the Mortgages Trustee has
engaged in any activities since its incorporation other than (i) those
incidental to any registration or re-registration as private limited companies
under the laws of England and Wales (with respect to Funding 2) and Jersey
(with respect to the Mortgages Trustee) and (if any) various changes to its
name, directors, secretary, registered office, Memorandum and Articles of
Association; (ii) the authorization, execution and, in certain cases, amendment
of the Legal Agreements to which it is a party; (iii) the activities referred
to or contemplated in the Legal Agreements to which it is a party or in the
Prospectus; (iv) the activities undertaken in connection with the establishment
of the Mortgages Trust pursuant to the Mortgages Trust Deed, the issue of notes
by Permanent Financing (No. 1) PLC, the issue of notes by Permanent Financing
(No. 2) PLC, the issue of notes by Permanent Financing (No. 3) PLC, the issue
of notes by Permanent Financing (No. 4) PLC, the issue of notes by Permanent
Financing (No. 5) PLC, the issue of notes by Permanent Financing (No. 6) PLC,
the issue of notes by Permanent Financing (No. 7) PLC, the issue of notes by
Permanent Financing (No. 8) PLC, the issue of notes by Permanent Financing (No.
9) PLC (together, the FUNDING 1 ISSUERS) and the issue of the Notes by the
Master Issuer; (v) the filing of notification as a "data controller" by the
Mortgages Trustee and Funding 2 under the Data Protection Act 1998 (the DPA),
the registration of the Mortgages Trustee as a data user under the Data
Protection (Jersey) Law 2005 and the application by the Mortgages Trustee for a
standard license under the Consumer Credit Act 1974 (the CCA); and (vi) any
activities in connection with or incidental to the issue of notes by the
Funding 1 Issuers and the issue of the Notes by the Master Issuer. Neither
Funding 2 nor the Mortgages Trustee has prepared any accounts and has neither
paid any dividends nor made any distributions since the date of its
incorporation other than (i) an interim dividend paid by the Mortgages Trustee
to the trustee of the Permanent Mortgages Charitable Trust on 17 August 2004
for the year ended 31 December 2003, which was hence distributed to four
charities on 18 August 2004, (ii) an interim dividend paid by the Mortgages
Trustee to the trustee of the Permanent Mortgages Charitable Trust on 19
January 2006 for the year ending 31 December 2005, which was hence distributed
to one charity on 19 January 2006 and (iii) an interim dividend paid by the
Mortgages Trustee to the trustee of the Permanent Mortgages Charitable Trust on
30 May 2006 for the year ending 31 December 2005, which was hence distributed
to one charity on 30 May 2006.
(p) No Prior Security. Save as set out in any of the Legal
Agreements, there exists no mortgage, lien, pledge, assignation, or other
charge on or over the assets of Funding 2 and, other than the Legal Agreements,
Funding 2 has not entered into any indenture or trust deed.
(q) Security for the Loan Tranches. Without prejudice to the
Reservations as to matters of English law only in the Allen & Overy LLP legal
opinion and Scots law only in the Shepherd and Wedderburn LLP legal opinion as
to the enforcement of security (and, for the avoidance of doubt, excluding from
such Reservations the factual assumptions on which they are made (including the
assumptions as to the solvency of Funding 2)), which Reservations Funding 2
represents are not material in the context of the Transaction (except to the
extent disclosed in the Prospectus), but subject to Reservations 4 and 6 of the
Allen & Overy LLP legal opinion, Funding 2 has created the following security
interests in the Funding 2 Deed of Charge: (i) an assignment by way of first
fixed security (which may take effect as a floating charge) of Funding 2's
share of the Trust Property (as defined in the Mortgages Trust Deed); (ii) an
assignment by way of first fixed security of all of Funding 2's right, title,
interest and benefit in the Mortgage Sale Agreement, the Mortgages Trust Deed,
the Servicing Agreement, the Master Intercompany Loan Agreement, the Funding 2
Start-up Loan Agreement, the Funding 2 Guaranteed Investment Contract, the
Corporate Services Agreement, the Cash Management Agreement, the Bank Account
Agreement and any other of the Legal Agreements to which Funding 2 is a party;
(iii) an assignment by way of first ranking fixed security (which may take
effect as a floating charge) over Funding 2's right, title, interest and
benefit in the Funding 2 Bank Accounts; (iv) a first ranking fixed charge
(which may take effect as a floating charge) of Funding 2's right, title,
interest and benefit in all Authorized Investments purchased with moneys
standing to the credit of the Funding 2 Bank Accounts; and (v) a first floating
charge over all the assets and the undertaking of Funding 2 which are not
effectively subject to a fixed charge or assignment by way of security, but
extending over all of Funding 2's Scottish assets.
18
(r) Capitalization. The authorized capital of each of Funding 2 and
the Mortgages Trustee is as set out in the Prospectus.
(s) United States Income Tax. Neither Funding 2 nor the Mortgages
Trustee has engaged in any activities in the United States (directly or through
agents), derived any income from United States sources as determined under the
Code, and has held nor currently holds any property which would cause it to be
engaged or deemed to be engaged in a trade or business within the United States
as determined under the Code.
(t) Beneficial Owner. (i) The Mortgages Trustee holds and will
continue to hold the equitable title to the English Portfolio (excluding Loans
and Related Security which have been redeemed or which, in accordance with the
Mortgage Sale Agreement, have been re-assigned to the Seller since the relevant
Assignment Date) on a bare trust for the benefit of Funding 1, Halifax and,
from the Programme Date, Funding 2 as tenants in common absolutely; and (ii)
the Mortgages Trustee is the sole beneficiary of the Scottish Trust Property as
defined in and in terms of the relevant Scottish Declaration of Trust and holds
and will continue to hold all the rights and interest of the sole beneficiary
thereunder on a bare trust for the benefit of Funding 1, Halifax and, from the
Programme Date, Funding 2 as beneficial tenants in common absolutely upon the
terms of the relevant Scottish Declaration of Trust and the Mortgages Trust
Deed.
(III) Representations and Warranties of Halifax. Halifax
represents and warrants to, and agrees with, the Underwriters, and each of them
that:
(a) Registration Statement and Prospectus. The Registration Statement, at the
time it became effective, any post-effective amendment thereto, at the time it
became effective, and the Prospectus, as of the date of the Prospectus
Supplement, complied and on the Issue 2007-1 Closing Date, the Registration
Statement, the Preliminary Prospectus, as of its date and as of the Time of
Sale, and the Prospectus (and any amendments or supplements thereto), will
comply in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the Trust Indenture Act and the respective
rules thereunder; the Registration Statement, as of the applicable effective
date as to each part of the Registration Statement and any amendment thereto
pursuant to Rule 430B(f)(2) under the Securities Act, did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; the
Preliminary Prospectus (except for the omission of any pricing related
information), as of its date and as of the Time of Sale, did not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statement therein, in the light of the circumstances under
which they were made, not misleading; and the Prospectus did not, and on the
Issue 2007-1 Closing Date will not, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided in each case that Halifax makes no representation and
warranty with respect to any statements or omissions made: (i) in that part of
the Registration Statement which constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Note Trustee, (ii)
in reliance upon and in conformity with information relating to any Underwriter
furnished to the Master Issuer in writing by or on behalf of any Underwriter
through the Representatives expressly for use in the Registration Statement, the
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto
and (iii) in the documents incorporated by reference under the heading "Issuing
entity swap providers" in the Preliminary Prospectus and the Prospectus. The
documents incorporated by reference in the Preliminary Prospectus and the
Prospectus, when they were filed with the Commission under the Exchange Act,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder; and any further documents so filed and incorporated by reference in
the Prospectus, when such documents are filed with the Commission, will conform
in all material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder; provided, however, that Halifax makes no representation, warranty or
agreement as to the documents incorporated by reference under the heading
"Issuing
19
entity swap providers" in the Preliminary Prospectus and the Prospectus. The
Investor Information did not, as of the Time of Sale and will not, as of the
Issue 2007-1 Closing Date, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(b) Organization and Good Standing. Halifax has been duly organized
and is a validly existing organization in good standing under the laws of its
jurisdiction of organization, is duly qualified to do business in England and
Wales and has full right, power and authority necessary to conduct its business
as described in the Preliminary Prospectus and the Prospectus, except where the
failure to be so qualified or have such power or authority would not,
individually or in the aggregate, have a material adverse effect on the
transactions contemplated herein or in the Legal Agreements (a HALIFAX MATERIAL
ADVERSE EFFECT). Halifax has not taken any corporate action nor (to the best
of its knowledge and belief) have any other steps been taken or legal
proceedings been started or threatened against it for its winding-up,
dissolution or reorganization (other than any solvent reorganization, including
that arising from the unification of the banking licences held by members of
the Halifax group) or for the appointment of a receiver, administrator,
administrative receiver or similar officer of it or of any or all of its assets
or revenues.
(c) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by Halifax.
(d) Legal Agreements. Each of the other Legal Agreements to which
Halifax is a party will be duly authorized by Halifax on or prior to the Issue
2007-1 Closing Date and on the Issue 2007-1 Closing Date will constitute valid
and legally binding obligations of Halifax enforceable against Halifax in
accordance with their terms, subject to the Enforceability Exceptions.
(e) No Conflicts with Existing Instruments. The execution, delivery
and performance by Halifax of this Agreement and the other Legal Agreements to
which Halifax is a party and compliance by Halifax with the terms hereof and
thereof will not, and each assignment of the English Loans and their Related
Security and each Scottish Declaration of Trust in respect of the Scottish
Loans and their Related Security did not upon the relevant Assignment Date, (i)
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge, security or encumbrance upon any property or assets of Halifax
(other than those created in, or imposed by, the Legal Agreements themselves)
pursuant to, any indenture, mortgage, trust deed, loan agreement or other
agreement or instrument to which Halifax is a party or by which Halifax is
bound or to which any of the property or assets of Halifax is subject, (ii)
result in any violation of the provisions of the Memorandum and Articles of
Association of Halifax or (iii) result in the violation of any applicable law
or statute or any judgment, license, authorisation, rule, notification, decree,
order or regulation of any court or governmental agency or any other body or
person having jurisdiction over Halifax or any of its properties (HALIFAX
GOVERNMENTAL AUTHORITY), except, in the case of clauses (i) and (iii) above,
for any such conflict, breach or violation that would not, individually or in
the aggregate, have a Halifax Material Adverse Effect.
(f) All Consents Obtained. All consents, approvals, authorizations,
licenses, notifications, orders, registrations and qualifications of all
Halifax Governmental Authorities required by Halifax for or in connection with
the execution, delivery and performance by Halifax of this Agreement and the
other Legal Agreements to which it is, or will be, on or prior to the Issue
2007-1 Closing Date, a party, have been obtained and are in full force and
effect, including, without limitation, all relevant authorisations under the
FSMA, the receipt of a standard license under the Consumer Credit Act 1974 and
registration under the DPA.
(g) Legal Proceedings. There are no legal, arbitration, governmental
or regulatory investigations, actions, suits or proceedings pending to which
Halifax is a party or to which any property of Halifax is the subject that,
individually or in the aggregate, if determined adversely to Halifax, could
reasonably be expected to have a material and adverse affect on (i) Halifax's
20
performance of its obligations under, or the validity of, this Agreement or
(ii) Halifax's title to the Related Security or the value of any security
therefor or Halifax's right (in so far as it relates to English Loans) to
assign such Related Security and such English Loans to the Mortgages Trustee or
(in so far as it relates to Scottish Loans) to assign or to create a trust
under the relevant Scottish Declaration of Trust in respect of any such Related
Security and such Scottish Loans in favour of the Mortgages Trustee, and to the
best knowledge of Halifax and save as already disclosed in the Prospectus, no
such investigations, actions, suits or proceedings are threatened by any
Halifax Governmental Authority or threatened by others.
(h) Beneficial Owner. (i) The Mortgages Trustee holds and will
continue to hold the equitable title to the English Portfolio (excluding Loans
and Related Security which have been redeemed or which, in accordance with the
Mortgage Sale Agreement, have been re-assigned to the Seller since the relevant
Assignment Date) on a bare trust for the benefit of Funding 1, Halifax and,
from the Programme Date, Funding 2 as tenants in common absolutely; (ii) the
Mortgages Trustee is the sole beneficiary of the Scottish Trust Property as
defined in and in terms of the relevant Scottish Declaration of Trust and holds
and will continue to hold all the rights and interest of the sole beneficiary
thereunder on a bare trust for the benefit of Funding 1, Halifax and, from the
Programme Date, Funding 2 as beneficial tenants in common absolutely upon the
terms of the relevant Scottish Declaration of Trust and the Mortgages Trust
Deed; and (iii) Halifax is the sole holder of all right, title and interest in
respect of the Scottish Portfolio (excluding Loans and Related Security which
were comprised in the Scottish Portfolio but which have been redeemed or which,
in accordance with the Mortgage Sale Agreement, have been released from the
relevant Scottish Declaration of Trust since the relevant Assignment Date) and
holds such right, title and interest as sole trustee on and subject to the
relevant Scottish Declaration of Trust on trust for the benefit of the
Mortgages Trustee absolutely.
(i) Representations in Legal Agreements. The representations and
warranties given by Halifax in the Mortgage Sale Agreement to which is it is a
party are true and accurate in all material respects as when stated to be made.
4. Further Agreements of the Master Issuer, Funding 2, the Mortgages
Trustee and Halifax. The Master Issuer and, where expressly provided, Funding
2, the Mortgages Trustee and Halifax severally covenants to, and agrees each
for itself with, the Underwriters and each of them that:
(a) Filing of Prospectus. Funding 2 will file the final Prospectus
(including any amendments or supplements thereto) with the Commission within
the time periods specified by Rule 424(b) under the Securities Act; and the
Master Issuer will furnish copies of the Prospectus (including any amendments
or supplements thereto made on or before the date of this Agreement) to the
Underwriters in London prior to 10:00 A.M., London time, on the business day
next succeeding the date of this Agreement (or such other time as agreed
between the Master Issuer and the Representatives) in such quantities as the
Representatives may reasonably request.
(b) Delivery of Copies. The Master Issuer will deliver (i) to the
Representatives, one copy of the Registration Statement as originally filed and
each amendment thereto (including any post-effective amendment to the
Registration Statement), in each case including all exhibits and consents filed
therewith; and (ii) to each Underwriter (A) a conformed copy of the
Registration Statement as originally filed and each amendment thereto, in each
case including all exhibits and consents filed therewith and (B) during the
Prospectus Delivery Period, as many copies of the Prospectus (including all
amendments and supplements thereto made on or before the date of this
Agreement) as the Representatives may reasonably request. As used herein, the
term PROSPECTUS DELIVERY PERIOD means such period of time after the first date
of the public offering of the Offered Notes as in the opinion of counsel for
the Underwriters a prospectus relating to the Offered Notes is required by law
to be delivered in connection with sales of the Offered Notes by any
Underwriter or dealer.
21
(c) Amendments or Supplements. Before filing any amendment or
supplement to the Registration Statement or the Prospectus prior to the Issue
2007-1 Closing Date, the Master Issuer, Funding 2 and the Mortgages Trustee
will furnish to the Representatives and counsel for the Underwriters a copy of
the proposed amendment or supplement for review and will not file any such
proposed amendment or supplement to which the Representatives reasonably
object.
(d) Commission Filings. Funding 2 will file, in a timely manner,
with the Commission during the Prospectus Delivery Period, all documents (and
any amendments to previously filed documents) required to be filed by them
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act within the
time periods required by the Exchange Act and the rules and regulations
thereunder, provided that Funding 2 will not file any such document or
amendment unless Funding 2 has furnished the Representatives with copies for
their review prior to filing and none of them will file any such proposed
document or amendment until the Underwriters have been consulted and given a
reasonable opportunity to comment on such document or amendment.
(e) Notice to the Representatives. During the Prospectus Delivery
Period, the Master Issuer will, and if the Master Issuer fails to do so,
Halifax shall, advise the Representatives promptly, and confirm such advice in
writing, (i) when any post-effective amendment to the Registration Statement
becomes effective; (ii) of any request by the Commission for any amendment to
the Registration Statement or any amendment or supplement to the Prospectus or
the receipt of any comments from the Commission relating to the Registration
Statement or any other request by the Commission for any additional
information; (iii) of the issuance by the Commission of any order suspending
the effectiveness of the Registration Statement or preventing or suspending the
use of the Prospectus or the initiation or threatening of any proceeding for
that purpose or of any challenge to the accuracy or adequacy of any document
incorporated by reference in the Prospectus; (iv) of any downgrading in the
rating of any debt securities of Halifax by Moody's Investors Service (MOODY'S)
or Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies,
Inc. (STANDARD & POOR'S) or Fitch Ratings Ltd. (FITCH) or if any such
organization shall have informed Halifax or HBOS plc or made any public
announcement that any such organization has under surveillance or review its
rating of any debt securities of Halifax (other than an announcement with
positive implications of a possible upgrading, and no implication of a possible
downgrading of such rating) as soon as such announcement is made or Halifax is
informed; and (v) of the receipt by the Master Issuer of any notice with
respect to any suspension of the qualification of the Offered Notes for offer
and sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and the Master Issuer will use its best efforts to prevent
the issuance of any such order suspending the effectiveness of the Registration
Statement, preventing or suspending the use of the Prospectus or suspending any
such qualification of the Offered Notes and, if issued, will obtain as soon as
possible the withdrawal thereof.
(f) Ongoing Compliance of the Prospectus. If during the Prospectus
Delivery Period (i) any event shall occur as a result of which it is necessary
to amend or supplement the Prospectus such that the Prospectus will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a potential
purchaser, not misleading or (ii) it is necessary to amend or supplement the
Prospectus to comply with US law, the Master Issuer will promptly notify the
Underwriters thereof and forthwith prepare and, subject to paragraph (d) above,
file with the Commission and furnish to the Underwriters, such amendments or
supplements to the Prospectus as may be necessary so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances existing when the Prospectus is delivered to a potential
purchaser, be misleading or so that the Prospectus will comply with US law. In
addition, Funding 2 shall use its best efforts to prevent the issuance of any
stop order and if, during the Prospectus Delivery Period, the Commission shall
issue a stop order suspending the effectiveness of the Registration Statement,
Funding 2 shall make every reasonable effort to obtain the lifting of that
order at the earliest possible time.
22
(g) Blue Sky Compliance. The Master Issuer will cooperate with the
Class A Underwriters (with respect to the Class A Offered Notes), the Class A2
Joint Lead Underwriters (with respect to the Class A2 Offered Notes) and the
Class B/C Joint Lead Underwriters (with respect to the Class B/C Offered Notes)
to qualify the Offered Notes for offer and sale under the securities or Blue
Sky laws of such jurisdictions as the applicable Representatives shall
reasonably request and will continue such qualifications in effect so long as
may be reasonably required for distribution of the Offered Notes and to file
such statements and reports as may be required by the laws of each jurisdiction
in which the Offered Notes have been qualified as above; provided that the
Master Issuer shall not be required to (i) qualify as a foreign corporation or
other entity or as a dealer in securities in any such jurisdiction where it
would not otherwise be required to so qualify, (ii) file any general consent to
service of process in such jurisdiction or take any other action that would
subject it to service of process in suits in any jurisdiction, other than those
arising out of the offering or sale of the Offered Notes in such jurisdiction
or (iii) subject itself to taxation in any such jurisdiction if it is not so
subject.
(h) Use of Proceeds. The Master Issuer will apply the gross proceeds
from the sale of the Offered Notes as described in the Prospectus.
(i) Copies of Reports. So long as the Class A Offered Notes are
outstanding, the Master Issuer shall furnish to each Class A Underwriter (i)
copies of each amendment to any of the Legal Agreements, and (ii) copies of all
reports or other communications (financial or other) furnished to holders of
the Class A Offered Notes, and copies of any reports and financial statements
furnished to or filed with the Commission, any governmental or regulatory
authority or any national securities exchange. So long as the Class A2 Offered
Notes are outstanding, the Master Issuer shall furnish to each Class A2 Joint
Lead Underwriter (i) copies of each amendment to any of the Legal Agreements,
and (ii) copies of all reports or other communications (financial or other)
furnished to holders of the Class A2 Offered Notes, and copies of any reports
and financial statements furnished to or filed with the Commission, any
governmental or regulatory authority or any national securities exchange. So
long as the Class B/C Offered Notes are outstanding, the Master Issuer shall
furnish to each Class B/C Joint Lead Underwriter (i) copies of each amendment
to any of the Legal Agreements, and (ii) copies of all reports or other
communications (financial or other) furnished to holders of the Class B/C
Offered Notes, and copies of any reports and financial statements furnished to
or filed with the Commission, any governmental or regulatory authority or any
national securities exchange.
(j) Rating Agencies. To the extent, if any, that the ratings provided
with respect to the Offered Notes by the Rating Agencies are conditional upon
the furnishing of documents or the taking of any other action by the Master
Issuer, the Master Issuer shall use its best efforts to furnish such documents
and take any other such action.
(k) Notify Change. Each of the Master Issuer, the Mortgages Trustee,
Funding 2 and Halifax, as the case may be, will notify the Underwriters
promptly of any change affecting any of their respective representations,
warranties, covenants, agreements or indemnities in this Agreement at any time
prior to payment of the net underwriting proceeds for the Notes being made to
the Master Issuer on the Issue 2007-1 Closing Date and will take such steps as
may be reasonably requested by the Representatives to remedy and/or publicize
the same.
(l) Official Announcements. Between the date of this Agreement and
the Issue 2007-1 Closing Date (both dates inclusive) none of Halifax, the
Master Issuer, Funding 2 or the Mortgages Trustee will, without the prior
approval of the Representatives on behalf of the Underwriters (such approval
not to be unreasonably withheld or delayed), make any official announcement
which would have a material adverse effect on the marketability of the Notes
(other than an official announcement which may be required by law or
regulation); provided that reasonable notice of the substance of any such
official announcement which may be required by law or regulation and which may
have a material adverse effect on the marketability of the Offered Notes shall
be given to the Representatives as soon as practicable.
23
(m) Stamp Duty.
(i) The Master Issuer will pay any stamp duty, issue,
registration, documentary or other taxes of a similar nature and duties
that it is required to pay under the Legal Agreements to which it is a
party payable in the United Kingdom, Belgium, Luxembourg or the United
States, including interest and penalties in connection with the
creation, issue, distribution and offering of the Notes or in connection
with the execution, delivery or enforcement of any of the Legal
Agreements to which it is a party together with any value added,
turnover or similar tax payable in respect of that amount (and
references in this Agreement to such amount shall be deemed to include
any such taxes so payable in addition to it);
(ii) Funding 2 will pay any stamp duty, issue, registration,
documentary or other taxes of a similar nature and duties that it is
required to pay under the Legal Agreements to which it is a party
payable in the United Kingdom or the United States, including interest
and penalties in connection with the execution, delivery or enforcement
of any of the Legal Agreements to which it is a party (other than in
respect of the execution, delivery or enforcement of the Mortgages Trust
Deed and any Legal Agreement to which the Master Issuer is a party)
together with any value added, turnover or similar tax payable in
respect of that amount (and references in this Agreement to such amount
shall be deemed to include any such taxes so payable in addition to it);
and
(iii) The Mortgages Trustee will pay any stamp duty, issue,
registration, documentary or other taxes of a similar nature and duties
that it is required to pay under the Legal Agreements to which it is a
party payable in the United Kingdom, the Channel Islands or the United
States, including interest and penalties in connection with the
execution, delivery or enforcement of the Mortgages Trust Deed
(including any amendment thereto) and the Mortgage Sale Agreement
(including any amendment thereto) (together with any value added,
turnover or similar tax payable in respect of that amount (and
references in this Agreement to such amount shall be deemed to include
any such taxes so payable in addition to it)) but will be promptly
reimbursed an amount equal to any such payments by the Beneficiaries in
accordance with the terms of the Mortgages Trust Deed.
(iv) For the avoidance of doubt, if Funding 2 or the Mortgages
Trustee discharges its obligations to pay any stamp duty, issue,
registration, documentary or other taxes of a similar nature and duties
payable in the United Kingdom, the Channel Islands or the United States,
including interest and penalties in each case as described above
(together, the RELEVANT TAXES), at any time while amounts are
outstanding in respect of the notes issued by the Master Issuer, then
Funding 2 and/or (as applicable) the Mortgages Trustee will not be
obliged to pay such relevant taxes multiple times (in respect of the
same obligation), in order to meet its obligations under (1) the
underwriting agreements and subscription agreements relating to the
Master Issuer and (2) paragraphs (ii) and/or (iii) (as applicable)
above.
(n) United States Income Tax. Neither the Master Issuer, Funding 2
nor the Mortgages Trustee will engage in any activities in the United States
(directly or through agents), nor derive any income from United States sources
as determined under the Code nor 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 the Code.
(o) Payment of Fees, Charges, Costs and Duties.
(i) Without prejudice to the generality of Section 11, the
Master Issuer will pay all and any fees, charges, costs and duties and
any stamp and other similar taxes or duties that it is required to pay
under the Legal Agreements to which it is a party, including interest
and penalties, arising from or in connection with the creation of the
security for the Notes
24
and the obligations of the Master Issuer under the Master Issuer Trust
Deed and for the other amounts to be secured as contemplated by the
Master Issuer Deed of Charge and the perfection of such security at any
time;
(ii) Without prejudice to the generality of Section 11, Funding 2
will pay all and any fees, charges, costs and duties and any stamp and
other similar taxes or duties that it is required to pay under the Legal
Agreements to which it is a party, including interest and penalties,
arising from or in connection with the creation of the security for a
Loan Tranche and for the other amounts to be secured as contemplated by
the Funding 2 Deed of Charge and the perfection of such security at any
time; and
(iii) Without prejudice to the generality of Section 11, the
Mortgages Trustee will pay all and any fees, charges, costs and duties
and any stamp and other similar taxes or duties that it is required to
pay under the Legal Agreements to which it is a party, including
interest and penalties, arising from or in connection with the purchase
of the Related Security (and related property and rights) excluding The
Land Registry, General Register of Sasines or Land Register of Scotland
fees (it being agreed that registration or recording at The Land
Registry or the General Register of Sasines or the Land Register of
Scotland of the transfer of the Related Security to the Mortgages
Trustee will not be applied for except in the circumstances specified in
the Servicing Agreement), but on the basis that the Mortgages Trustee
will be reimbursed such fees, charges, costs and duties and any stamp
and other similar taxes or duties (including interest and penalties) by
the Beneficiaries pursuant to the terms of the Mortgages Trust Deed;
(p) Perform all required actions. On or prior to the Issue 2007-1
Closing Date, each of Halifax, the Master Issuer, Funding 2 and the Mortgages
Trustee will do all things reasonably within each of their respective powers
and required of each of them on such date under the terms of the Legal
Agreements to which each is a party.
(q) Review of Related Security. Halifax will deliver to the
Representatives on the date of this Agreement a letter (relating to its review
of the Related Security) dated the date of this Agreement in the agreed form
addressed to Halifax and the Underwriters from KPMG LLP (KPMG).
(r) Conditions Precedent. The Master Issuer will use all reasonable
endeavours to procure satisfaction on or before the Issue 2007-1 Closing Date
of the conditions referred to in Section 5 of this Agreement.
(s) Servicing Agreement. The Master Issuer, Funding 2 and the
Mortgages Trustee will use all reasonable endeavours to procure that Halifax
complies with its obligations under the Servicing Agreement.
(t) Charges and Security Interests.
(i) The Master Issuer will procure that each of the charges and
other security interests created by or contained in the Master Issuer
Deed of Charge is registered within all applicable time limits in all
appropriate registers; and
(ii) Funding 2 will procure that each of the charges and other
security interests created by or contained in the Funding 2 Deed of
Charge is registered within all applicable time limits in all
appropriate registers.
(u) Ratings. None of Halifax, the Master Issuer, Funding 2 or the
Mortgages Trustee will take, or cause to be taken, any action and none of them
will permit any action to be taken which it knows or has reason to believe
would result in the Notes not being assigned on the Issue 2007-1 Closing Date
an "F-1+" rating for the Series 1 Class A Notes, an "AA" rating for the Series
1 Class B
25
Notes, a "BBB" rating for the Series 1 Class C Notes, an "AAA" rating for the
Series 2 Class A1 Notes, an "AAA" rating for the Series 2 Class A2 Notes, and an
"AAA" rating for the Series 4 Class A Notes by Fitch; a "P-1" rating for the
Series 1 Class A Notes, an "Aa3" rating for the Series 1 Class B Notes, a "Baa2"
rating for the Series 1 Class C Notes, an "Aaa" rating for the Series 2 Class A1
Notes, an "Aaa" rating for the Series 2 Class A2 Notes and an "Aaa" rating for
the Series 4 Class A Notes, by Moody's; an "A-1+" rating for the Series 1 Class
A Notes, an "AA" rating for the Series 1 Class B Notes, a "BBB" for the Series 1
Class C Notes, an "AAA" rating for the Series 2 Class A1 Notes, an "AAA" rating
for the Series 2 Class A2 Notes and an "AAA" rating for the Series 4 Class A
Notes by Standard & Poor's.
(v) Legal Agreements. Prior to closing on the Issue 2007-1 Closing
Date none of Halifax, the Master Issuer, Funding 2 or the Mortgages Trustee
will amend the terms of the executed Legal Agreements, nor execute any of the
other Legal Agreements other than in the agreed form, without the consent of
the Representatives (such consent not to be unreasonably withheld or delayed).
(w) Written Communications.
(1) The following terms have the specified meanings for purposes of
this Agreement:
BLOOMBERG SUBMISSION means the pricing material (in electronic
form) sent via Bloomberg e-mail by the Underwriters to investors; provided,
that references to Bloomberg Submission in this Agreement shall mean the final
pricing information accurately displayed on Bloomberg;
FREE WRITING PROSPECTUS means and includes any information
relating to the Offered Notes disseminated by the Master Issuer or any
Underwriter that constitutes a "free writing prospectus" within the meaning of
Rule 405 under the Securities Act;
ISSUER INFORMATION means (1) the information contained in any
Underwriter Free Writing Prospectus (as defined below) which information is
also included in the Preliminary Prospectus (other than Information Provided by
the Underwriters (as defined in Section 6(b) hereof), (2) information in the
Preliminary Prospectus or provided by the Master Issuer, Funding 2, the
Mortgages Trustee or Halifax that is used to calculate or create any Derived
Information, in each case in its final form and as filed under Rule 433 under
the Securities Act and (3) any computer tape or data in respect of the Offered
Notes or the related Loans furnished by the Master Issuer, Funding 2, the
Mortgages Trustee or Halifax to any Underwriter; and
DERIVED INFORMATION means such written information regarding the
Offered Notes as is disseminated by any Underwriter to a potential investor,
which information is neither (1) Issuer Information nor (2) contained in the
Registration Statement, the Preliminary Prospectus, the Prospectus or any
amendment or supplement to any of them, taking into account information
incorporated therein by reference (other than information incorporated by
reference from any information regarding the Offered Notes that is disseminated
by any Underwriter to a potential investor).
(2) The Master Issuer will not disseminate to any potential investor
any information relating to the Offered Notes that constitutes a "written
communication" within the meaning of Rule 405 under the Securities Act, other
than the Investor Presentation Material, the Preliminary Prospectus and the
Prospectus, unless the Master Issuer has obtained the prior consent of the
Representatives (which consent will not be unreasonably withheld).
(3) Neither the Master Issuer nor any Underwriter shall disseminate or
file with the Commission any information relating to the Offered Notes in
reliance on Rule 167 or Rule 426 under the Securities Act, nor shall the Master
Issuer or any Underwriter disseminate any Underwriter Free
26
Writing Prospectus (as defined below) "in a manner reasonably designed to lead
to its broad unrestricted dissemination" within the meaning of Rule 433(d) under
the Securities Act.
(4) The Master Issuer and the Underwriters each agree that any Free
Writing Prospectus prepared by it shall comply in all material respects with
the Securities Act and the Rules and Regulations and shall bear the following
legend, or a substantially similar legend that complies with Rule 433 under the
Securities Act:
The issuing entity has filed a registration statement (including a
prospectus) with the Commission for the offering to which this communication
relates. Before you invest, you should read the prospectus in that
registration statement and other documents the depositor has filed with the
Commission for more complete information about the issuing entity and this
offering. You may get these documents for free by visiting EDGAR on the
Commission Web site at www.sec.gov. Alternatively, the issuing entity, any
underwriter or any dealer participating in the offering will arrange to send
you the prospectus if you request it by calling toll-free _________.
(5) In the event the Master Issuer or Halifax becomes aware that, as
of the Time of Sale, the Preliminary Prospectus contains or contained any
untrue statement of material fact or omits or omitted to state a material fact
necessary in order to make the statements contained therein, in the light of
the circumstances under which they were made, not misleading (a DEFECTIVE
PROSPECTUS), the Master Issuer or Halifax shall promptly notify the
Representatives of such untrue statement or omission no later than one business
day after discovery and the Master Issuer shall, if requested by the
Representatives, prepare and deliver to the Underwriters a Corrected
Prospectus.
(6) In the event that any Underwriter shall incur any costs to any
investor in connection with the reformation of the Contract of Sale with such
investor that received a Defective Prospectus, the Master Issuer agrees to
reimburse such Underwriter for such costs.
(7) Each Underwriter represents, warrants, covenants and agrees with
the Master Issuer that:
(i) Other than the Investor Presentation Material, the
Preliminary Prospectus and the Prospectus, it has not made, used,
prepared, authorized, approved or referred to and will not prepare,
make, use, authorize, approve or refer to any "written communication"
(as defined in Rule 405 under the Securities Act) that constitutes an
offer to sell or solicitation of an offer to buy the Offered Notes;
provided, however, that (A) each Underwriter may prepare and convey one
or more "written communications" (as defined in Rule 405 under the
Securities Act) containing no more than the following: (1) information
included in the Preliminary Prospectus with the consent of the Master
Issuer, (2) information relating to the class, size, rating, price,
CUSIPs, coupon, yield, spread, benchmark, status and/or legal maturity
date of the Offered Notes, the weighted average life, expected final
payment date, the trade date and payment window of one or more classes
of Offered Notes and any credit enhancement expected to be provided with
respect to the Offered Notes, (3) the eligibility of the Offered Notes
to be purchased by ERISA plans, (4) a column or other entry showing the
status of the subscriptions for the Offered Notes (both for the issuance
as a whole and for each Underwriter's retention) and/or expected pricing
parameters of the Offered Notes and (5) any "ABS informational and
computational materials" as defined in Item 1101(a) of Regulation AB
under the Securities Act (each such written communication, an
UNDERWRITER FREE WRITING PROSPECTUS); (B) unless otherwise consented to
by the Master Issuer, no Underwriter Free Writing Prospectus shall be
conveyed if, as a result of such conveyance, the Master Issuer shall be
required to make any registration or other filing solely as a result of
such Underwriter Free Writing Prospectus pursuant to Rule 433(d) under
the Securities Act other than the filing of the final terms of the
Offered Notes pursuant to Rule 433(d)(5)(ii) of the Securities Act; and
(C) each Underwriter will be permitted to provide information (including
any Bloomberg Submission) customarily included in confirmations
27
of sale of securities and notices of allocations and information
delivered in compliance with Rule 134 under the Securities Act.
(ii) If a Defective Prospectus has been corrected with a
Corrected Prospectus, it shall comply with the requirements for
reformation of the original Contract of Sale, as described in Section
IV.A.2.c. of the Commission's Securities Offering Reform Release No. 33-
8591.
(8) The Master Issuer agrees to file with the Commission when required
under the Rules and Regulations the following:
(i) any Free Writing Prospectus that is included in the
Preliminary Prospectus (any such Free Writing Prospectus, an ISSUER FREE
WRITING PROSPECTUS);
(ii) subject to the Underwriters' compliance with Section
4(w)(7), any Underwriter Free Writing Prospectus at the time required to
be filed; and
(iii) any Free Writing Prospectus for which the Master Issuer or
any person acting on its behalf provided, authorized or approved
information that is prepared and published or disseminated by a person
unaffiliated with the Master Issuer or any other offering participant
that is in the business of publishing, radio or television broadcasting
or otherwise disseminating communications.
(9) Halifax, Funding 2 and the Mortgages Trustee will cause any Issuer
Free Writing Prospectus with respect to the Offered Notes to be filed with the
Commission to the extent required by Rule 433 under the Securities Act.
(10) Notwithstanding the provisions of Sections 4(w)(8) and 4(w)(9),
the Master Issuer, Funding 2, the Mortgages Trustee and Halifax will not be
required to file any Free Writing Prospectus that does not contain substantive
changes from or additions to a Free Writing Prospectus previously filed with
the Commission.
5. Conditions of Underwriters' Obligations. The obligation of each
Class A Underwriter to purchase the Class A Offered Notes, the obligation of
each Class A2 Joint Lead Underwriter to purchase the Class A2 Offered Notes and
the obligation of each Class B/C Joint Lead Underwriter to purchase the Class
B/C Offered Notes on the Issue 2007-1 Closing Date as provided herein is
subject to the performance by the Master Issuer, Funding 2, the Mortgages
Trustee and Halifax of their respective obligations hereunder and to the
following additional conditions:
(a) Registration Compliance; No Stop Order. If a post-effective
amendment to the Registration Statement is required to be filed under the
Securities Act, such post-effective amendment shall have become effective, and
the Representatives shall have received notice thereof, before the
determination of the public offering price of the Offered Notes; no order
suspending the effectiveness of the Registration Statement shall be in effect,
and no proceeding for such purpose shall be pending before or threatened by the
Commission; the Prospectus (including any amendments or supplements thereto)
shall have been timely filed with the Commission under the Securities Act and
in accordance with Section 4(a) hereof; and all requests by the Commission for
additional information shall have been complied with.
(b) Representations and Warranties. The representations and
warranties of the Master Issuer, Funding 2, the Mortgages Trustee and Halifax
contained herein shall be true and correct on the date hereof and on and as of
the Issue 2007-1 Closing Date; the statements of the Master Issuer, Funding 2,
the Mortgages Trustee and Halifax and their respective officers made in any
certificates delivered pursuant to this Agreement shall be true and correct on
and as of the Issue 2007-1 Closing Date; and each of the Master Issuer, Funding
2, the Mortgages Trustee and Halifax shall have
28
complied with all agreements and all conditions to be performed or satisfied on
its respective part hereunder at or prior to the Issue 2007-1 Closing Date.
(c) No Downgrading. Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have been publicly announced in the rating
accorded any debt securities or preference shares of, or guaranteed by, Halifax
by any of Standard & Poor's, Moody's or Fitch and (ii) no such organization
shall have publicly announced that it has under surveillance or review (other
than an announcement with positive implications of a possible upgrading), its
rating of any debt securities or preference shares of, or guaranteed by,
Halifax.
(d) No Material Adverse Change. Subsequent to the execution and
delivery of this Agreement, no event of a type that (i) renders untrue or
incorrect any of the representations and warranties contained in Section 3
hereof as though the said representations and warranties had been given on the
Issue 2007-1 Closing Date with reference to the facts and circumstances
prevailing at that date or (ii) causes the failure of the Master Issuer,
Funding 2, the Mortgages Trustee or Halifax to perform each and every covenant
to be performed by it pursuant to the Legal Agreements, the Loans and the
Related Security on or prior to the Issue 2007-1 Closing Date or (iii) involves
a material adverse change or any development involving a prospective material
adverse change in the financial or trading condition of any of the Master
Issuer, Funding 2, the Mortgages Trustee or Halifax shall have occurred or
shall exist, which event or condition is not described in the Preliminary
Prospectus and the Prospectus (excluding any amendment or supplement thereto)
and the effect of any of which in the judgment of the Representatives makes it
impracticable to proceed with the offering, sale or delivery of the Notes on
the terms and in the manner contemplated by this Agreement and the Prospectus
or which in the view of the Representatives has caused a material deterioration
in the price and/or value of the Notes.
(e) Officer's Certificate. The Representatives shall have received on
and as of the Issue 2007-1 Closing Date:
(i) a certificate of an executive officer of each of the Master
Issuer, Funding 2, the Mortgages Trustee and Halifax reasonably
satisfactory to the Representatives confirming that such officer has
carefully reviewed the Prospectus (including any amendments or
supplements thereto) and, to the best knowledge of such officer, the
representations set forth in Section 3(I)(a), 3(II)(a) and 3(III)(a)
hereof are true and correct;
(ii) a certificate of an executive officer of each of the Master
Issuer, Funding 2, the Mortgages Trustee and Halifax reasonably
satisfactory to the Representatives to the effect set forth in
paragraphs (a), (b) and (c) above and that there has been no adverse
change, nor any development involving a prospective adverse change, in
or affecting the operations, properties, financial or trading condition
or prospects of the Master Issuer, Funding 2, the Mortgages Trustee or
Halifax which is material in the context of the issue of the Notes;
(iii) a certificate of an executive officer of the Master Issuer
reasonably satisfactory to the Representatives confirming the solvency
of the Master Issuer;
(iv) a certificate of an executive officer of Funding 2
reasonably satisfactory to the Representatives confirming the solvency
of Funding 2;
(v) a certificate of an executive officer of the Mortgages
Trustee reasonably satisfactory to the Representatives confirming the
solvency of the Mortgages Trustee;
(vi) a certificate of an executive officer of Halifax reasonably
satisfactory to the Representatives confirming the solvency of Halifax;
and
29
(vii) a certificate, reasonably satisfactory to the
Representatives, of an executive officer of each 2007-1 Master Issuer
Dollar Currency Swap Provider in relation to the wording in the
Prospectus provided by it.
(f) Comfort Letters. KPMG shall have furnished to the
Representatives, at the request of the Master Issuer, letters, including,
without limitation, (i) a pool report in respect of agreed upon procedures in
connection with the Halifax mortgage files (with no material exceptions to the
results stated therein), dated the date of the Preliminary Prospectus and
addressed to the Underwriters, in form and substance reasonably satisfactory to
the Representatives and (ii) letters containing statements and information of
the type ordinarily included in auditors' "comfort letters" with respect to
certain financial, statistical and other information contained in the
Preliminary Prospectus, the Investor Presentation Materials and the Prospectus,
dated the date of the Preliminary Prospectus (with respect to the letter
related to the Preliminary Prospectus and the Investor Presentation Materials)
and the date of the Prospectus (with respect to the letter related to the
Prospectus) and addressed to the Underwriters, each in form and substance
satisfactory to the Representatives.
(g) Legal Opinions. On or prior to the Issue 2007-1 Closing Date,
there having been delivered to the Master Issuer, the Underwriters, the Note
Trustee and the Funding 2 Security Trustee copies of opinions and disclosure
letters, in form and substance reasonably satisfactory to the Representatives,
the Note Trustee, the Funding 2 Security Trustee and the Rating Agencies, dated
the Issue 2007-1 Closing Date, of:
(i) Allen & Overy LLP, legal advisers as to English law and as
to US law to Halifax, Funding 2 and the Master Issuer, addressed to
Halifax, the Mortgages Trustee, Funding 2, the Master Issuer, the
Underwriters, the Note Trustee and the Funding 2 Security Trustee;
(ii) Mourant du Feu & Jeune, legal advisers as to Jersey law to
the Mortgages Trustee, addressed to the Mortgages Trustee, the
Underwriters, the Note Trustee and the Funding 2 Security Trustee;
(iii) Sidley Austin (UK) LLP, legal advisers as to English law and
as to US law to the Underwriters, addressed to the Underwriters;
(iv) In-house legal counsel of each Swap Provider party to a
2007-1 Master Issuer Swap Agreement (other than Halifax), addressed to
the Underwriters, the Master Issuer and Halifax; and
(v) Shepherd and Wedderburn LLP, legal advisers to the Master
Issuer and Halifax as to Scottish law, addressed to Halifax, the
Mortgages Trustee, Funding 2, the Master Issuer, the Underwriters, the
Note Trustee and the Funding 2 Security Trustee.
(h) Rating Agency Letters. Each Underwriter shall have received
copies of letters from each Rating Agency stating that the Offered Notes are
rated as set forth in Schedule II hereto by the Rating Agencies either without
conditions or subject only to the execution and delivery on or before the Issue
2007-1 Closing Date of the Legal Agreements and legal opinions in all material
respects in the form in which they shall then have been executed and delivered
on or prior to the Issue 2007-1 Closing Date.
(i) Execution of Legal Agreements and Global Notes. The execution
and delivery by all parties thereto of the Legal Agreements and the Global
Notes representing each series and class of the Offered Notes on or prior to
the Issue 2007-1 Closing Date.
(j) Admission to Trading. (i) Each Representative shall have
received a copy of the confirmation from the UK Listing Authority that the
Prospectus (combined with the related United
30
Kingdom supplement) has been approved as a prospectus for the purposes of
Section 85(2) of the FSMA and the Prospectus Rules and (ii) the Offered Notes
having been admitted to the Official List maintained by UK Listing Authority and
the London Stock Exchange plc (the STOCK EXCHANGE) shall have agreed to
admission of the Offered Notes to trading on the Stock Exchange's Gilt Edged and
Fixed Interest Market on or about the Issue 2007-1 Closing Date.
(k) Certified Constitutional Documents. On or prior to the Issue
2007-1 Closing Date, there having been delivered to the Representatives on
behalf of the Underwriters a copy, certified by a duly authorized director or
the company secretary of, as applicable, the Master Issuer, Funding 2, the
Mortgages Trustee and Halifax of: (i) the Memorandum and Articles of
Association of each of the Master Issuer, Funding 2, the Mortgages Trustee and
Halifax; (ii) the resolution of the Board of Directors (or committee as
appropriate) of each of the Master Issuer, Funding 2, the Mortgages Trustee and
Halifax authorizing the execution of this Agreement and the other Legal
Agreements and the entry into and performance of the transactions contemplated
thereby; and (iii) in respect of the Master Issuer, the resolution of the Board
of Directors of the Master Issuer authorising the issue of the Notes and the
entry into and performance of the transactions contemplated thereby.
(l) Circumstances for Termination. On or prior to the Issue 2007-1
Closing Date, in the opinion of the Representatives, none of the circumstances
described in Section 3 having arisen.
(m) Other Issues. The Reg S Notes having been or being issued and
subscribed and paid for pursuant to the Subscription Agreements and the
Programme Agreement prior to or contemporaneously with the issue, subscription
and payment for the Offered Notes hereunder.
(n) Mortgages Trust Deed. All of the steps required by Clause 4.2(ii)
of the Mortgages Trust Deed to be taken on prior to the Issue 2007-1 Closing
Date for the purposes of the increase in the Funding 2 Share of the Trust
Property having been taken.
(o) No Legal Impediment to Issuance. No action shall have been taken
and no statute, rule, regulation or order shall have been enacted, adopted or
issued by any Halifax Governmental Authority that would, as of the Issue 2007-1
Closing Date, prevent the issuance or sale of the Notes; and no injunction or
order of any federal, state or foreign court shall have been issued that would,
as of the Issue 2007-1 Closing Date, prevent the issuance or sale of the Notes.
(p) Good Standing. The Representatives shall have received on and as
of the Issue 2007-1 Closing Date satisfactory evidence of the good standing of
the Mortgages Trustee in its jurisdiction of organization from the appropriate
Governmental Authorities of such jurisdictions.
(q) Certificate of Note Trustee. The Note Trustee having furnished to
the Representatives a certificate stating that that part of the Registration
Statement which shall constitute the Statement of Eligibility and Qualification
(Form T-1) under the Trust Indenture Act of the Note Trustee did not or will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading.
(r) Additional Documents. On or prior to the Issue 2007-1 Closing
Date, the Master Issuer, Funding 2, the Mortgages Trustee and Halifax shall
have furnished to the Representatives such further certificates and documents
as any Representative may reasonably request.
All opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory in all material respects to counsel for the Underwriters.
If any of the conditions specified in this Section 5 have not been
fulfilled in all material respects when and as provided in this Agreement, or
if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be reasonably satisfactory in all material respects in
31
form and substance to the Representatives, this Agreement and all obligations of
the Underwriters hereunder may be cancelled at, or at any time prior to, the
Issue 2007-1 Closing Date by the Representatives. Notice of such cancellation
shall be given to the Master Issuer, Funding 2, the Mortgages Trustee and
Halifax in writing or by telephone or facsimile confirmed in writing.
The Representatives, on behalf of the Underwriters, may, in their
discretion, waive compliance with the whole or any part of this Section 5.
6. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Master Issuer (in
respect of itself only), Funding 2 (in respect of itself only), the Mortgages
Trustee (in respect of itself only) and Halifax (in respect of itself, the
Master Issuer, Funding 2 and the Mortgages Trustee) agree to indemnify and hold
harmless each Underwriter, its affiliates and each person, if any, who controls
such Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and their respective representatives,
directors, officers, employees and agents, from and against any and all losses,
claims, damages and liabilities (including, without limitation, legal fees and
other expenses reasonably incurred in connection with investigating and
defending any suit, action or proceeding or any claim asserted), joint or
several, caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Preliminary
Prospectus, the Prospectus, the Issuer Information or any Issuer Free Writing
Prospectus (or any amendment or supplement thereto) or the Investor Information
(save in the case of the Mortgages Trustee, which gives no indemnity herein in
relation to the Investor Information), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (excluding, in the
case of the Preliminary Prospectus, the pricing related information omitted
therefrom), except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission (x) made in reliance upon and in conformity with any Information
Provided by the Underwriters (as defined in Section 6(b) below) or (y)
contained in any Derived Information or any Bloomberg Submission unless such
untrue statement or alleged untrue statement or omission or alleged omission
contained in any Derived Information or any Bloomberg Submission results from
an error or omission in the Preliminary Prospectus, the Prospectus or the
Issuer Information (other than any Information Provided by the Underwriters
contained therein); provided further, that with respect to any such untrue
statement in or omission from any Preliminary Prospectus, the indemnity
agreement contained in this paragraph (a) shall not inure to the benefit of any
Underwriter to the extent that the sale to the person asserting any such loss,
claim, damage or liability was an initial resale during the Prospectus Delivery
Period by such Underwriter and any such loss, claim, damage or liability of or
with respect to such Underwriter results from the fact that both (i) a copy of
the Prospectus, as amended or supplemented (for purposes of this Section 6, the
FINAL PROSPECTUS) was not sent or given to such person at or prior to the
written confirmation of the sale of such Offered Notes to such person and (ii)
the untrue statement in or omission from such Preliminary Prospectus was
corrected in the Final Prospectus and such corrected Final Prospectus was
delivered to such Underwriter in time so that such delivery of such Final
Prospectus can take place at or prior to the delivery of the written
confirmation of such sale unless, in either case, such failure to deliver the
Final Prospectus was a result of non-compliance by the Master Issuer, Funding
2, the Mortgages Trustee or Halifax with the provisions of Section 3 hereof;
provided further that the references to the Registration Statement, the
Preliminary Prospectus and the Prospectus in the first part of this sentence up
to but excluding the first proviso (1) shall exclude the sections therein
having the heading "Issuing entity swap provider", and (2) shall exclude the
Information Provided by the Underwriters (as defined in Section 6(b) below) in
the section having the heading "Underwriting".
No Underwriter or controlling person of any Underwriter shall have any
duty or obligation, whether as fiduciary for any Indemnified Person (as defined
in Section 6(c)) or otherwise, to recover any such payment or to account to any
other person for any amounts paid to it under this Section 6(a).
32
The foregoing shall be subject to the following:
(i) Any right which at any time the Mortgages Trustee or
Halifax, as the case may be, has under the existing or future laws of
Jersey whether by virtue of the droit de discussion or otherwise to
require that recourse be had to the assets of any other person before
any claim is enforced against such person in respect of the obligations
hereby assumed by such person is hereby abandoned and waived.
(ii) The Mortgages Trustee and Halifax undertake that if at any
time any person indemnified sues the Mortgages Trustee or Halifax, as
the case may be, in respect of any such obligations and the person in
respect of whose obligations the indemnity is given is not sued also,
the Mortgages Trustee or Halifax, as the case may be, shall not claim
that such person be made a party to the proceedings and agrees to be
bound by this indemnity whether or not it is made a party to legal
proceedings for the recovery of the amount due or owing to the person
indemnified, as aforesaid, by the person in respect of whose obligations
the indemnity is given and whether the formalities required by any law
of Jersey whether existing or future in regard to the rights or
obligations of sureties shall or shall not have been observed.
(iii) Any right which the Mortgages Trustee or Halifax, as the
case may be, may have under the existing or future laws of Jersey
whether by virtue of the droit de division or otherwise to require that
any liability under this indemnity be divided or apportioned with any
other person or reduced in any manner whatsoever is hereby abandoned and
waived.
(b) Indemnification of the Master Issuer, Funding 2, the Mortgages
Trustee and Halifax. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Master Issuer, Funding 2 and the Mortgages
Trustee, each of their directors, each of their officers who signed the
Registration Statement, Halifax and each person, if any, who controls the
Master Issuer, Funding 2, Halifax or the Mortgages Trustee within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the indemnity set forth in paragraph (a) above, but only with
respect to any losses, claims, damages or liabilities caused by any untrue
statement or omission of a material fact or alleged untrue statement or
omission of a material fact made in reliance upon and in conformity with (x)
any information furnished to the Master Issuer, Funding 2, the Mortgages
Trustee or Halifax in writing by such Underwriter through the Representatives
expressly for use in the Registration Statement, the Preliminary Prospectus or
the Prospectus (or any amendment or supplement thereto) or (y) any Derived
Information or any Bloomberg Submission; provided, however, that the indemnity
with respect to clause (y) above shall not apply to any untrue statement or
alleged untrue statement or omission or alleged omission made in any Derived
Information or any Bloomberg Submission that results from an error or omission
in the Preliminary Prospectus, the Prospectus or the Issuer Information (other
than any Information Provided by the Underwriters contained therein). The
Master Issuer, Funding 2, the Mortgages Trustee and Halifax acknowledge that
the statements set forth under the heading "Underwriting" that specify (i) the
list of Underwriters and their respective participation in the sale of the
Offered Notes, (ii) the sentences related to concessions and reallowances and
(iii) the paragraph related to over-allotment transactions, short sales,
stabilizing transactions, short covering transactions and penalty bids in the
Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in the Registration Statement, the Preliminary Prospectus or the Prospectus
(such statements being the INFORMATION PROVIDED BY THE UNDERWRITERS).
(c) Notice and Procedures. If any suit, action, proceeding (including
any governmental or regulatory investigation), claim or demand shall be brought
or asserted against any person in respect of which indemnification may be
sought pursuant to either paragraph (a) or (b) above, such person (the
INDEMNIFIED PERSON) shall promptly notify the person against whom such
indemnification may be sought (the INDEMNIFYING PERSON) in writing; provided
that the failure to notify the Indemnifying Person shall not relieve it from
any liability that it may have under paragraph
33
(a) or (b) of this Section 6 except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defences) by such
failure; and provided, further, that the failure to notify the Indemnifying
Person shall not relieve it from any liability that it may have to an
Indemnified Person otherwise than under paragraph (a) or (b) of this Section 6.
If any such proceeding shall be brought or asserted against an Indemnified
Person and it shall have notified the Indemnifying Person thereof, the
Indemnifying Person shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others entitled
to indemnification pursuant to this Section 6 that the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary; (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal
defences available to it that are different from or in addition to those
available to the Indemnifying Person; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for any Underwriter, its affiliates and any control persons of
such Underwriter shall be designated in writing by the Representatives and any
such separate firms for the Master Issuer, Funding 2, the Mortgages Trustee,
each of their directors or officers who signed the Registration Statement,
Halifax and any control persons of the Master Issuer, Funding 2 and the
Mortgages Trustee shall be designated in writing by the Master Issuer, Funding
2, the Mortgages Trustee or Halifax, as the case may be. The Indemnifying Person
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested that an Indemnifying Person reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by this
paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by the Indemnifying Person of such
request and (ii) the Indemnifying Person shall not have either reimbursed the
Indemnified Person in accordance with such request prior to the date of such
settlement or objected to such request in writing prior to the date of such
settlement. No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnification could have been sought hereunder by such Indemnified
Person, unless such settlement (x) includes an unconditional release of such
Indemnified Person from all liability on claims that are the subject matter of
such proceeding and (y) does not include any statement as to or any admission of
fault, culpability or a failure to act by or on behalf of any Indemnified
Person.
(d) Contribution. If the indemnification provided for in paragraphs
(a) and (b) above is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, severally (or, with respect to Halifax, in
respect of itself, the Master Issuer, Funding 2 and the Mortgages Trustee)
agrees to contribute to the amount paid or payable by such Indemnified Person
as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Master Issuer, Funding 2, the Mortgages Trustee and Halifax on the one hand and
the Underwriters on the other from the offering of the Offered Notes or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred
34
to in clause (i) but also the relative fault of the Master Issuer, Funding 2,
the Mortgages Trustee and Halifax on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Master Issuer, Funding 2,
the Mortgages Trustee and Halifax on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportions as the net
proceeds (before deducting expenses) received by the Master Issuer from the sale
of the Offered Notes and the total underwriting discounts, fees and commissions
received by the Underwriters in connection therewith, in each case as set forth
in the table on the cover of the Prospectus, bear to the aggregate offering
price of the Offered Notes. The relative fault of the Master Issuer, Funding 2,
the Mortgages Trustee and Halifax on the one hand and the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Master
Issuer, Funding 2, the Mortgages Trustee, Halifax or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) Limitation on Liability. The Master Issuer, Funding 2, the
Mortgages Trustee, Halifax and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 6 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an Indemnified Person as a result of the losses, claims, damages
and liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
incurred by such Indemnified Person in connection with any such action or
claim. Notwithstanding the provisions of this Section 6, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total underwriting discounts, fees and commissions received by such
Underwriter with respect to the offering of the Offered Notes exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 6 are several
in proportion to their respective purchase obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section
6 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Person at law or in equity.
7. Effectiveness of Agreement. This Agreement shall become effective
upon the execution and delivery hereof by the parties hereto.
8. Termination. This Agreement may be terminated by the
Representatives by notice to the Master Issuer, Funding 2, the Mortgages
Trustee and Halifax, if after the execution and delivery of this Agreement and
prior to the Issue 2007-1 Closing Date:
(a) (i) trading generally shall have been suspended or materially
limited on or by any of the New York Stock Exchange, or the over-the-counter
market; (ii) a general moratorium on commercial banking activities shall have
been declared by federal or New York State authorities; or (iii) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis, either within or outside the
United States, that in the judgment of the Representatives is material and
adverse and makes it impracticable to proceed with the offering, sale or
delivery of the Offered Notes on the terms and in the manner contemplated by
this Agreement and the Prospectus or which in the view of the Representatives
has caused a material deterioration in the price and/or value of the Notes; or
35
(b) there shall have come to the notice of the Underwriters any breach
of, or any event rendering untrue or incorrect in any material respect, any of
the warranties and representations contained in Section 3 (or any deemed
repetition thereof) or failure to perform any of the Master Issuer's or
Halifax's covenants or agreements in this Agreement in any material respect; or
(c) any condition specified in Section 5 has not been satisfied or
waived by the Representatives on behalf of the Underwriters; or
(d) the Subscription Agreements are terminated.
If this Agreement shall be terminated pursuant to Section 8 hereof, this
Agreement shall terminate and be of no further effect and no party hereto shall
be under any liability to any other in respect of this Agreement except that
(a) the Master Issuer shall remain liable under Section 11 for the payment of
costs and expenses already incurred or incurred in consequence of such
termination, and if the Master Issuer shall not pay such costs and expenses,
Funding 2, the Mortgages Trustee and Halifax shall be liable for the payment of
such costs and expenses already incurred or incurred in consequence of such
termination for which the Master Issuer was liable under Section 11, (b) the
parties hereto shall remain liable under the indemnity provisions and
contribution provisions set forth in Section 6 and in respect of accrued
liabilities and (c) the representations and agreements of the Underwriters made
in Section 2 of this Agreement, which would have continued in accordance with
Section 13 had the arrangements for the underwriting and issue of the Notes
been completed, shall so continue.
9. Listing.
(a) Application for Listing. The Master Issuer confirms that it has
made or caused to be made at the Master Issuer's expense an application for the
Notes to be admitted to listing on the Official List of the UK Listing
Authority and for the Notes to be admitted to trading on the Stock Exchange's
Gilt Edged and Fixed Interest Market or such other market of the Stock Exchange
as shall be designated a "regulated market" within the meaning of Directive
93/22/EC (the MARKET).
(b) Supply of Information. The Master Issuer agrees to deliver to
the UK Listing Authority and the Stock Exchange copies of the Prospectus
(including any amendments or supplements thereto) and such other documents,
information and undertakings as may be required for the purpose of obtaining
such listing.
(c) Maintenance of Listing. The Master Issuer agrees to use its
reasonable endeavours to maintain a listing of the Notes on the Official List
of the UK Listing Authority and the admission of the Notes to trading on the
Market for as long as any of the Notes are outstanding and to pay all fees and
supply all further documents, information and undertakings and publish all
advertisements or other material as may be necessary for such purpose.
However, if such listing becomes impossible, the Master Issuer will obtain, and
will thereafter use its best endeavours to maintain, a quotation for, or
listing of, the Notes on or by such other stock exchange, competent listing
authority and/or quotation system as is commonly used for the quotation or
listing of debt securities as it may, with the approval of the Representatives
(such approval not to be unreasonably withheld or delayed), decide.
10. Defaulting Underwriter.
(a) If, on the Issue 2007-1 Closing Date, any Class A Underwriter
defaults on its obligation to purchase the Class A Offered Notes that it has
agreed to purchase hereunder, the non-defaulting Class A Underwriters may in
their discretion arrange for the purchase of such Class A Offered Notes by
other persons satisfactory to the Master Issuer on the terms contained in this
Agreement. If, within 36 hours after any such default by any Class A
Underwriter, the non-defaulting Class A Underwriters do not arrange for the
purchase of such Class A Offered Notes, then the Master Issuer shall be
entitled to a further period of 36 hours within which to procure other persons
to purchase such Class A Offered Notes on such terms. If other persons become
obligated or agree to
36
purchase the Class A Offered Notes of a defaulting Class A Underwriter, either
the non-defaulting Class A Underwriters or the Master Issuer may postpone the
Issue 2007-1 Closing Date for up to five full business days in order to effect
any changes that in the opinion of counsel for the Master Issuer or counsel for
the Class A Underwriters may be necessary in the Registration Statement and the
Prospectus or in any other document or arrangement, and the Master Issuer agrees
to promptly prepare any amendment or supplement to the Registration Statement
and the Prospectus that effects any such changes.
If, on the Issue 2007-1 Closing Date, a Class A2 Joint Lead Underwriter
defaults on its obligation to purchase the Class A2 Offered Notes that it has
agreed to purchase hereunder, the non-defaulting Class A2 Joint Lead
Underwriter may in its discretion arrange for the purchase of such Class A2
Offered Notes by other persons satisfactory to the Master Issuer on the terms
contained in this Agreement. If, within 36 hours after any such default by a
Class A2 Joint Lead Underwriter, the non-defaulting Class A2 Joint Lead
Underwriter does not arrange for the purchase of such Class A2 Offered Notes,
then the Master Issuer shall be entitled to a further period of 36 hours within
which to procure other persons to purchase such Class A2 Offered Notes on such
terms. If other persons become obligated or agree to purchase the Class A2
Offered Notes of a defaulting Class A2 Joint Lead Underwriter, either the non-
defaulting Class A2 Joint Lead Underwriter or the Master Issuer may postpone
the Issue 2007-1 Closing Date for up to five full business days in order to
effect any changes that in the opinion of counsel for the Master Issuer or
counsel for the Class A2 Joint Lead Underwriters may be necessary in the
Registration Statement and the Prospectus or in any other document or
arrangement, and the Master Issuer agrees to promptly prepare any amendment or
supplement to the Registration Statement and the Prospectus that effects any
such changes.
If, on the Issue 2007-1 Closing Date, a Class B/C Joint Lead Underwriter
defaults on its obligation to purchase the Class B/C Offered Notes that it has
agreed to purchase hereunder, the non-defaulting Class B/C Joint Lead
Underwriter may in its discretion arrange for the purchase of such Class B/C
Offered Notes by other persons satisfactory to the Master Issuer on the terms
contained in this Agreement. If, within 36 hours after any such default by a
Class B/C Joint Lead Underwriter, the non-defaulting Class B/C Joint Lead
Underwriter does not arrange for the purchase of such Class B/C Offered Notes,
then the Master Issuer shall be entitled to a further period of 36 hours within
which to procure other persons to purchase such Class B/C Offered Notes on such
terms. If other persons become obligated or agree to purchase the Class B/C
Offered Notes of a defaulting Class B/C Joint Lead Underwriter, either the non-
defaulting Class B/C Joint Lead Underwriter or the Master Issuer may postpone
the Issue 2007-1 Closing Date for up to five full business days in order to
effect any changes that in the opinion of counsel for the Master Issuer or
counsel for the Class B/C Joint Lead Underwriters may be necessary in the
Registration Statement and the Prospectus or in any other document or
arrangement, and the Master Issuer agrees to promptly prepare any amendment or
supplement to the Registration Statement and the Prospectus that effects any
such changes.
As used in this Agreement, the terms "Class A Underwriter" and
"Underwriter" include, for all purposes of this Agreement unless the context
otherwise requires, any person not listed in Schedule I hereto that, pursuant
to this Section 10, purchases Class A Offered Notes that a defaulting Class A
Underwriter agreed but failed to purchase. As used in this Agreement, the
terms "Class A2 Joint Lead Underwriter" and "Underwriter" include, for all
purposes of this Agreement unless the context otherwise requires, any person
not listed in Schedule I hereto that, pursuant to this Section 10, purchases
Class A2 Offered Notes that a defaulting Class A2 Joint Lead Underwriter agreed
but failed to purchase. As used in this Agreement, the terms "Class B/C Joint
Lead Underwriter" and "Underwriter" include, for all purposes of this Agreement
unless the context otherwise requires, any person not listed in Schedule I
hereto that, pursuant to this Section 10, purchases Class B/C Offered Notes
that a defaulting Class B/C Joint Lead Underwriter agreed but failed to
purchase.
(b) If, after giving effect to any arrangements for the purchase of
the Class A Offered Notes of a defaulting Class A Underwriter or Class A
Underwriters by the non-defaulting Class A Underwriters and the Master Issuer
as provided in paragraph (a) above, the aggregate principal
37
amount of such Class A Offered Notes that remains unpurchased does not exceed
ten percent of the aggregate principal amount of all the Offered Notes, then the
Master Issuer shall have the right to require each non-defaulting Class A
Underwriter to purchase the principal amount of Class A Offered Notes that such
Class A Underwriter agreed to purchase hereunder plus such Class A Underwriter's
pro rata share (based on the principal amount of Class A Offered Notes that such
Class A Underwriter agreed to purchase hereunder) of the Class A Offered Notes
of such defaulting Class A Underwriter or Class A Underwriters for which such
arrangements have not been made.
If, after giving effect to any arrangements for the purchase of the Class
A2 Offered Notes of the defaulting Class A2 Joint Lead Underwriter by the non-
defaulting Class A2 Joint Lead Underwriter and the Master Issuer as provided in
paragraph (a) above the aggregate principal amount of such Class A2 Offered
Notes that remains unpurchased does not exceed ten percent of the aggregate
principal amount of all the Offered Notes, then the Master Issuer shall have the
right to require the non-defaulting Class A2 Joint Lead Underwriter to purchase
the principal amount of Class A2 Offered Notes that such Class A2 Joint Lead
Underwriter agreed to purchase hereunder plus the Class A2 Offered Notes of the
defaulting Class A2 Joint Lead Underwriter for which such arrangements have not
been made.
If, after giving effect to any arrangements for the purchase of the Class
B/C Offered Notes of the defaulting Class B/C Joint Lead Underwriter by the
non-defaulting Class B/C Joint Lead Underwriter and the Master Issuer as
provided in paragraph (a) above, the aggregate principal amount of such Class
B/C Offered Notes that remains unpurchased does not exceed ten percent of the
aggregate principal amount of all the Offered Notes, then the Master Issuer
shall have the right to require the non-defaulting Class B/C Joint Lead
Underwriter to purchase the principal amount of Class B/C Offered Notes that
such Class B/C Joint Lead Underwriter agreed to purchase hereunder plus the
Class B/C Offered Notes of the defaulting Class B/C Joint Lead Underwriter for
which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the
Class A Offered Notes of a defaulting Class A Underwriter or Class A
Underwriters by the non-defaulting Class A Underwriters and the Master Issuer as
provided in paragraph (a) above, the aggregate principal amount of such Class A
Offered Notes that remains unpurchased exceeds ten percent of the aggregate
principal amount of all the Offered Notes, or if the Master Issuer shall not
exercise the right described in paragraph (b) above, then this Agreement shall
terminate without liability on the part of the non-defaulting Class A
Underwriters, the Class B/C Joint Lead Underwriters or the Master Issuer, except
that the Master Issuer will continue to be liable for the payment of expenses as
set forth in Section 11 hereof and except that the provisions of Section 6
hereof shall not terminate and shall remain in effect.
If, after giving effect to any arrangements for the purchase of the Class A2
Offered Notes of the defaulting Class A2 Joint Lead Underwriter by the non-
defaulting Class A2 Joint Lead Underwriter and the Master Issuer as provided in
paragraph (a) above, the aggregate principal amount of such Class A2 Offered
Notes that remains unpurchased exceeds ten percent of the aggregate principal
amount of all the Offered Notes, or if the Master Issuer shall not exercise the
right described in paragraph (b) above, then this Agreement shall terminate
without liability on the part of the non-defaulting Class A2 Joint Lead
Underwriter, the Class A Underwriters or the Master Issuer, except that the
Master Issuer will continue to be liable for the payment of expenses as set
forth in Section 11 hereof and except that the provisions of Section 6 hereof
shall not terminate and shall remain in effect.
If, after giving effect to any arrangements for the purchase of the Class
B/C Offered Notes of the defaulting Class B/C Joint Lead Underwriter by the
non-defaulting Class B/C Joint Lead Underwriter and the Master Issuer as
provided in paragraph (a) above, the aggregate principal amount of such Class
B/C Offered Notes that remains unpurchased exceeds ten percent of the aggregate
principal amount of all the Offered Notes, or if the Master Issuer shall not
exercise the right described in paragraph (b) above, then this Agreement shall
terminate without liability on the part of the non-defaulting Class B/C Joint
Lead Underwriter, the Class A Underwriters or the Master Issuer, except that
38
the Master Issuer will continue to be liable for the payment of expenses as set
forth in Section 11 hereof and except that the provisions of Section 6 hereof
shall not terminate and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Master Issuer or any non-defaulting
Underwriter for damages caused by its default.
11. Payment of Expenses.
(a) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Master Issuer will pay or
cause to be paid the following (together with (i) in respect of taxable
supplies made to the Master Issuer, any amount in respect of VAT or similar tax
payable in respect thereof against production of a valid tax invoice and (ii)
in respect of taxable supplies made to a person other than the Master Issuer,
any amount in respect of Irrecoverable VAT (for the purposes of this Agreement
IRRECOVERABLE VAT means any amount in respect of VAT incurred by a party to the
Transaction Documents (for the purposes of this definition, a RELEVANT PARTY)
as part of a payment in respect of which it is entitled to be indemnified under
the relevant Transaction Documents to the extent that the Relevant Party does
not or will not receive and retain a credit or repayment of such VAT as input
tax (as that expression is defined in section 24(1) of the Value Added Tax Act
1994) for the prescribed accounting period (as that expression is used in
section 25(1) of the Value Added Tax Act 1994) to which such input tax relates)
or similar tax payable in respect thereof against production of a valid tax
invoice): (i) the costs of the Master Issuer incident to the authorization,
issuance, preparation and delivery of the Notes; (ii) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement, the Preliminary Prospectus and the Prospectus (including all
exhibits, amendments and supplements thereto) and the distribution thereof;
(iii) the costs of the preparation and execution of the Legal Agreements and
any other relevant documents and the issue of the Offered Notes and compliance
with the Conditions of the Offered Notes, including the reproduction and
distribution thereof; (iv) the fees and expenses of counsel to the Master
Issuer, Funding 2, the Mortgages Trustee and the independent accountants; (v)
the fees and expenses incurred in connection with the registration or
qualification and determination of eligibility for investment of the Offered
Notes under such United States state securities, Blue Sky or similar laws as
the Representatives may designate and the preparation, printing and
distribution of a Blue Sky Memorandum (including the related fees and expenses
of counsel for the Underwriters); (vi) any fees charged by Rating Agencies for
rating the Offered Notes and annual fees in connection with such rating or any
other rating from the Rating Agencies for the Offered Notes; (vii) the fees and
expenses of the Note Trustee, the Funding 2 Security Trustee, the US Paying
Agent, Agent Bank, any paying agent in connection with the preparation and
execution of the Legal Agreements and any other relevant documents and the
issue of the Offered Notes and compliance with the Conditions of the Offered
Notes (including related fees and expenses of any counsel to the Note Trustee
and the Funding 2 Security Trustee) and the initial fees and expenses of The
Depository Trust Company in relation to the Offered Notes (excluding any such
fees and expenses arising as a result of any transfer of the Offered Notes);
(viii) all expenses and application fees incurred in connection with any filing
with the National Association of Securities Dealers, Inc.; (ix) the fees and
expenses payable in connection with obtaining and maintaining the admission to
trading of the Offered Notes on the Stock Exchange; (x) all out-of-pocket
expenses (excluding legal expenses) incurred by the Representatives on behalf
of the Underwriters in connection with the transactions contemplated hereby;
(xi) all expenses incurred by the Representatives in connection with any "road
show" presentation to potential investors; and (xii) any amount in respect of
fees and disbursements of the Underwriters' counsel, subject to any agreed
limit or cap on fees.
(b) The Master Issuer will reimburse the Underwriters for all amounts
in connection with the issue of the Notes which it has agreed to pay pursuant
to Section 11(a).
(c) For the avoidance of doubt, references to costs and expenses in
this Agreement shall be deemed to include, in addition, references to any
Irrecoverable VAT payable in respect of such costs and expenses.
39
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Master Issuer, Funding 2, the
Mortgages Trustee, each of their officers and directors and any controlling
persons referred to herein, Halifax, the Underwriters, their respective
affiliates and any controlling persons referred to herein, and their respective
successors. Nothing in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein. No purchaser of
Offered Notes from any Underwriter shall be deemed to be a successor merely by
reason of such purchase.
13. Survival.
(a) The respective indemnities, rights of contribution,
representations, warranties and agreements of the Master Issuer, Funding 2, the
Mortgages Trustee, Halifax and the Underwriters contained in this Agreement or
made by or on behalf of the Master Issuer, Funding 2, the Mortgages Trustee,
Halifax or the Underwriters pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the
Offered Notes and shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Master Issuer, Funding 2, the
Mortgages Trustee, Halifax or the Underwriters.
(b) Save for their respective responsibilities to comply with relevant
representations and warranties set forth herein, neither the Master Issuer,
Funding 2, the Mortgages Trustee nor Halifax shall have any responsibility in
respect of the legality of the Underwriters or other persons offering and
selling the Notes in any jurisdiction or in respect of the Notes qualifying for
sale in any jurisdiction.
14. Certain Defined Terms. For purposes of this Agreement, (a) except
where otherwise expressly provided, the term AFFILIATE or AFFILIATE has the
meaning set forth in Rule 405 under the Securities Act; (b) the term BUSINESS
DAY or BUSINESS DAY (unless otherwise indicated to be a London Business Day)
means any day other than a day on which banks are permitted or required to be
closed in New York City; and (c) the term SUBSIDIARY has the meaning set forth
in Rule 405 under the Securities Act.
15. Miscellaneous.
(a) Authority of the Representatives. Any action by the Underwriters
hereunder may be taken by the Representatives on behalf of the Underwriters,
and any such action taken by the Representatives shall be binding upon the
Underwriters.
(b) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed or transmitted
and confirmed by any standard form of telecommunication in accordance with the
following information:
(i) Class A Underwriters
Deutsche Bank Securities Inc.
60 Wall Street
New York, New York 10005
(Fax: +1 (212) 797 2031)
Attention: Managing Director - ABS Syndicate
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
(Fax: +44 (0)20 7102 4139)
(E-mail: Head_StructuredFinance@lehman.com)
Attention: Head of Legal, Structured Finance
40
UBS Securities LLC
1285 Avenue of the Americas
New York, New York 10019
(Fax:+1 (212) 713 2638)
Attention - Securitized Products Group, ABS Syndicate Desk
with a copy to
UBS Securities LLC
1285 Avenue of the Americas
New York, New York 10019
(Fax: +1 (212) 713 1153)
Attention: Legal Department, Securitiezed Products Group
and to
UBS Limited
100 Liverpool Street,
London EC2M 2RH
Attention: European Securitisation Desk
(Fax: +44 (0)20 7568 5332)
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4 World Financial Center
New York, New York 10080
Attention: Tom Saywell, Securitisation
(Fax: 212-449-9015)
ABN AMRO Bank N.V., London Branch
250 Bishopsgate
London EC2M 4AA
(Fax: +44 (0)20 7857 9494)
Attention: Legal Counsel, ABS & Hybrid Finance
Credit Suisse Securities (Europe) Limited
One Cabot Square
London E14 4QJ
(Fax: +44 20 7888 4342)
Attention: Masashi Washida, Asset Finance Capital Markets
(ii) Class A2 Joint Lead Underwriters
Deutsche Bank Securities Inc.
60 Wall Street
New York, New York 10005
(Fax: +1 (212) 797 2031)
Attention: Managing Director - ABS Syndicate
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
(Fax: +44 (0)20 7102 4139)
(E-mail: Head_StructuredFinance@lehman.com)
Attention: Head of Legal, Structured Finance
41
UBS Securities LLC
1285 Avenue of the Americas
New York, New York 10019
(Fax:+1 (212) 713 2638)
Attention - Securitized Products Group, ABS Syndicate Desk
with a copy to
UBS Securities LLC
1285 Avenue of the Americas
New York, New York 10019
(Fax: +1 (212) 713 1153)
Attention: Legal Department, Securitiezed Products Group
and to
UBS Limited
100 Liverpool Street,
London EC2M 2RH
Attention: European Securitisation Desk
(Fax: +44 (0)20 7568 5332)
(iii) Class B/C Joint Lead Underwriters
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
(Fax: +44 (0)20 7102 4139)
(E-mail: Head_StructuredFinance@lehman.com)
Attention: Head of Legal, Structured Finance
UBS Securities LLC
1285 Avenue of the Americas
New York, New York 10019
(Fax: +1 (212) 713 2638)
Attention - Securitized Products Group, ABS Syndicate Desk
with a copy to
UBS Securities LLC
1285 Avenue of the Americas
New York, New York 10019
(Fax: +1 (212) 713 1153)
Attention: Legal Department, Securitiezed Products Group
and to
UBS Limited
100 Liverpool Street,
London EC2M 2RH
Attention: European Securitisation Desk
(Fax: +44 (0)20 7568 5332)
42
(iv) Master Issuer
35 Great St. Helen's
London EC3A 6AP
(Fax: +44 (0)20 7398 6325)
Attention: The Directors
(v) Funding 2
35 Great St. Helen's
London EC3A 6AP
(Fax: +44 (0)20 7398 6325)
Attention: The Directors
(vi) Mortgages Trustee
47 Esplanade
St. Helier
Jersey JE1 0BD
(Fax: +44 (0)1534 726 391)
Attention: The Directors
(vii) Halifax
Trinity Road
Halifax (LP/3/3/SEC)
West Yorkshire
HX1 2RG
(Fax: +44 (0) 113 235 7511)
Attention: Head of Mortgage Securitisation
(c) Appointment of Process Agent. Each of the Master Issuer, Funding
2, the Mortgages Trustee and Halifax hereby designates and appoints CT
Corporation System, 111 Eighth Avenue, New York, NY 10011 (the PROCESS AGENT),
as its authorized agent, upon whom process may be served in any legal suit,
action or proceeding based on or arising under or in connection with this
Agreement, it being understood that the designation and appointment of the
Process Agent as such authorized agent shall become effective immediately
without any further action on the part of the Master Issuer, Funding 2, the
Mortgages Trustee or Halifax, as applicable. Such appointment shall be
irrevocable to the extent permitted by applicable law and subject to the
appointment of a successor agent in the United States on terms substantially
similar to those contained in this Section 14(c) and reasonably satisfactory to
the Representatives. If the Process Agent shall cease to act as agent for
service of process, the Master Issuer, Funding 2, the Mortgages Trustee and
Halifax shall appoint, without unreasonable delay, another such agent, and
notify the Representatives of such appointment. Each of the Master Issuer,
Funding 2, the Mortgages Trustee and Halifax represents to the Underwriters
that it has notified the Process Agent of such designation and appointment and
that the Process Agent has accepted the same in writing and the Master Issuer,
Funding 2, the Mortgages Trustee and Halifax hereby authorize and direct the
Process Agent to accept such service. Each of the Master Issuer, Funding 2,
the Mortgages Trustee and Halifax further agree that service of process upon
the Process Agent and written notice of that service to it shall be deemed in
every respect effective service of process upon it in any such legal suit,
action or proceeding. Nothing in this Section 14(c) shall affect the right of
any Underwriter or any person controlling any Underwriter to serve process in
any other manner permitted by law.
43
(d) Consent to Jurisdiction. Each of the parties hereto submits to
the non-exclusive jurisdiction of the federal and state courts in the Borough
of Manhattan in The City of New York in any suit or proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby.
(e) Non Petition and Limited Recourse. Each of the Underwriters
agrees with the Master Issuer, Funding 2 and the Mortgages Trustee that it
shall not, until the expiry of one year and one day after the payment of all
sums outstanding and owing under the Notes (in respect of the Master Issuer)
and until the expiry of one year and one day after the payment of all sums
outstanding and owing under any Loan Tranche made to Funding 2 by the Master
Issuer or any other company (in respect of the Mortgages Trustee and Funding 2)
take any corporate action or other steps or legal proceedings for the winding-
up, dissolution, arrangement, reconstruction or re-organisation or for the
appointment of a liquidator, receiver, manager, administrator, administrative
receiver or similar officer of the Master Issuer, the Mortgages Trustee or
Funding 2 or any, or all of, their respective assets or revenues. Each
Underwriter further agrees with the Mortgages Trustee that to the extent that
any amounts due to such Underwriter from the Mortgages Trustee hereunder
exceeds the assets of the Mortgages Trustee (excluding, for the avoidance of
doubt, the assets comprised in the Mortgages Trust) available to pay such
amounts and any other amount due to other creditors of the Mortgages Trustee,
then the claims of such Underwriter in relation to any such excess amounts
shall be extinguished and shall not thereafter revive. 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 the Master Issuer, Funding 2 or the Mortgages Trustee, by the
enforcement of any assessment or by any legal proceedings, by virtue of any
statute or otherwise; it being expressly agreed and understood that this
Agreement is a corporate obligation of each of the Master Issuer, Funding 2 and
the Mortgages Trustee 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 the Master Issuer, Funding 2 or the
Mortgages Trustee contained in this Agreement, or implied therefrom, and that
any and all personal liability for breaches by such person of any 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.
(f) Foreign Taxes. All payments to be made by the Master Issuer,
Funding 2, the Mortgages Trustee and Halifax hereunder shall be made without
withholding or deduction for or on account of any present or future taxes,
duties or governmental charges, excluding for the purposes of this Section
15(f), (a) any taxes which are payable as a consequence of any Underwriter
having a necessary connection with the relevant taxing jurisdiction and (b) any
income or franchise tax on the overall net income of such Underwriter imposed
by the United States or the State of New York (all such non-excluded taxes,
duties or charges, FOREIGN TAXES), unless the Master Issuer, Funding 2, the
Mortgages Trustee or Halifax, as applicable, is compelled by law to deduct or
withhold such Foreign Taxes. In that event, the Master Issuer, Funding 2, the
Mortgages Trustee or Halifax, as applicable, shall pay such additional amounts
as may be necessary in order that the net amounts received after such
withholding or deduction shall equal the amounts that would have been received
if no withholding or deduction had been made.
(g) Judgment Currency. If any judgment or order in any legal
proceeding against any of the Master Issuer, Funding 2, the Mortgages Trustee
or Halifax is given or made for any amount due hereunder and such judgment or
order is expressed and paid in a currency (the JUDGMENT CURRENCY) other than
United States dollars and there is any variation as between (i) the rate of
exchange (the JUDGMENT RATE) at which the United States dollar amount is
converted into the Judgment Currency for the purpose of such judgment or order,
and (ii) the rate of exchange (the MARKET RATE) at which the person to whom
such amounts is paid (the PAYEE) is able to purchase United States dollars with
the amount of the Judgment Currency actually received by the holder, then the
difference, expressed in United States dollars, between such amount calculated
at the Judgment Rate and such amount
44
calculated at the Market Rate shall be indemnified (a) if negative by the Master
Issuer, Funding 2, the Mortgages Trustee or Halifax, as applicable, to the Payee
and (b) if positive by the Payee to the Master Issuer, Funding 2, the Mortgages
Trustee or Halifax, as applicable. The foregoing indemnity shall constitute a
separate and independent obligation of the Master Issuer, Funding 2, the
Mortgages Trustee, Halifax and/or the Payee, as the case may be, and shall
continue in full force and effect notwithstanding any such judgment or order as
aforesaid. The term "rate of exchange" shall include any premiums and costs of
exchange payable in connection with the purchase of, or conversion into, the
relevant currency.
(h) Governing Law. THIS AGREEMENT AND THE OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS
RULES THEREOF (OTHER THAN AS CONTAINED IN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK).
(i) Counterparts. This Agreement may be signed in counterparts (which
may include counterparts delivered by any standard form of telecommunication),
each of which shall be an original and all of which together shall constitute
one and the same instrument.
(j) Amendments or Waivers. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto.
(k) Headings. The headings herein are included for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
45
If the foregoing is in accordance with your understanding, please
indicate your acceptance of this Agreement by signing in the space provided
below.
Very truly yours,
PERMANENT MASTER ISSUER PLC
By /s/ James Garner Smith MacDonald
PERMANENT FUNDING (NO. 2) LIMITED
By /s/ James Garner Smith MacDonald
PERMANENT MORTGAGES TRUSTEE LIMITED
By /s/ Peter John Richardson
HALIFAX plc
By /s/ Malcolm Ryan
By /s/ Lorinda Long
46
Accepted: 23 February 2007
LEHMAN BROTHERS INC.
By /s/ Milind Chankar
DEUTSCHE BANK SECURITIES INC.
By /s/ Kristi Leo
By /s/ Denise Chen
UBS SECURITIES LLC
By /s/ Steven Warjanka
By /s/ Paul Sciaiabba
47
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By /s/ Tom Saywell
ABN AMRO BANK N.V., LONDON BRANCH
By /s/ Jacqueline Steven
By /s/ Mauricio Noe
CREDIT SUISSE SECURITIES (EUROPE) LIMITED
By /s/ Masashi Washida
48
SCHEDULE I
AGGREGATE INITIAL PRINCIPAL AMOUNT
OF CERTIFICATES TO BE PURCHASED
CLASS A UNDERWRITERS: Series 1 Series 2 Series 4
Class A Class A1 Class A
Notes Notes Notes
Deutsche Bank Securities Inc. $333,000,000 $500,000,000 $450,000,000
Lehman Brothers Inc. $334,000,000 $500,000,000 $450,000,000
UBS Securities LLC $333,000,000 $500,000,000 $450,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated Nil Nil Nil
ABN AMRO Bank N.V., London Branch Nil Nil Nil
Credit Suisse Securities (Europe) Limited Nil Nil Nil
CLASS A2 JOINT LEAD UNDERWRITERS:
Series 1
Class A2
Notes
Deutsche Bank Securities Inc. $334,000,000
Lehman Brothers Inc. $333,000,000
UBS Securities LLC $333,000,000
CLASS B/C JOINT LEAD UNDERWRITERS: Series 1 Series 1
Class B Class C
Notes Notes
Lehman Brothers Inc. $21,500,000 $21,500,000
UBS Securities LLC $21,500,000 $21,500,000
49
SCHEDULE II
OFFERED NOTES RATING
Designation Standard & Poor's Moody's Fitch
Series 1 Class A Notes (short term) A-1+ P-1 F-1+
Series 1 Class B Notes AA Aa3 AA
Series 1 Class C Notes BBB Baa2 BBB
Series 2 Class A1 Notes AAA Aaa AAA
Series 2 Class A2 Notes AAA Aaa AAA
Series 4 Class A Notes AAA Aaa AAA
50