Underwriting Agreement (2006)Full Document 

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                            UNDERWRITING AGREEMENT

                           dated September 15, 2006

                           GRANITE MASTER ISSUER PLC

                                      and

                               NORTHERN ROCK PLC

                                      and

                       GRANITE FINANCE FUNDING 2 LIMITED

                                      and

                       GRANITE FINANCE TRUSTEES LIMITED

                                      and

                       CITIGROUP GLOBAL MARKETS LIMITED

                                      and

                             LEHMAN BROTHERS INC.

                                      and

                              UBS SECURITIES LLC

                                      and

                             BARCLAYS CAPITAL INC.

                                      and

                          J.P. MORGAN SECURITIES INC.

                                      and

              MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

                                      and

                  MORGAN STANLEY & CO. INTERNATIONAL LIMITED


                     relating to GRANITE MASTER ISSUER PLC


      U.S. $1,000,000,000 Series 2006-3 Class A1 Notes due December 2030
      U.S. $1,800,000,000 Series 2006-3 Class A3 Notes due December 2054
      U.S. $1,000,000,000 Series 2006-3 Class A4 Notes due December 2054
      U.S. $1,750,000,000 Series 2006-3 Class A7 Notes due December 2054
        U.S. $70,000,000 Series 2006-3 Class B1 Notes due December 2054
       U.S. $182,000,000 Series 2006-3 Class B2 Notes due December 2054
        U.S. $90,000,000 Series 2006-3 Class M1 Notes due December 2054
       U.S. $100,000,000 Series 2006-3 Class M2 Notes due December 2054
        U.S. $60,000,000 Series 2006-3 Class C2 Notes due December 2054


                                 SIDLEY AUSTIN
                               WOOLGATE EXCHANGE
                             25 BASINGHALL STREET
                               LONDON, EC2V 5HA
                            TELEPHONE 020 7360 3600
                            FACSIMILE 020 7626 7937
                                REF:30507-30140




                                   CONTENTS


Clause                                                                                      Page

                                                                                      
1.       Agreement to Issue and Subscribe......................................................5
2.       Stabilization.........................................................................8
3.       Agreements by the Underwriters........................................................9
4.       Listing..............................................................................16
5.       Representations and Warranties of the Master Issuer..................................17
6.       Representations and Warranties of Funding 2 and the Mortgages Trustee................22
7.       Representations and Warranties of NRPLC..............................................28
8.       Covenants of the Master Issuer, Funding 2, the Mortgages Trustee and NRPLC...........31
9.       Conditions Precedent.................................................................40
10.      Expenses.............................................................................44
11.      Indemnification......................................................................45
12.      Termination..........................................................................49
13.      Survival of Representations and Obligations..........................................50
14.      Notices..............................................................................50
15.      Time.................................................................................52
16.      Non Petition and Limited Recourse....................................................52
17.      Governing Law and Jurisdiction.......................................................53
18.      Counterparts.........................................................................53
19.      Authority of the Lead Underwriters...................................................53
20.      Successors...........................................................................54

Schedule 1 ..................................................................................S-1



                                      i


THIS UNDERWRITING AGREEMENT (this "Agreement") is made as of September 15, 2006

BETWEEN:

(1)   GRANITE MASTER ISSUER PLC, a public limited company incorporated under
      the laws of England and Wales, whose registered office is at Fifth
      Floor, 100 Wood Street, London EC2V 7EX (the "Master Issuer");

(2)   NORTHERN ROCK PLC, a public limited company incorporated under the laws
      of England and Wales, whose registered office is at Northern Rock House,
      Gosforth, Newcastle upon Tyne NE3 4PL ("NRPLC");

(3)   GRANITE FINANCE FUNDING 2 LIMITED, a private limited company
      incorporated under the laws of England and Wales, whose registered
      office is at Fifth Floor, 100 Wood Street, London EC2V 7EX ("Funding
      2");

(4)   GRANITE FINANCE TRUSTEES LIMITED, a private limited company incorporated
      under the laws of Jersey, Channel Islands, whose registered office is at
      22 Grenville Street, St. Helier, Jersey JE4 8PX, Channel Islands (the
      "Mortgages Trustee");

(5)   CITIGROUP GLOBAL MARKETS LIMITED, a limited liability company
      incorporated under the laws of England and Wales, whose registered
      office is at Citigroup Centre, Canada Square, Canary Wharf, London E14
      5LB, LEHMAN BROTHERS INC., a corporation organized under the laws of the
      State of Delaware, whose registered office is at 2711 Centerville Road,
      Wilmington, Delaware 19808, and UBS SECURITIES LLC, a limited liability
      company organized under the laws of the State of Delaware, whose
      registered office is at c/o Corporation Service Company, 2711
      Centerville Road, Suite 400, Wilmington, Delaware 19808 (the "Lead
      Underwriters"); and

(6)   BARCLAYS CAPITAL INC., a corporation organized under the laws of the
      State of Connecticut, whose registered office is at 200 Park Avenue, New
      York, New York 10166, J.P. MORGAN SECURITIES INC., a corporation
      organized under the laws of the State of New York, whose registered
      office is at 270 Park Avenue, New York, New York 10019, MERRILL LYNCH,
      PIERCE, FENNER & SMITH INCORPORATED, a corporation organized under the
      laws of the State of Delaware, whose registered office is at c/o The
      Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware
      19801, and MORGAN STANLEY & CO. INTERNATIONAL LIMITED, a private limited
      company incorporated under the laws of England and Wales, whose
      registered office is 25 Cabot Square, Canary Wharf, London E14 4QA,
      (together with the Lead Underwriters, the "Underwriters" and each an
      "Underwriter").

WHEREAS:

(A)   The Master Issuer proposes to issue and sell to the Underwriters the
      mortgage-backed notes of the series and class specified in Schedule 1
      hereto and described in Clause 1.3 hereof (the "US Notes" as set forth
      on the cover page of the Prospectus Supplement).

(B)   The US Notes will be issued in U.S. dollars and in minimum denominations
      of $100,000 and integral multiples of $1,000 in excess thereof. The US
      Notes will be issued on the date and at the time specified in the
      Prospectus Supplement, which date and time may be changed by agreement
      between the Master Issuer and the Lead Underwriters on behalf of the
      Underwriters (such date and time of delivery of and payment for such US
      Notes being




      hereinafter referred to as the "Closing Date"). The issue of the US
      Notes is referred to in this Agreement as the "Issue".

(C)   Simultaneously with the Issue, the Master Issuer intends to issue other
      classes and series of notes (the "Reg S Notes", and together with the US
      Notes, the "Notes") specified in the subscription agreement dated as of
      the date hereof (the "Subscription Agreement") among the Master Issuer,
      NRPLC, Funding 2, the Mortgages Trustee and the respective dealers named
      therein (the "Dealers"). Such Dealers have agreed to subscribe and pay
      for the Reg S Notes upon the terms and subject to the conditions
      contained in the Subscription Agreement and the programme agreement
      dated as of January 19, 2005 (the "Programme Date"), as amended by a
      Deed of Amendment dated August 26, 2005, among the Master Issuer, NRPLC,
      Funding 2, the Mortgages Trustee and the respective dealers named
      therein (the "Programme Agreement").

(D)   The Notes will be constituted by, issued subject to and have the benefit
      of a supplemental trust deed to the Issuer Trust Deed (the "Supplemental
      Issuer Trust Deed") to be entered into on or before the Closing Date
      between the Master Issuer and The Bank of New York, London Branch as
      trustee for the Noteholders (the "Note Trustee").

(E)   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 dated the
      Programme Date, which includes any deed of accession entered into in
      connection therewith or supplement thereto (the "Issuer Deed of Charge")
      by the Master Issuer, The Bank of New York (in its separate capacities
      as the Note Trustee and the Issuer Security Trustee), Citibank, N.A. (in
      its separate capacities as the Principal Paying Agent, the US Paying
      Agent, the Registrar, the Transfer Agent, an Issuer Account Bank and the
      Agent Bank), NRPLC (in its separate capacities as the Issuer Cash
      Manager, the Issuer GIC Provider, an Issuer Account Bank and the
      Start-up Loan Provider), and Law Debenture Corporate Services Limited in
      its capacity as the Corporate Services Provider. The deed of accession
      to the Issuer Deed of Charge to be entered into on the Closing Date is
      herein referred to as the "Issuer Deed of Accession".

(F)   Payments of principal of, and interest on, the US Notes will be made by
      the Master Issuer to the US Paying Agent and by the US Paying Agent to
      Noteholders on behalf of the Master Issuer under a paying agent and
      agent bank agreement entered into on or before the Programme Date (the
      "Issuer Paying Agent and Agent Bank Agreement") among the Master Issuer,
      the Note Trustee, the Issuer Security Trustee, the Agent Bank, the
      Principal Paying Agent, the US Paying Agent, the Transfer Agent and the
      Registrar.

(G)   Each class of the US Notes will be in fully registered permanent global
      form. The Registrar will maintain a register in respect of the US Notes
      in accordance with the Issuer Paying Agent and Agent Bank Agreement. The
      global note certificates representing the US Notes (the "Dollar Global
      Note Certificates") will be deposited on behalf of the beneficial owners
      of the US Notes with Citibank N.A. in New York, as custodian for, and
      registered in the name of Cede & Co. as nominee of, The Depository Trust
      Company ("DTC").

(H)   The Master Issuer will use an amount in Sterling equal to the gross
      proceeds of the Issue as well as an amount in Sterling equal to the
      gross proceeds of the Reg S Notes issue to make advances (each a loan
      tranche) to Funding 2 pursuant to the terms of the global intercompany
      loan agreement entered into on or before the Programme Date among the
      Master Issuer, Funding 2, the Agent Bank and The Bank of New York,
      London Branch in its capacity as security trustee (the "Funding 2
      Security Trustee") (the "Global Intercompany Loan Agreement" and each
      loan tranche made thereunder, a "Loan Tranche"). Reference to the


                                      2


      Global Intercompany Loan Agreement shall include reference to a loan
      tranche supplement in respect of the Global Intercompany Loan Agreement
      to be entered into on or about the Closing Date among Funding 2, the
      Master Issuer, the Funding 2 Security Trustee and the Agent Bank, as
      amended, restated, novated, verified or supplemented from time to time
      and shall include any additional and/or replacement intercompany loan
      terms and conditions entered into from time to time in accordance with
      the Legal Agreements.

(I)   Funding 2 will pay the proceeds of each Loan Tranche to the Mortgages
      Trustee (or to its order) in consideration for the increase of its
      beneficial share of a trust portfolio made up of, amongst other things,
      first residential mortgage loans (the "Mortgage Loans") and an interest
      in the related insurances and their related security (together, the
      "Related Security").

(J)   On March 26, 2001, NRPLC assigned the initial portfolio of Mortgage
      Loans and their Related Security to the Mortgages Trustee and may assign
      further Mortgage Loans on subsequent assignment dates pursuant to a
      mortgage sale agreement dated March 26, 2001 among NRPLC, the Mortgages
      Trustee, Funding 2 and the Funding 2 Security Trustee (the "Mortgage
      Sale Agreement"). Each of the Mortgages Trustee and Funding 2 has
      appointed NRPLC as administrator to service the Mortgage Loans and their
      Related Security pursuant to an Administration Agreement dated March 26,
      2001 (the "Administration Agreement").

(K)   The Mortgages Trustee holds the Mortgage Loans and their Related
      Security on a bare trust in undivided shares for the benefit of Funding,
      Funding 2 and NRPLC pursuant to the mortgages trust deed dated March 26,
      2001 entered into by NRPLC, Funding, Funding 2 and the Mortgages Trustee
      (the "Mortgages Trust Deed"). The Mortgages Trustee also entered into a
      guaranteed investment contract dated on or about May 26, 2004 in respect
      of its principal bank account (the "Mortgages Trustee Guaranteed
      Investment Contract"), among the Mortgages Trustee, the Security
      Trustee, the Cash Manager and NRPLC (in its capacity as the Mortgages
      Trustee GIC Provider).

(L)   Funding 2's obligations to the Master Issuer under the Global
      Intercompany Loan Agreement and to Funding 2's other creditors are
      secured by the benefit of security interests created by a deed of charge
      and assignment dated the Programme Date, which will include any deed of
      accession to be entered into in connection therewith or supplement
      thereto (the "Funding 2 Deed of Charge"), by and among Funding 2, the
      Master Issuer, the Mortgages Trustee, the Funding 2 Security Trustee,
      the Issuer Security Trustee, Law Debenture Corporate Services Limited
      and NRPLC (in its separate capacities as Cash Manager, Account Bank,
      Funding 2 Basis Rate Swap Provider and Funding 2 GIC Provider).

(M)   In connection with Funding 2's purchase of a beneficial interest in a
      mortgage portfolio 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) a cash management agreement with the Cash
      Manager, the Mortgages Trustee, the Seller, Funding and the Funding 2
      Security Trustee (the "Cash Management Agreement"); (2) a bank account
      agreement with the Account Banks, the Funding 2 Security Trustee and the
      Cash Manager (the "Funding 2 Bank Account Agreement"); (3) a guaranteed
      investment contract with, inter alios, NRPLC as Funding 2 GIC Provider
      and Cash Manager and the Funding 2 Security Trustee (the "Funding 2
      Guaranteed Investment Contract"); (4) a corporate services agreement
      (the "Corporate Services Agreement") with, inter alios, Law Debenture
      Corporate Services Limited as corporate services provider to Funding 2
      and the Master Issuer; and (5) 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 Basis Rate Swap Provider and the
      Note Trustee (the "Basis Rate Swap Agreements").


                                      3


(N)   In connection with the Issue, the Master Issuer will also execute and
      deliver, on or before the Closing Date, (1) the Global Note Certificates
      relating to each class of the Notes; (2) a start-up loan tranche
      supplement with the Start-up Loan Provider and the Issuer Security
      Trustee (the "Start-Up Loan Tranche Supplement"); (3) an ISDA Master
      Agreement, including the Schedule thereto and confirmations thereunder
      in respect of Dollar/Sterling currency swaps with the relevant Issuer
      Swap Provider(s) and the Note Trustee (the "Dollar Currency Swap
      Agreements"); and (4) an ISDA Master Agreement, including the Schedule
      thereto and confirmations thereunder in respect of Euro/Sterling
      currency swaps with the relevant Issuer Swap Provider(s) and the Note
      Trustee (the "Euro Currency Swap Agreements" and together with the
      Dollar Currency Swap Agreements, the "Currency Swap Agreements").

(O)   In connection with the Issue, the Master Issuer has executed and
      delivered, on or before the Programme Date, (1) the Corporate Services
      Agreement; (2) a cash management agreement between the Master Issuer,
      the Issuer Cash Manager and the Issuer Security Trustee (the "Issuer
      Cash Management Agreement"); (3) a bank account agreement between the
      Master Issuer, the Issuer Security Trustee, the Issuer Cash Manager, the
      Issuer GIC Account Bank and the Issuer Transaction Account Bank (the
      "Issuer Bank Account Agreement"); (4) a post-enforcement call option
      agreement (the "Post-Enforcement Call Option Agreement") between the
      Master Issuer, the Note Trustee and GPCH Limited; and (5) a start-up
      loan agreement with the Start-up Loan Provider, the Master Issuer and
      the Issuer Security Trustee (the "Start-Up Loan Agreement").

(P)   As required, the Master Issuer, Funding 2, the Mortgages Trustee and/or
      NRPLC will enter into any other relevant documents to be signed and
      delivered on or before the Closing Date (such documents, together with
      the Mortgage Sale Agreement, the Mortgages Trust Deed, the
      Administration Agreement, the Mortgages Trustee Guaranteed Investment
      Contract, the Global Intercompany Loan Agreement, the Post-Enforcement
      Call Option Agreement, the Funding 2 Guaranteed Investment Contract, the
      Cash Management Agreement, the Funding 2 Bank Account Agreement, the
      Collection Bank Agreement, the Start-up Loan Agreement, the Start-up
      Loan Tranche Supplement, the Funding 2 Deed of Charge, the Basis Rate
      Swap Agreements, the Issuer Deed of Charge (as amended by the Issuer
      Deed of Accession), the Supplemental Issuer Trust Deed, the Issuer Cash
      Management Agreement, the Issuer Paying Agent and Agent Bank Agreement,
      the Issuer Bank Account Agreement, the Corporate Services Agreement, the
      Currency Swap Agreements, this Agreement, the Programme Agreement and
      the Subscription Agreement, 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").

(Q)   The Master Issuer (together with Funding 2 and the Mortgages Trustee)
      has prepared a registration statement on Form S-3, including a
      prospectus relating to the US Notes and additional series of notes, for
      the registration under the Securities Act of 1933, as amended (the
      "Securities Act"), of the offering and sale thereof from time to time in
      accordance with Rule 415 under the Securities Act. At or prior to the
      time when sales to purchasers of the US Notes were first made by the
      Underwriters, which was approximately 4:00 p.m. (GMT +01:00, London) on
      September 13, 2006 (the "Time of Sale"), the Master Issuer (together
      with Funding 2 and the Mortgages Trustee) had prepared the following
      information (when read together, the "Time of Sale Information"): (i)
      the Preliminary Prospectus Supplement dated August 30, 2006 to the base
      prospectus dated August 30, 2006 (including information referred to
      under the caption "Static Pool Data" in Annex D therein regardless of
      whether it is deemed a part of the Registration Statement or
      Prospectus), together with such base prospectus (the "Initial
      Preliminary Prospectus") and (ii) the Preliminary Prospectus Supplement
      dated September 12, 2006 to the base prospectus dated September 12, 2006
      (including information referred to under the caption "Static Pool Data"
      in Annex D therein


                                      4


      regardless of whether it is deemed a part of the Registration Statement
      or Prospectus) together with such base prospectus (the "Revised
      Preliminary Prospectus"). If, subsequent to the Time of Sale and prior
      to the Closing Date, the Revised Preliminary Prospectus included an
      untrue statement of 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 US Notes may terminate their old "Contracts of
      Sale" (within the meaning of Rule 159 under the Securities Act) for any
      US Notes and the Underwriters enter into new Contracts of Sale with
      investors in the US Notes, then "Time of Sale Information" will refer to
      the information conveyed to investors at 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 Lead Underwriters that corrects such material
      misstatements or omissions (a "Corrected Prospectus") and "Time of Sale"
      will refer to the time and date on which such new Contracts of Sale were
      entered into.

IT IS AGREED as follows:

1.    AGREEMENT TO ISSUE AND SUBSCRIBE

1.1   Definitions and Interpretation

      (a)   Capitalized terms used herein and not otherwise defined herein or
            pursuant hereto, unless the context otherwise requires, shall have
            the meanings given to them in the Programme Master Definitions
            Schedule signed for the purposes of identification only by Sidley
            Austin Brown & Wood and Allen & Overy LLP on the Programme Date
            and the Issuer Master Definitions Schedule signed for the purposes
            of identification only by Sidley Austin Brown & Wood and Allen &
            Overy LLP on the Programme Date (each as amended, varied or
            supplemented from time to time). In the event of a conflict
            between the Programme Master Definitions Schedule and the Issuer
            Master Definitions Schedule, the Issuer Master Definitions
            Schedule will control.

      (b)   In this Agreement:

            (i)   words denoting the singular number only shall include the
                  plural number also and vice versa;

            (ii)  words denoting one gender only shall include the other
                  genders;

            (iii) words denoting persons only shall include firms and
                  corporations and vice versa;

            (iv)  references to any statutory provision shall be deemed also
                  to refer to any statutory modification or re-enactment
                  thereof or any statutory instrument, order or regulation
                  made thereunder or under any such re-enactment;

            (v)   references to any agreement or other document (including any
                  of the Legal Agreements) shall be deemed also to refer to
                  such agreement or document as amended, varied, supplemented,
                  restated or novated from time to time;

            (vi)  clause, paragraph and schedule headings are for ease of
                  reference only;


                                      5


            (vii) reference to a statute shall be construed as a reference to
                  such statute as the same may have been, or may from time to
                  time be, amended or re-enacted to the extent such amendment
                  or re-enactment is substantially to the same effect as such
                  statute on the date hereof;

            (viii) reference to a time of day, unless otherwise specified,
                  shall be construed as a reference to London time; and

            (ix)  references to any person shall include references to his
                  successors, transferees and assigns and any person deriving
                  title under or through him.

1.2   Offering

      Each of the Master Issuer, Funding 2 and the Mortgages Trustee
      understands that the Underwriters have offered and will offer the US
      Notes upon the terms set forth in the Time of Sale Information and the
      Prospectus, and in compliance with all applicable laws and regulations.

1.3   Purchase and Sale

      Subject to the terms and conditions and in reliance upon the
      representations and warranties set forth in this Agreement, the Master
      Issuer agrees to issue and sell the US Notes on the Closing Date to the
      Underwriters as hereinafter provided, and each Underwriter agrees to
      purchase, severally and not jointly, from the Master Issuer the
      respective principal amount of the US Notes set forth opposite such
      Underwriter's name in Schedule 1 hereto at a price equal to the
      aggregate of 100 per cent. of the aggregate principal amount of the
      Series 2006-3 Class A1 Notes, 100 per cent. of the aggregate principal
      amount of the Series 2006-3 Class A3 Notes, 100 per cent. of the
      aggregate principal amount of the Series 2006-3 Class A4 Notes, 100 per
      cent. of the aggregate principal amount of the Series 2006-3 Class A7
      Notes, 100 per cent. of the aggregate principal amount of the Series
      2006-3 Class B1 Notes, 100 per cent. of the aggregate principal amount
      of the Series 2006-3 Class B2 Notes, 100 per cent. of the aggregate
      principal amount of the Series 2006-3 Class M1 Notes, 100 per cent. of
      the aggregate principal amount of the Series 2006-3 Class M2 Notes and
      100 per cent. of the aggregate principal amount of the Series 2006-3
      Class C2 Notes (the "Issue Price"). The Series 2006-3 Class A1 Notes,
      Series 2006-3 Class A3 Notes, Series 2006-3 Class A4 Notes, Series
      2006-3 Class A7 Notes, Series 2006-3 Class B1 Notes, Series 2006-3 Class
      B2 Notes, Series 2006-3 Class M1 Notes, Series 2006-3 Class M2 Notes and
      Series 2006-3 Class C2 Notes are collectively referred to as the "US
      Notes".

      The Master Issuer acknowledges and agrees that each of the Underwriters
      in providing investment banking services to the Master Issuer in
      connection with the offering, including in acting pursuant to the terms
      of this Agreement, has acted and is acting as an arm's-length
      counterparty and not as a fiduciary and the Master Issuer does not
      intend any of the Underwriters to act in any capacity other than as an
      arm's-length counterparty, including as a fiduciary or in any other
      position of higher trust.

1.4   Commissions

      In consideration of the obligations undertaken herein by the
      Underwriters, the Master Issuer agrees to pay to the Underwriters a
      selling commission (the "Selling Commission") of 0.03333 per cent. of
      the aggregate principal amount of the Series 2006-3 Class A1 Notes,
      0.04333 per cent. of the aggregate principal amount of the Series 2006-3
      Class A3 Notes, 0.04667 per cent. of the aggregate principal amount of
      the Series 2006-3 Class A4 Notes,


                                      6


      0.06000 per cent. of the aggregate principal amount of the Series 2006-3
      Class A7 Notes, 0.10000 per cent. of the aggregate principal amount of
      the Series 2006-3 Class B1 Notes, 0.10000 per cent. of the aggregate
      principal amount of the Series 2006-3 Class B2 Notes, 0.14667 per cent.
      of the aggregate principal amount of the Series 2006-3 Class M1 Notes,
      0.14667 per cent. of the aggregate principal amount of the Series 2006-3
      Class M2 Notes and 0.30000 per cent. of the aggregate principal amount
      of the Series 2006-3 Class C2 Notes and a combined management and
      underwriting commission (the "Management and Underwriting Commission")
      of 0.01667 per cent. of the aggregate principal amount of the Series
      2006-3 Class A1 Notes, 0.02167 per cent. of the aggregate principal
      amount of the Series 2006-3 Class A3 Notes, 0.02333 per cent. of the
      aggregate principal amount of the Series 2006-3 Class A4 Notes, 0.03000
      per cent. of the aggregate principal amount of the Series 2006-3 Class
      A7 Notes, 0.05000 per cent. of the aggregate principal amount of the
      Series 2006-3 Class B1 Notes, 0.05000 per cent. of the aggregate
      principal amount of the Series 2006-3 Class B2 Notes, 0.07333 per cent.
      of the aggregate principal amount of the Series 2006-3 Class M1 Notes,
      0.07333 per cent. of the aggregate principal amount of the Series 2006-3
      Class M2 Notes and 0.15000 per cent. of the aggregate principal amount
      of the Series 2006-3 Class C2 Notes.

      The Master Issuer undertakes and covenants that on the Closing Date it
      will pay to the Lead Underwriters on behalf of the Underwriters the
      aggregate Selling Commission and aggregate Management and Underwriting
      Commission calculated in accordance with this Clause 1.4.

1.5   Delivery and Payment

      No later than 3:00 p.m. (London time) on the Closing Date, the Master
      Issuer will (a) cause the Global Note Certificate for each of the US
      Notes to be registered in the name of Cede & Co. as nominee for DTC for
      credit on the Closing Date to the account of the Lead Underwriters with
      DTC or to such other account with DTC as the Lead Underwriters may
      direct; and (b) deliver the Global Note Certificate for each of the US
      Notes duly executed on behalf of the Master Issuer and authenticated in
      accordance with the Paying Agent and Agent Bank Agreement to Citibank
      N.A., as custodian for DTC.

      Against delivery of the US Notes (i) the Underwriters will pay to the
      Lead Underwriters the gross underwriting proceeds for the US Notes and
      (ii) the Lead Underwriters will pay to the Master Issuer or to a third
      party, as directed by the Master Issuer, the gross underwriting proceeds
      for the US Notes. Payment for the US Notes shall be made by the Lead
      Underwriters in Dollars in immediately available funds to the account of
      the Master Issuer, account number 10861537, or to such other accounts as
      the Master Issuer may direct, and shall be evidenced by a confirmation
      from the Lead Underwriters that they have so made that payment to the
      Master Issuer.

1.6   The Legal Agreements

      To the extent that each of the Master Issuer, Funding 2, the Mortgages
      Trustee and NRPLC is a signatory to the Legal Agreements, each will on
      or before the Closing Date, have entered into or enter into each of the
      Legal Agreements to which it is a party, substantially in the form of
      the draft reviewed by Allen & Overy LLP and Sidley Austin (any draft of
      any document so reviewed being called an "agreed form"), with such
      amendments as the Lead Underwriters, on behalf of the Underwriters, may
      agree with the Master Issuer and, if it is a signatory, Funding 2, the
      Mortgages Trustee and/or NRPLC.


                                      7


1.7   The Notes

      The Notes will be issued on the Closing Date in accordance with the
      terms of the Supplemental Issuer Trust Deed and will be in, or
      substantially in, the form set out therein.

1.8   Prospectus

      The Master Issuer confirms that it has prepared the Initial Preliminary
      Prospectus, the Revised Preliminary Prospectus and the Prospectus for
      use in connection with the issue of the US Notes and hereby authorizes
      the Underwriters to distribute copies of the Prospectus in connection
      with the offering and sale of the US Notes, copies of the Initial
      Preliminary Prospectus and the Revised Preliminary Prospectus having
      already been distributed with the consent of the Master Issuer.

1.9   Authority to Offer

      The Master Issuer confirms that it has authorized the Lead Underwriters
      to offer the US Notes on its behalf to the Underwriters for subscription
      at the Issue Price subject to signature of this Agreement. Subject to
      Clause 3.2(a), the Master Issuer acknowledges and agrees that the
      Underwriters may offer and sell US Notes to or through any affiliate of
      an Underwriter and that any such affiliate may offer and sell US Notes
      purchased by it to or through any Underwriter.

2.    STABILIZATION

2.1   Stabilization

      (a)   In connection with the issue of the US Notes, the Underwriter(s)
            (if any) named as the stabilizing underwriter(s) (the "Stabilizing
            Underwriter(s)") (or persons acting on behalf of any Stabilizing
            Underwriter) in the Prospectus Supplement may over-allot US Notes
            (provided that the aggregate principal amount of US Notes allotted
            does not exceed 105 per cent. of the aggregate principal amount of
            the US Notes) or effect transactions with a view to supporting the
            market price of the US Notes at a level higher than that which
            might otherwise prevail. However, there is no assurance that the
            Stabilizing Underwriter(s) (or persons acting on behalf of any
            Stabilizing Underwriter) will undertake stabilization action. Any
            stabilization action may begin on or after the date on which
            adequate public disclosure of the terms of the offer of the US
            Notes is made and, if begun, may be ended at any time, but it must
            end no later than the earlier of 30 days after the issue date of
            the US Notes and 60 days after the date of the allotment of the US
            Notes.

      (b)   The Master Issuer confirms that it has not issued and will not
            issue, without the prior consent of the Stabilizing Underwriter(s)
            (if any) (such consent not to be unreasonably withheld), any press
            or other public announcement referring to the proposed issue of US
            Notes unless the announcement adequately discloses that
            stabilizing action may take place in relation to the US Notes to
            be issued.

      (c)   The Master Issuer authorises the Stabilizing Underwriter(s) to
            make all appropriate announcements in relation to any
            stabilization or ancillary stabilization action taken in respect
            of the US Notes.

      (d)   In carrying on any stabilization activity, the Stabilizing
            Underwriter(s) shall act as principal and not as agent of the
            Master Issuer.


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2.2   Stabilization Profits and Losses

      As between the Master Issuer and the Stabilizing Underwriter any loss
      resulting from stabilization transactions entered into by the
      Stabilizing Underwriter pursuant to Clause 2.1 shall be borne, and any
      profit arising therefrom shall be retained, by the Stabilizing
      Underwriter for its own account.

3.    AGREEMENTS BY THE UNDERWRITERS

3.1   Default of Underwriters

      (a)   If any Underwriter shall default on its obligation to purchase US
            Notes which it has agreed to purchase hereunder, the
            non-defaulting Underwriters may in their discretion arrange to
            purchase, or for another party or other parties reasonably
            satisfactory to NRPLC to purchase, such US Notes on the terms
            contained herein. If within thirty-six hours after such default by
            any Underwriter, the non-defaulting Underwriters do not arrange
            for the purchase of such US Notes, then NRPLC shall be entitled to
            a further period of thirty-six hours within which to procure
            another party or other parties satisfactory to the non-defaulting
            Underwriters to purchase such US Notes on such terms. In the event
            that, within the respective prescribed periods, the Lead
            Underwriters on behalf of the non-defaulting Underwriters notify
            NRPLC that the non-defaulting Underwriters have so arranged for
            the purchase of such US Notes, or NRPLC notifies the
            non-defaulting Underwriters that it has so arranged for the
            purchase of such US Notes, the non-defaulting Underwriters or
            NRPLC shall have the right to postpone the Closing Date for a
            period of time agreed by the Lead Underwriters and NRPLC acting
            reasonably, in order to effect whatever changes may thereby be
            made necessary in any documents or arrangements relating to the
            offering and sale of the US Notes. Any substitute purchaser of US
            Notes pursuant to this paragraph shall be deemed to be an
            Underwriter, for purposes of this Agreement, in connection with
            the offering and sale of the US Notes.

      (b)   If, after giving effect to any arrangements for the purchase of US
            Notes of a defaulting Underwriter by the non-defaulting
            Underwriters, as provided in Clause 3.1(a) above, the aggregate
            principal amount of the US Notes which remains unpurchased does
            not exceed ten per cent. of the aggregate principal amount of the
            US Notes, NRPLC shall have the right to require each
            non-defaulting Underwriter to purchase the principal amount of the
            US Notes which such Underwriter agreed to purchase hereunder and,
            in addition to require each non-defaulting Underwriter to purchase
            its pro rata share (based on the principal amount of the US Notes
            which such Underwriter agreed to purchase hereunder) of the
            principal amount of the US Notes of such defaulting Underwriter
            for which such arrangements have not been made; but nothing herein
            shall relieve a defaulting Underwriter from liability for its
            default.

      (c)   If, after giving effect to any arrangements for the purchase of
            the principal amount of the US Notes of a defaulting Underwriter
            by the non-defaulting Underwriters as provided in Clause 3.1(a)
            above, the aggregate principal amount of the US Notes which
            remains unpurchased exceeds ten per cent. of the aggregate
            principal amount of the US Notes, or if NRPLC shall not exercise
            the right described in Clause 3.1(b) above to require
            non-defaulting Underwriters to purchase the US Notes of a
            defaulting Underwriter, then this Agreement shall thereupon
            terminate, without liability on the part of the non-defaulting
            Underwriters; but nothing herein shall relieve a defaulting
            Underwriter from liability for its default.


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3.2   Selling

      Each Underwriter severally (and not jointly) agrees as follows:

      (a)   United States

            It is understood that several Underwriters propose to offer the US
            Notes for sale to the public in the United States as set forth in
            the Time of Sale Information and the Prospectus. Any Underwriters
            that are not U.S. registered broker dealers will offer and sell
            the US Notes in the United States only through U.S. registered
            broker dealers.

      (b)   United Kingdom

            Each Underwriter represents and agrees that:

            (i)   it has only communicated or caused to be communicated and
                  will only communicate or cause to be communicated any

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