EXHIBIT 4.8
EXECUTION
DATED 23 JULY 2001
NORTHERN ROCK PLC
as Cash Manager
- AND -
GRANITE FINANCE TRUSTEES LIMITED
as Mortgages Trustee
- AND -
NORTHERN ROCK PLC
as Seller
- AND -
GRANITE FINANCE FUNDING LIMITED
as Beneficiary
- AND -
THE BANK OF NEW YORK
as Security Trustee
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FIRST AMENDED AND RESTATED
CASH MANAGEMENT AGREEMENT
Dated 23 July 2001
which amends and restates the
CASH MANAGEMENT AGREEMENT
Dated 26 March 2001
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SIDLEY ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
TELEPHONE ▇▇▇ ▇▇▇▇ ▇▇▇▇
FACSIMILE 020 7626 7937
REF:
CONTENTS
CLAUSE PAGE NO.
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1. Definitions and Interpretation.......................................... 5
2. Appointment of Cash Manager............................................. 5
3. The Services............................................................ 6
4. Payments, Accounts, Ledgers............................................. 7
5. Early Repayment Charges................................................. 14
6. No Liability............................................................ 14
7. Costs and Expenses...................................................... 14
8. Information............................................................. 15
9. Remuneration............................................................ 17
10. Covenants, Representations and Warranties of the Cash Manager........... 18
11. Services Non-Exclusive.................................................. 19
12. Termination............................................................. 19
13. Further Assurances...................................................... 22
14. Miscellaneous........................................................... 22
15. Confidentiality......................................................... 23
16. No Partnership.......................................................... 24
17. Assignment.............................................................. 24
18. The Security Trustee.................................................... 24
19. New Intercompany Loan Agreements........................................ 25
20. Non Petition Covenant; Limited Recourse................................. 25
21. Amendments and Waiver................................................... 26
22. Notices................................................................. 27
23. Third Party Rights...................................................... 28
24. Execution in Counterparts; Severability................................. 28
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25. Governing Law and Submission to Jurisdiction............................ 28
SCHEDULE 1 The Cash Management Services..................................... 29
SCHEDULE 2 Cash Management and Maintenance of Ledgers....................... 32
SCHEDULE 3A Form of Mortgages Trustee Quarterly Report...................... 42
SCHEDULE 3B Form of Funding Quarterly Report................................ 43
SCHEDULE 4 Cash Manager Representations and Warranties...................... 46
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THIS FIRST AMENDED AND RESTATED CASH MANAGEMENT AGREEMENT DATED 23 JULY 2001
AMENDS AND RESTATES THE ORIGINAL CASH MANAGEMENT AGREEMENT DATED 26 MARCH 2001
BETWEEN:
(1) NORTHERN ROCK PLC (registered number 3273685), a public limited company
incorporated under the laws of England and Wales whose registered office
is at ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ in its
capacity as cash manager (the "CASH MANAGER", which expression shall
include such other person as may from time to time be appointed as cash
manager pursuant to this Agreement);
(2) GRANITE FINANCE TRUSTEES LIMITED (registered number 79309), a private
limited company incorporated under the laws of Jersey, Channel Islands
whose registered office is at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇
▇▇▇, Channel Islands (the "MORTGAGES TRUSTEE");
(3) NORTHERN ROCK PLC (registered number 3273685), a public limited company
incorporated under the laws of England and Wales whose registered office
is at ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ in its
capacity as Seller of the Mortgage Loans (the "SELLER");
(4) GRANITE FINANCE FUNDING LIMITED (registered number 79308), a private
limited company incorporated under the laws of Jersey, Channel Islands
having its principal place of business in the United Kingdom at ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ("FUNDING" and,
together with the Seller, the "BENEFICIARIES"); and
(5) THE BANK OF NEW YORK whose principal office is at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ in its capacity as trustee (the "SECURITY TRUSTEE"
which expression shall include such company and all other persons or
companies for the time being acting as the trustee or trustees under the
Funding Deed of Charge).
WHEREAS:
(A) On the Initial Closing Date the First Issuer will issue the First Issuer
Notes constituted by the First Issuer Trust Deed. From the proceeds of the
issue of those First Issuer Notes, the First Issuer shall make a loan to
Funding pursuant to the terms of the First Issuer Intercompany Loan
Agreement. From the proceeds of that loan, Funding shall pay the Initial
Contribution to the Mortgages Trustee as consideration in part for the
Initial Funding Share of the Trust Property, which funds will be used by
the Mortgages Trustee to pay to the Seller the Initial Purchase Price for
the assignment by the Seller to the Mortgages Trustee of the Initial
Mortgage Portfolio pursuant to the Mortgage Sale Agreement.
(B) The Cash Manager is willing to provide Cash Management Services to the
Mortgages Trustee, Funding and the Security Trustee on the terms and
subject to the conditions contained in this Agreement.
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IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 The Master Definitions Schedule signed for the purposes of identification
by ▇▇▇▇▇ & Wood and ▇▇▇▇▇▇▇▇ Chance Limited Liability Partnership on 26
March 2001 (as the same may be amended, varied or supplemented from time
to time with the consent of the parties hereto) is expressly and
specifically incorporated into this Agreement and, accordingly, the
expressions defined in the Master Definitions Schedule (as so amended,
varied or supplemented) shall, except where the context otherwise requires
and save where otherwise defined herein, have the same meanings in this
Agreement, including the recitals hereto, and this Agreement shall be
construed in accordance with the interpretation provisions set out in
Clause 2 of such Master Definitions Schedule.
1.2 Any reference in this Agreement to any discretion, power or right on the
part of the Mortgages Trustee shall be as exercised by the Mortgages
Trustee only as directed by the Beneficiaries but subject in each case to
the provisions of Clause 17 (DIRECTIONS FROM BENEFICIARIES) of the
Mortgages Trust Deed.
2. APPOINTMENT OF CASH MANAGER
2.1 APPOINTMENT: Until termination pursuant to Clause 12 herein (Termination),
the Mortgages Trustee, Funding and the Security Trustee (according to
their respective estates and interests) each hereby appoints the Cash
Manager as its lawful agent to provide the Cash Management Services set
out in this Agreement, including in relation to:
(a) the Mortgages Trustee; and
(b) Funding,
and the Cash Manager in each case hereby accepts such appointment on the
terms and subject to the conditions of this Agreement.
2.2 DUTIES PRESCRIBED BY TRANSACTION DOCUMENTS: For the avoidance of doubt and
in connection with the powers conferred under Clause 2.1 (APPOINTMENT),
save as expressly provided elsewhere in this Agreement, nothing herein
shall be construed so as to give the Cash Manager any powers, rights,
authorities, directions or obligations other than as specified in this
Agreement or any of the other Transaction Documents.
2.3 APPOINTMENT CONDITIONAL UPON ISSUANCE OF FIRST ISSUER NOTES: The
appointment pursuant to Clause 2.1 (APPOINTMENT) is conditional upon the
issue of the First Issuer Notes and the making of the First Issuer
Intercompany Loan under the First Issuer Intercompany Loan Agreement and
shall take effect upon and from the Initial Closing Date automatically
without any further action on the part of any person, PROVIDED THAT, if
the issue of the First Issuer Notes by the First Issuer has not occurred
by 30 April 2001, or such later date as the First Issuer and the Lead
Manager may agree, this Agreement shall cease to be of further effect.
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3. THE SERVICES
3.1 GENERAL: The Cash Manager shall provide the services set out in this
Agreement (including, without limitation, Schedules 1 and 2 attached
hereto) (the "CASH MANAGEMENT SERVICES").
3.2 APPROVALS AND AUTHORISATIONS: The Cash Manager shall maintain, or procure
the maintenance of, the approvals, authorisations, consents and licences
required in connection with the respective businesses of the Mortgages
Trustee and Funding and shall prepare and submit, or procure the
preparation and submission of, on behalf of the Mortgages Trustee and
Funding, all necessary applications and requests for any further
approvals, authorisations, consents or licences which may be required in
connection with the respective businesses of the Mortgages Trustee and
Funding and shall, so far as it reasonably can do so, perform the Cash
Management Services in such a way as not to prejudice the continuation of
any such approvals, authorisations, consents or licences.
3.3 COMPLIANCE WITH TRANSACTION DOCUMENTS, ETC.: The Cash Management Services
shall include procuring (so far as the Cash Manager, using its reasonable
endeavours, is able so to do) compliance by the Mortgages Trustee and
Funding with all applicable legal requirements and with the terms of the
Transaction Documents to which each of the Mortgages Trustee and/or
Funding is a party, PROVIDED THAT the Cash Manager shall not lend or
provide any sum to the Mortgages Trustee or Funding (other than as
expressly contemplated by the Transaction Documents) and the Cash Manager
shall have no liability whatsoever to the Mortgages Trustee, Funding, the
Security Trustee or any other person for any failure by the Mortgages
Trustee or Funding to make any payment due by any of them under any of the
Transaction Documents (other than to the extent arising from (i) the Cash
Manager failing to make a payment in its capacity as Administrator, or in
any other capacity under the Transaction Documents, or (ii) the Cash
Manager failing to perform any of its obligations under any of the
Transaction Documents).
3.4 LIABILITY OF CASH MANAGER:
(a) The Cash Manager shall indemnify each of the Mortgages Trustee,
Funding and the Security Trustee on demand for any loss, liability,
claim, expense or damage suffered or incurred by any of them in
respect of the negligence, bad faith or wilful default of the Cash
Manager in carrying out its functions as Cash Manager under this
Agreement or under the other Transaction Documents or as a result of
a breach by the Cash Manager of the terms and provisions of this
Agreement or such other Transaction Documents to which the Cash
Manager is a party (in its capacity as such) in relation to such
functions.
(b) For the avoidance of doubt, the Cash Manager shall not be liable in
respect of any loss, liability, claim, expense or damage suffered or
incurred by the Mortgages Trustee, Funding, or the Security Trustee
and/or any other person as a result of the proper performance of the
Cash Management Services (as
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defined in Clause 3.1) by the Cash Manager save to the extent that
such loss, liability, claim, expense or damage is suffered or
incurred as a result of any negligence, bad faith or wilful default
of the Cash Manager under, or as a result of, a breach by the Cash
Manager of the terms and provisions of this Agreement or any of the
other Transaction Documents to which the Cash Manager is a party (in
its capacity as such) in relation to such functions.
4. PAYMENTS, ACCOUNTS, LEDGERS
4.1 ESTABLISHMENT OF BANK ACCOUNTS:
(a) The Cash Manager hereby confirms that the Mortgages Trustee GIC
Account has been established on or before the date hereof pursuant
to the Bank Account Agreement and the Mortgages Trustee Guaranteed
Investment Contract and that the Mortgages Trustee GIC Account
Mandate in the agreed form will apply thereto at the Initial Closing
Date. The Cash Manager undertakes (to the extent to which the same
is within its control) that at the Initial Closing Date the
Mortgages Trustee GIC Account will be operative and that the Cash
Manager will not knowingly create or permit to subsist any Security
Interest in relation to the Mortgages Trustee GIC Account (but
without prejudice to the Mortgages Trust and the other Transaction
Documents).
(b) The Cash Manager hereby confirms that the Mortgages Trustee
Transaction Account has been established on or before the date
hereof pursuant to the Bank Account Agreement and that the Mortgages
Trustee Transaction Account Mandate in the agreed form will apply
thereto at the Initial Closing Date. The Cash Manager undertakes (to
the extent to which the same is within its control) that at the
Initial Closing Date the Mortgages Trustee Transaction Account will
be operative and that the Cash Manager will not knowingly create or
permit to subsist any Security Interest in relation to the Mortgages
Trustee Transaction Account (but without prejudice to the Mortgages
Trust and the other Transaction Documents).
(c) The Cash Manager hereby confirms that the Funding GIC Account has
been established on or before the date hereof pursuant to the Bank
Account Agreement and the Funding Guaranteed Investment Contract and
that the Funding GIC Account Mandate in the agreed form will apply
thereto at the Initial Closing Date. The Cash Manager undertakes (to
the extent to which the same is within its control) that at the
Initial Closing Date the Funding GIC Account will be operative and
that the Cash Manager will not knowingly create or permit to subsist
any Security Interest in relation to the Funding GIC Account other
than as created under or permitted pursuant to the Funding Deed of
Charge.
(d) The Cash Manager hereby confirms that the Funding Transaction
Account has been established on or before the date hereof pursuant
to the Bank Account Agreement and that the Funding Transaction
Account Mandate in the agreed
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form will apply thereto at the Initial Closing Date. The Cash
Manager undertakes (to the extent to which the same is within its
control) that at the Initial Closing Date the Funding Transaction
Account will be operative and that the Cash Manager will not
knowingly create or permit to subsist any Security Interest in
relation to the Funding Transaction Account other than as created
under or permitted pursuant to the Funding Deed of Charge.
(e) The Cash Manager hereby confirms that the Funding (First Issuer) GIC
Account has been established on or before the date hereof pursuant
to the Funding (First Issuer) Bank Account Agreement and the Funding
(First Issuer) Guaranteed Investment Contract and that the Funding
(First Issuer) GIC Account Mandate in the agreed form will apply
thereto at the Initial Closing Date. The Cash Manager undertakes (to
the extent to which the same is within its control) that at the
Initial Closing Date the Funding (First Issuer) GIC Account will be
operative and that the Cash Manager will not knowingly create or
permit to subsist any Security Interest in relation to the Funding
(First Issuer) GIC Account other than as created under or permitted
pursuant to the Funding Deed of Charge.
(f) Upon Funding entering into any New Intercompany Loan Agreement with
a New Issuer, the Cash Manager undertakes to establish a separate
Funding (Issuer) GIC Account in respect of each New Issuer to which
amounts in respect of any Issuer Reserve Fund and Issuer Liquidity
Reserve Fund (if any) of such New Issuer will be credited.
(g) If Funding enters into a New Intercompany Loan Agreement, then the
Cash Manager, the Seller, Funding, the Security Trustee and the
Mortgages Trustee shall execute such amendments to this Agreement as
may be necessary to reflect the establishment of any new Funding
(Issuer) GIC Account.
4.2 MORTGAGES TRUSTEE LEDGERS:
(a) The Cash Manager shall open and maintain in the books of the
Mortgages Trustee the following ledgers on behalf of the Mortgages
Trustee:
(i) the Mortgages Trustee Principal Ledger, which shall separately
reflect all Principal Receipts standing to the credit of each
of the Mortgages Trustee GIC Account and the Mortgages Trustee
Transaction Account from time to time and distribution of the
same to Funding and the Seller;
(ii) the Mortgages Trustee Revenue Ledger, which shall separately
reflect all Revenue Receipts standing to the credit of each of
the Mortgages Trustee GIC Account and the Mortgages Trustee
Transaction Account from time to time and distribution of the
same to Funding and the Seller;
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(iii) the Losses Ledger, which shall record Losses on the Mortgage
Portfolio;
(iv) the Funding Share/Seller Share Ledger which shall record the
Funding Share, the Seller Share, the Funding Share Percentage
and the Seller Share Percentage of the Trust Property;
(v) the Overpayments Ledger, which will reflect each Revenue
Receipt and/or Principal Receipt paid by a Borrower in excess
of the amount required under the terms of the relevant
Mortgage Loan (and in the case of any non-Flexible Mortgage
Loan any payment which is not a Capital Payment), which shall
be divided into (A) the Non-Flexible Overpayments Sub Ledger
to record Overpayments on Non-Flexible Mortgage Loans and (B)
the Flexible Overpayments Sub Ledger to record Overpayments on
Flexible Mortgage Loans, in each case as received into and
paid out of the Mortgages Trustee GIC Account from time to
time;
(vi) the Non-Flexible Underpayments Ledger, which shall record
Underpayments on Non-Flexible Mortgage Loans from time to
time;
(vii) the Re-Draws Ledger, which will record Re-Draws on the
Flexible Mortgage Loans and which shall be divided into (A)
the Cash Re-Draws Sub Ledger to record Cash Re-Draws made in
respect of Flexible Mortgage Loans and (B) the Non-Cash
Re-Draws Sub Ledger to record Non-Cash Re-Draws made in
respect of Flexible Mortgage Loans; and
(viii) the Contributions Ledger, which will be divided into sub
ledgers to record (i) the making by Funding to the Mortgages
Trustee of Contributions to the Mortgages Trust pursuant to
the Mortgages Trust Deed (ii) the making by the Seller to the
Mortgages Trustee of Contributions to the Mortgages Trust
pursuant to the Mortgages Trust Deed and the application of
such Contributions in accordance with the terms of the
Mortgages Trust Deed by (iii) the payment by the Mortgages
Trustee to the Seller of either (a) amounts of Initial
Purchase Price for the sale of any New Mortgage Portfolio
which is acquired by the Mortgages Trustee from the Seller
under the provisions of Mortgage Sale Agreement (b) amounts of
Deferred Purchase Price in accordance with the Mortgage Sale
Agreement and (iv) the payment by the Mortgages Trustee to the
Seller of any Special Distribution in accordance with the
Mortgages Trust Deed.
(b) The Cash Manager shall make credits and debits to the Mortgages
Trustee Ledgers in the manner described in paragraphs 10, 11, 12,
13, 20, 21 and 22 of Schedule 2 hereto.
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4.3 FUNDING LEDGERS:
(a) The Cash Manager shall open and maintain in the books of Funding the
following ledgers on behalf of Funding:
(i) the Issuer Reserve Fund Ledger of any Issuer, which shall
record the amount credited to the Issuer Reserve Fund of such
Issuer on the related Closing Date, and subsequent withdrawals
and deposits in respect of such Issuer Reserve Fund;
(ii) the Issuer Liquidity Reserve Ledger of any Issuer, if any,
which shall record the amount credited to the Issuer Liquidity
Reserve Fund from time to time of such Issuer, and subsequent
withdrawals and deposits in respect of such Issuer Liquidity
Reserve Fund;
(iii) the Funding Principal Ledger, which shall separately reflect
all Funding Principal Receipts received by Funding on each
Distribution Date and all Funding Principal Receipts standing
to the credit of each Funding Bank Account;
(iv) the Funding Principal Deficiency Ledger, which shall reflect
the aggregate position of the Issuer Principal Deficiency
Ledgers of all Issuers as to Losses on the Mortgage Loans and
the application of Funding Available Principal Receipts to
fund Issuer Liquidity Reserve Funds;
(v) the Funding Revenue Ledger, which shall separately reflect all
Funding Revenue Receipts received by Funding on each
Distribution Date and all Funding Revenue Receipts standing to
the credit of each Funding Bank Account;
(vi) the Funding Reserve Ledger, which shall record the amount
credited to the Funding Reserve Fund from time to time, and
subsequent withdrawals and deposits in respect of the Funding
Reserve Fund; and
(vii) the Intercompany Loan Ledger, which shall be divided into
segregated sub ledgers each of which shall record payments of
interest and fees and repayments of principal made under such
Intercompany Loan.
(b) The Cash Manager shall make credits and debits to the Funding
Ledgers in accordance with the provisions of paragraphs 14 through
19 of Schedule 2 hereto.
4.4 PAYMENTS:
(a) The Cash Manager shall procure that so far as it may be able in
relation to all Mortgage Loans comprised in the Mortgage Portfolio,
the following amounts are paid into the Mortgages Trustee
Transaction Account:
(i) all Monthly Payments, other interest received under and in
respect of the Mortgage Loans and any costs or other amounts
received under the
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Mortgage Loans (including in any such case amounts recovered
on enforcement of rights against any Borrower or guarantor of
the Borrower, any Mortgaged Property or any of the Borrower's
or guarantor's other property or assets);
(ii) all final releases and all repayments or prepayments of
principal under the Mortgage Loans;
(iii) any amount received by or on behalf of the Mortgages Trustee
pursuant to any Insurance Policy; and
(iv) any other amounts whatsoever received by or on behalf of the
Mortgages Trustee on or after the Initial Closing Date,
(b) The Cash Manager shall procure that the following amounts are
credited to the Mortgages Trustee GIC Account:
(i) from time to time upon written or electronic receipt of
instructions from the Administrator, all amounts standing to
the credit of the Mortgages Trustee Transaction Account; and
(ii) all interest earned on any of (A) the Mortgages Trustee
Transaction Account, (B) the Mortgages Trustee GIC Account and
(C) all investment proceeds from Authorised Investments
purchased from amounts standing to the credit of either the
Mortgages Trustee Transaction Account or the Mortgages Trustee
GIC Account.
(c) The Cash Manager shall procure that on each Distribution Date the
following amounts are paid into the Funding GIC Account:
(i) all Funding Principal Receipts, PROVIDED HOWEVER that any
amounts recorded as a credit on the Non-Flexible Overpayments
Sub Ledger shall remain in the Mortgages Trustee GIC Account
on such Distribution Date;
(ii) all Funding Revenue Receipts; and
(iii) any other amounts whatsoever received by or on behalf of
Funding after the Initial Closing Date,
and the Cash Manager shall procure that all interest earned on the
Funding GIC Account and the Funding Transaction Account and all
investment proceeds from Authorised Investments purchased from
amounts standing to the credit of such accounts are credited to the
Funding GIC Account.
(d) The Cash Manager shall procure that all interest earned on each
Funding (Issuer) GIC Account and all investment proceeds from
Authorised Investments purchased from amounts standing to the credit
of such Funding (Issuer) GIC Account are credited to such account.
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(e) The Cash Manager shall procure that on each Payment Date the lesser
of (1) the amount standing to the credit of the Funding GIC Account
and (2) the aggregate of all amounts required to be paid by Funding
to all Issuers in accordance with the relevant Funding Priority of
Payments, is credited to the Funding Transaction Account in
accordance with the provisions of the Funding Deed of Charge.
(f) The Cash Manager shall procure that all transfers and withdrawals of
amounts standing to the credit of the Funding Transaction Account
and the Funding GIC Account shall be made in accordance with the
provisions of the Funding Deed of Charge.
(g) The Cash Manager shall procure that all transfers and withdrawals of
amounts standing to the credit of each Funding (Issuer) GIC Account
shall be made in accordance with the provisions of the Funding Deed
of Charge.
(h) Each of the payments into the Mortgages Trustee Transaction Account,
the Mortgages Trustee GIC Account, the Funding Transaction Account,
the Funding GIC Account and each Funding (Issuer) GIC Account
referred to in Clauses 4.4(a) through (g) herein shall be made
forthwith upon receipt by the Mortgages Trustee, Funding or the Cash
Manager, as the case may be, of the amount in question.
(i) For the avoidance of doubt, as soon as reasonably practicable after
becoming aware of the same, the Cash Manager may, and shall,
withdraw Cash from, as the case may be, the Mortgages Trustee
Transaction Account, the Mortgages Trustee GIC Account, the Funding
Transaction Account, the Funding GIC Account or any Funding (Issuer)
GIC Account if, and to the extent that, such Cash was credited
thereto in error and shall use its reasonable endeavours to ensure
that such Cash is applied correctly thereafter.
(j) The Cash Manager shall promptly notify each of the Mortgages
Trustee, Funding and the Security Trustee of any additional account
which supplements or replaces any account specifically referred to
in the definitions of the "Mortgages Trustee Transaction Account",
the "Mortgages Trustee GIC Account", the "Funding Transaction
Account", the "Funding GIC Account" or any "Funding (Issuer) GIC
Account" in the Master Definitions Schedule.
(k) Each of the Cash Manager, the Mortgages Trustee and Funding
undertakes that, so far as it is able to procure the same, the
Mortgages Trustee Transaction Account, the Mortgages Trustee GIC
Account, the Funding Transaction Account and the Funding GIC Account
and all instructions and Mandates in relation thereto will continue
to be operative and will not, save as provided in Clause 4.6 herein
(CASH MANAGEMENT) or as permitted pursuant to the Bank Account
Agreement, be changed without the prior written consent of the
Security Trustee (such consent not to be unreasonably withheld or
delayed). Each of the Cash Manager and Funding undertakes that, so
far as it is able to procure the same, any Funding (Issuer) GIC
Account and all instructions and
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Mandates in relation thereto will continue to be operative and will
not, save as provided in Clause 4.6 herein (CASH MANAGEMENT) or as
permitted pursuant to the related Funding (Issuer) Bank Account
Agreement, be changed without the prior written consent of the
Security Trustee (such consent not to be unreasonably withheld or
delayed). For the avoidance of doubt, the Cash Manager may change
the Authorised Signatories in respect of any instructions or
Mandates relating to Funding and/or the Mortgages Trustee, without
the prior written consent of the Security Trustee, in accordance
with Clause 4.2 (AMENDMENT OR REVOCATION) of the Bank Account
Agreement or any Funding (Issuer) Bank Account Agreement, as the
case may be.
4.5 WITHDRAWALS: The Cash Manager may make withdrawals:
(a) on behalf of the Mortgages Trustee from the Mortgages Trustee
Transaction Account and the Mortgages Trustee GIC Account;
(b) on behalf of Funding from the Funding GIC Account, any Funding
(Issuer) GIC Account and the Funding Transaction Account, but only:
(i) with the prior consent of the Security Trustee as provided
under the Funding Deed of Charge or following receipt of a
request for withdrawal in writing from the Cash Manager on
behalf of Funding; and
(ii) until receipt of an Intercompany Loan Enforcement Notice
served by the Security Trustee on Funding (with a copy to the
Funding Secured Creditors as soon as reasonable thereafter in
accordance with and subject to the Funding Deed of Charge),
as permitted by this Agreement, the Mortgages Trust Deed, the Bank Account
Agreement, any Funding (Issuer) Bank Account Agreement, the Mortgages
Trustee Guaranteed Investment Contract, the Funding Guaranteed Investment
Contract, any Funding (Issuer) Guaranteed Investment Contract and the
Funding Deed of Charge, but shall not in carrying out its functions as
Cash Manager under this Agreement otherwise make withdrawals from the
Mortgages Trustee Transaction Account, the Mortgages Trustee GIC Account
or the Funding Bank Accounts. Following enforcement of the Funding
Security, the Cash Manager will not be entitled to make withdrawals from
any Funding Account other than in accordance with the instructions of the
Security Trustee.
4.6 CASH MANAGEMENT: In administering the Mortgages Trustee Transaction
Account, the Mortgages Trustee GIC Account, the Funding Transaction
Account, the Funding GIC Account and any Funding (Issuer) GIC Account on
behalf of the Mortgages Trustee, Funding and the Security Trustee, as
applicable, the Cash Manager shall comply with the provisions of Schedule
2 hereto prior to receipt by the Cash Manager of a copy of any
Intercompany Loan Enforcement Notice served by the Security Trustee on
Funding.
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4.7 CONTRIBUTIONS: Following the drawing of any Intercompany Loan by Funding
from the First Issuer or any New Issuer on any date, the Cash Manager
shall procure (i) the payment on such date by Funding to the Mortgages
Trustee of Funding's Contribution to the Mortgages Trustee pursuant to the
Mortgages Trust Deed and (ii) the application of such Contribution by the
Mortgages Trustee for payment to the Seller of either (a) the amount of
Initial Purchase Price for the sale of any New Mortgage Portfolio which is
acquired by the Mortgages Trustee from the Seller on such date under the
provisions of Mortgage Sale Agreement or (b) the amount of any Special
Distribution made to the Seller as Beneficiary under the Mortgages Trust
Deed, as applicable.
5. EARLY REPAYMENT CHARGES
The Cash Manager shall withdraw any Early Repayment Charges paid into the
Mortgages Trustee Transaction Account or the Mortgages Trustee GIC Account
and pay the same to the Seller, by telegraphic transfer to such account as
may be specified by the Seller from time to time, promptly following a
request for such withdrawal being received from the Seller. For the
avoidance of doubt, the Cash Manager shall not record the receipt or
withdrawal of Early Repayment Charges in any of the ledgers maintained
under this Agreement.
6. NO LIABILITY
Save as otherwise provided in this Agreement, the Cash Manager shall have
no liability for the obligations of any of the Mortgages Trustee, Funding
or the Security Trustee under any of the Transaction Documents or
otherwise and nothing herein shall constitute a guarantee, or similar
obligation, by the Cash Manager of any of the Mortgages Trustee, Funding
or the Security Trustee in respect of any of them.
7. COSTS AND EXPENSES
7.1 Funding and the Mortgages Trustee, proportionately in accordance with and
subject to the applicable Funding Priority of Payments set out in the
Funding Deed of Charge or the applicable Priority of Payments for the
Mortgages Trustee under the Mortgages Trust Deed, as the case may be, will
on each Payment Date reimburse the Cash Manager for all out-of-pocket
costs, expenses and charges (together with any amounts in respect of
Irrecoverable VAT due thereon) properly incurred by the Cash Manager in
the performance of the Cash Management Services including any such costs,
expenses or charges not reimbursed to the Cash Manager on any previous
Payment Date and the Cash Manager shall supply Funding and/or the
Mortgages Trustee with an appropriate VAT invoice issued by the Cash
Manager or, if the Cash Manager has treated the relevant cost, expense or
charge as a disbursement for VAT purposes, by the person making the
supply.
7.2 Unless and until otherwise agreed by Funding, the Mortgages Trustee and
the Security Trustee in writing (notified to the Cash Manager), Funding
and the Mortgages Trustee shall be jointly and severally responsible for
reimbursing the Cash Manager for the out-of-pocket costs, expenses and
charges (together with any
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amounts in respect of Irrecoverable VAT due thereon) referred to in Clause
7.1 herein.
8. INFORMATION
8.1 USE OF INFORMATION TECHNOLOGY SYSTEMS:
(a) The Cash Manager represents and warrants that at the date hereof in
respect of the software which is to be used by the Cash Manager in
providing the Cash Management Services it has in place all necessary
licences and/or consents from the respective licensor or licensors
(if any) of such software.
(b) The Cash Manager undertakes that it shall for the duration of this
Agreement, use reasonable endeavours to:
(i) ensure that the licences and/or consents referred to in
paragraph (a) are maintained in full force and effect; and
(ii) except insofar as it would breach any other of its legal
obligations, grant to any person to whom it may sub-contract
or delegate the performance of all or any of its powers and
obligations under this Agreement and/or to such person as the
Mortgages Trustee, Funding and the Security Trustee elect as a
substitute cash manager in accordance with the terms of this
Agreement a licence to use any proprietary software together
with any updates which may be made thereto from time to time.
(c) The Cash Manager shall use reasonable endeavours to maintain in
working order the information technology systems used by the Cash
Manager in providing the Cash Management Services.
(d) The Cash Manager shall pass to any person to whom it may
sub-contract or delegate the performance of all or any of its powers
and obligations under this Agreement and/or to such person as the
Mortgages Trustee, Funding and the Security Trustee elect as a
substitute cash manager in accordance with the terms of this
Agreement the benefit of any warranties in relation to the software
insofar as the same are capable of assignment.
8.2 BANK ACCOUNT STATEMENTS: The Cash Manager shall take all reasonable steps
to ensure that it receives:
(a) a monthly bank statement in relation to each of the Mortgages
Trustee Transaction Account and the Mortgages Trustee GIC Account
(and any additional or supplemental bank account of the Mortgages
Trustee) and that it furnishes a copy of such statements to the
Mortgages Trustee, each of the Beneficiaries and the Security
Trustee (upon its request); and
(b) monthly bank statements in relation to each of the Funding
Transaction Account, the Funding GIC Account and any Funding
(Issuer) GIC Account
15
(and any additional or supplemental bank account of Funding) and
that it furnishes a copy of such statements to Funding and the
Security Trustee (upon its request).
8.3 ACCESS TO BOOKS AND RECORDS: Subject to all applicable laws, the Cash
Manager shall permit the Mortgages Trustee, Funding, the Auditors of the
Mortgages Trustee and Funding, the Security Trustee and/or any other
person nominated by the Security Trustee or the Beneficiaries (to whom the
Cash Manager has no reasonable objection) at any time during normal office
hours upon reasonable notice to have access, or procure that such person
or persons are granted access, to all books of record and account relating
to the Cash Management Services provided by the Cash Manager and related
matters in accordance with this Agreement.
8.4 STATUTORY OBLIGATIONS: The Cash Manager will use its reasonable endeavours
on behalf of the Mortgages Trustee and Funding, to prepare or procure the
preparation of and file all reports, annual returns, financial statements,
statutory forms and other returns which each of the Mortgages Trustee and
Funding is required by law to prepare and file. Subject to approval
thereof by the directors of the Mortgages Trustee or Funding (as
appropriate), the Cash Manager shall cause such accounts to be audited by
the Auditors and shall procure so far as it is able so to do that the
Auditors shall make a report thereon as required by law and copies of all
such documents shall be delivered to the Mortgages Trustee, the Security
Trustee and Funding (as appropriate) and the Rating Agencies as soon as
practicable after the end of each accounting reference period of the
Mortgages Trustee or Funding (as appropriate).
8.5 INFORMATION COVENANTS:
(a) The Cash Manager shall provide the Mortgages Trustee, Funding, the
Security Trustee, the Seller and the Rating Agencies:
(i) quarterly with a report in, or substantially in, the form set
out in Schedule 3A hereto in respect of the Mortgages Trustee;
and
(ii) quarterly with a report in, or substantially in, the form set
out in Schedule 3B hereto in respect of Funding.
Such quarterly reports shall be delivered to the Mortgages Trustee,
Funding, the Security Trustee (upon its request), the Seller and the
Rating Agencies by the last Business Day of the month in which each
Payment Date occurs.
(b) The Cash Manager shall provide, or procure the provision of, to the
Mortgages Trustee, Funding, the Security Trustee (upon its request)
and the Rating Agencies copies of any annual returns or financial
statements referred to in Clause 8.4 herein (STATUTORY OBLIGATIONS)
as soon as reasonably practicable after the preparation thereof.
(c) The Cash Manager shall notify the Rating Agencies and the Security
Trustee in writing of the details of (i) any material amendment to
the Transaction
16
Documents of which it is or becomes aware, (ii) the occurrence of an
Intercompany Loan Event of Default or Potential Intercompany Loan
Event of Default and (iii) any other information relating to the
Cash Manager as the Rating Agencies and the Security Trustee may
reasonably request in connection with its obligations under this
Agreement, PROVIDED THAT any such request by the Security Trustee
does not adversely interfere with the Cash Manager's day-to-day
provision of the Cash Management Services under the other terms of
this Agreement.
(d) After becoming aware of any event described in paragraph (c)(i) and
(ii) above, the Cash Manager shall give details to Funding, the
Mortgages Trustee and Security Trustee of any pending legal action
and any judgments given in respect of the Cash Manager if it could
have a potential material adverse effect on the ability of the Cash
Manager to perform its obligations hereunder.
(e) The Cash Manager shall, at the request of the Security Trustee,
furnish the Security Trustee and the Rating Agencies with such other
information relating to its business and financial condition as the
Security Trustee may request in connection with this Agreement,
PROVIDED THAT the Security Trustee shall not make such a request
more than once every three months unless, in the belief of the
Security Trustee, an Intercompany Loan Event of Default, a Note
Event of Default or Cash Manager Termination Event (as defined in
Clause 12.1 herein (CASH MANAGER TERMINATION EVENTS)) shall have
occurred and is continuing or a Potential Intercompany Loan Event of
Default or a Potential Note Event of Default shall have occurred and
is continuing or may reasonably be expected to occur, PROVIDED THAT
any such request by the Security Trustee does not adversely
interfere with the Cash Manager's day to day provision of the Cash
Management Services under the other terms of this Agreement.
9. REMUNERATION
9.1 FEE PAYABLE:
(a) Subject to paragraph (b) below, Funding and the Mortgages Trustee,
proportionately in accordance with and subject to the applicable
Funding Priority of Payments set out in the Funding Deed of Charge
and the applicable Priority of Payments for the Mortgages Trustee
under the Mortgages Trust Deed, as the case may be, shall pay to the
Cash Manager for its Cash Management Services hereunder an annual
cash management fee of (pound)100,000 for its services which will be
paid quarterly.
(b) Unless and until otherwise agreed by Funding, the Mortgages Trustee
and the Security Trustee in writing (notified to the Cash Manager),
Funding and the Mortgages Trustee shall be jointly and severally
responsible for paying the cash management fee to the Cash Manager
which is referred to in paragraph (a) above.
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9.2 PAYMENT OF FEE: The cash management fee referred to in Clause 9.1 herein
(FEE PAYABLE) shall only be payable to the Cash Manager on each Payment
Date in the manner contemplated by, in accordance with and subject to the
provisions of the applicable Priority of Payments for the Mortgages
Trustee under the Mortgages Trust Deed and the applicable Funding Priority
of Payments under the Funding Deed of Charge.
10. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE CASH MANAGER
10.1 COVENANTS: The Cash Manager hereby covenants with and undertakes to each
of the Mortgages Trustee, Funding and the Security Trustee that without
prejudice to any of its specific obligations hereunder:
(a) it will exercise all due skill, care and diligence to the
performance of its obligations and the exercise of its discretions
hereunder;
(b) it will comply with any proper directions, orders and instructions
which the Mortgages Trustee, Funding or the Security Trustee may
from time to time give to it in accordance with the provisions of
this Agreement and, in the event of any conflict, those of the
Security Trustee shall prevail;
(c) it will obtain and keep in force all licences, approvals,
authorisations and consents which are necessary in connection with
the performance of the Cash Management Services and prepare and
submit all necessary applications and requests for any further
approval, authorisation, consent or licence required in connection
with the performance of the Cash Management Services;
(d) it will not knowingly fail to comply with any legal requirements in
the performance of the Cash Management Services;
(e) it will make all payments required to be made by it pursuant to this
Agreement on the due date for payment thereof for value in the
specified currency on such day without set-off (including, without
limitation, in respect of any fees owed to it) or counterclaim; and
(f) it will not without the prior written consent of the Security
Trustee amend or terminate any of the Transaction Documents save in
accordance with their terms.
10.2 DURATION OF COVENANTS: The covenants of the Cash Manager in Clause 10.1
(COVENANTS) shall remain in force until this Agreement is terminated but
without prejudice to any right or remedy of the Mortgages Trustee and/or
Funding and/or the Security Trustee arising from breach of any such
covenant prior to the date of termination of this Agreement.
10.3 REPRESENTATIONS AND WARRANTIES: The Cash Manager hereby makes the
representations and warranties to each of the Mortgages Trustee, Funding
and the Security Trustee that are specified on Schedule 4 hereto.
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11. SERVICES NON-EXCLUSIVE
Nothing in this Agreement shall prevent the Cash Manager from rendering
or performing services similar to those provided for in this Agreement to
or for itself or other persons, firms or companies or from carrying on
business similar to or in competition with the business of the Mortgages
Trustee, Funding or the Security Trustee.
12. TERMINATION
12.1 CASH MANAGER TERMINATION EVENTS: If any of the following events ("Cash
Manager Termination Events") shall occur:
(a) default is made by the Cash Manager in the payment on the due date
of any payment due and payable by it under this Agreement or in
the performance of its obligations under Clauses 4.4 and 4.5
herein and such default continues unremedied for a period of five
(5) London Business Days after the earlier of the Cash Manager
becoming aware of such default and receiving written notice from
the Security Trustee requiring the same to be remedied;
(b) default is made by the Cash Manager in the performance or
observance of any of its other covenants and obligations under
this Agreement, which in the opinion of the Security Trustee
(acting at the direction of the Note Trustee) is materially
prejudicial to the Noteholders and such default continues
unremedied for a period of twenty (20) days after the earlier of
the Cash Manager becoming aware of such default and receipt by the
Cash Manager of written notice from the Security Trustee requiring
the same to be remedied; or
(c) the Cash Manager suffers an Insolvency Event,
then Funding, the Mortgages Trustee and/or the Security Trustee may at
once or at any time thereafter while such default continues by notice in
writing to the Cash Manager with a copy to the Account Bank terminate its
appointment as Cash Manager under this Agreement with effect from a date
(not earlier than the date of the notice) specified in the notice.
12.1.1 Upon termination of the appointment of the Cash Manager, the Security
Trustee agrees to use its reasonable endeavours to appoint a substitute
cash manager. Any substitute cash manager:
(i) must agree to enter into an agreement substantially on the same
terms as the relevant provisions of this Agreement or on such
terms as are satisfactory to the Mortgages Trustee, Funding and
the Security Trustee, and
(ii) must be a party that the Rating Agencies have previously confirmed
in writing to the Mortgages Trustee, Funding and the Security
Trustee
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will not cause the then-current ratings of the Notes to be
downgraded, withdrawn or qualified.
The Security Trustee shall have no liability to any person in the event
that, having used reasonable endeavours, it is unable to appoint a
substitute cash manager. In any event, the Security Trustee shall only be
required to use its reasonable endeavours to appoint such substitute cash
manager. Notwithstanding any other provision of the Transaction
Documents, the Security Trustee shall not itself be required to perform
any duties of the Cash Manager.
The Security Trustee shall not be obliged to monitor or supervise the
performance by any substitute Cash Manager of its duties hereunder or in
relation to the other Transaction Documents nor shall the Security
Trustee be responsible or liable for any act or omission of any
substitute Cash Manager or for any loss caused thereby.
12.2 RESIGNATION OF CASH MANAGER: The Cash Manager may resign from its
appointment under this Agreement only upon giving not less than twelve
(12) months' notice to each of the Mortgages Trustee, Funding and the
Security Trustee, PROVIDED THAT:
(a) the Mortgages Trustee, Funding and the Security Trustee each
consent in writing to such resignation;
(b) a substitute cash manager shall be appointed, such appointment to
be effective not later than the effective date of such
resignation;
(c) such substitute cash manager enters into an agreement
substantially on the same terms as the relevant provisions of this
Agreement and the Cash Manager shall not be released from its
obligations under the relevant provisions of this Agreement until
such substitute cash manager has entered into such new agreement
and the rights of the Mortgages Trustee and Funding under such
agreement are charged in favour of the Security Trustee on terms
satisfactory to the Security Trustee; and
(d) the then-current ratings of the Notes are not adversely affected
as a result thereof.
12.3 EFFECT OF TERMINATION OR RESIGNATION:
(a) On and after termination or resignation of the appointment of the
Cash Manager under this Agreement pursuant to this Clause 12, all
authority and power of the Cash Manager under this Agreement shall
be terminated and be of no further effect and the Cash Manager
shall not thereafter hold itself out in any way as the agent of
the Mortgages Trustee, Funding or the Security Trustee pursuant to
this Agreement.
(b) Upon termination or resignation of the appointment of the Cash
Manager under this Agreement pursuant to this Clause 12, the Cash
Manager shall:
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(i) forthwith deliver (and in the meantime hold on trust for, and
to the order of, the Mortgages Trustee, Funding or the
Security Trustee, as the case may be) to the Mortgages
Trustee, Funding or the Security Trustee, as the case may be
or as it shall direct, all books of account, papers, records,
registers, correspondence and documents in its possession or
under its control relating to the affairs of or belongings of
the Mortgages Trustee, Funding or the Security Trustee, as the
case may be (if practicable, on the date of receipt), any
monies then held by the Cash Manager on behalf of the
Mortgages Trustee, Funding or, the Security Trustee and any
other assets of the Mortgages Trustee, Funding and the
Security Trustee;
(ii) take such further action as the Mortgages Trustee, Funding or
the Security Trustee, as the case may be, may reasonably
direct at the expense of the Mortgages Trustee or Funding,
provided that the Cash Manager shall not be required to take
or direct to be taken such further action unless it has been
indemnified to its satisfaction (and in the event of a
conflict between the directions of Funding, the Mortgages
Trustee and the Security Trustee, the directions of the
Security Trustee shall prevail);
(iii) provide all relevant information contained on computer records
in the form of magnetic tape, together with details of the
layout of the files encoded on such magnetic tapes; and
(iv) co-operate and consult with and assist the Mortgages Trustee,
Funding or the Security Trustee or its nominee, as the case
may be (which shall, for the avoidance of doubt, include any
Receiver appointed by it), for the purposes of explaining the
file layouts and the format of the magnetic tapes generally
containing such computer records on the computer system of the
Mortgages Trustee, Funding, or the Security Trustee or such
nominee, as the case may be.
12.4 NOTICE OF EVENT OF DEFAULT: The Cash Manager shall deliver to the
Mortgages Trustee, Funding and the Security Trustee as soon as reasonably
practicable but in any event within three London Business Days of becoming
aware thereof a notice of any Cash Manager Termination Event or any event
which with the giving of notice or expiry of any grace period or
certification, as specified in such Cash Manager Termination Event would
constitute the same or any Intercompany Loan Event of Default or any
Potential Intercompany Loan Event of Default.
12.5 GENERAL PROVISIONS RELATING TO TERMINATION:
(a) Termination of this Agreement or the appointment of the Cash Manager
under this Agreement shall be without prejudice to the liabilities
of the Mortgages Trustee and Funding to the Cash Manager and VICE
VERSA incurred before the effective date of such termination. The
Cash Manager shall have no right of
21
set-off or any lien in respect of such amounts against amounts held
by it on behalf of the Mortgages Trustee, Funding or the Security
Trustee.
(b) This Agreement shall terminate automatically at such time as Funding
has no further interest in the Trust Property and all Intercompany
Loans have been fully repaid or Funding's obligations under all
Intercompany Loans have been otherwise discharged.
(c) On termination of the appointment of the Cash Manager under the
provisions of this Clause 12, the Cash Manager shall be entitled to
receive all fees and other monies accrued up to (but excluding) the
date of termination subject to the applicable Funding Priority of
Payments set out in the Funding Deed of Charge and/or the applicable
Priority of Payments for the Mortgages Trustee under the Mortgages
Trust Deed, as the case may be, but shall not be entitled to any
other or further compensation. Such monies so receivable by the Cash
Manager shall be paid by Funding and the Mortgages Trustee, on the
dates on which they would otherwise have fallen due hereunder and
under the terms of the Funding Deed of Charge and the Mortgages
Trust Deed. For the avoidance of doubt, such termination shall not
affect the Cash Manager's rights to receive payment of all amounts
(if any) due to it from Funding and the Mortgages Trust Deed other
than under this Agreement.
(d) Any provision of this Agreement which is stated to continue after
termination of the Agreement shall remain in full force and effect
notwithstanding termination.
13. FURTHER ASSURANCES
13.1 CO-OPERATION, ETC: The parties hereto agree that they will co-operate
fully to do all such further acts and things and execute any further
documents as may be necessary or desirable to give full effect to the
arrangements contemplated by this Agreement and the other Transaction
Documents.
13.2 POWERS OF ATTORNEY: Without prejudice to the generality of Clause 13.1
herein (CO-OPERATION, ETC.), the Mortgages Trustee and Funding shall upon
request by the Cash Manager forthwith give to the Cash Manager such
further powers of attorney or other written authorisations, mandates or
instruments as are necessary to enable the Cash Manager to perform the
Cash Management Services.
14. MISCELLANEOUS
14.1 NO SET-OFF: Each of the Seller and the Cash Manager agrees that it will
not make or exercise any claims or demands, any rights of counterclaim or
any other equities against or withhold payment of any and all sums of
money which may at any time and from time to time be standing to the
credit of the Mortgages Trustee Transaction Account, the Mortgages Trustee
GIC Account, the Funding Transaction Account, the Funding GIC Account or
any Funding (Issuer) GIC Account or any replacement of additional bank
account of either the Mortgages Trustee or Funding.
22
14.2 NO RECOURSE:
(a) In relation to all sums due and payable by the Mortgages Trustee or
Funding to the Cash Manager, the Cash Manager agrees that it shall
have recourse only to sums paid to or received by (or on behalf of)
the Mortgages Trustee or Funding pursuant to the provisions of the
Transaction Documents, in each case subject to the Mortgages Trustee
Revenue Priority of Payments and the Funding Priority of Payments.
(b) For the avoidance of doubt, the Security Trustee shall not be liable
to pay any amounts due under Clause 7 (COSTS AND EXPENSES), but
without prejudice to the obligations of the Mortgages Trustee or
Funding, as the case may be, or any receiver appointed pursuant to
the Funding Deed of Charge in respect of such amounts.
(c) Notwithstanding any other provisions of this Agreement, all
obligations to, and rights of, the Security Trustee under or in
connection with this Agreement (other than its obligations under
Clause 13 herein (FURTHER ASSURANCES)) shall automatically terminate
upon the discharge in full of the Funding Secured Obligations,
PROVIDED THAT this shall be without prejudice to any claims in
respect of such obligations and rights arising on or prior to such
date.
15. CONFIDENTIALITY
During the continuance of this Agreement or after its termination, each of
the Mortgages Trustee, the Cash Manager, the Seller, Funding and the
Security Trustee shall use its best endeavours not to disclose to any
person, firm or company whatsoever any information relating to the
business, finances or other matters of a confidential nature of any other
party hereto of which it may exclusively by virtue of being party to the
Transaction Documents have become possessed and shall use all reasonable
endeavours to prevent any such disclosure as aforesaid, PROVIDED HOWEVER
that the provisions of this Clause 15 shall not apply:
(a) to any information already known to the recipient otherwise than as
a result of entering into any of the Transaction Documents;
(b) to any information subsequently received by the recipient which it
would otherwise be free to disclose;
(c) to any information which is or becomes public knowledge otherwise
than as a result of the conduct of the recipient;
(d) to any extent that the recipient is required to disclose the same
pursuant to any law or order of any court or pursuant to any
direction, request or requirement (whether or not having the force
of law) of any central bank or any governmental or other authority
(including, without limitation, any official bank examiners or
regulators);
23
(e) to the extent that the recipient needs to disclose the same for
determining the existence of, or declaring, an Event of Default, an
Intercompany Loan Event of Default or a Cash Manager Termination
Event, the protection or enforcement of any of its rights under any
of the Transaction Documents or in connection herewith or therewith
or for the purpose of discharging, in such manner as it thinks fit,
its duties under or in connection with such agreements in each case
to such persons as require to be informed of such information for
such purposes; or
(f) in relation to any information disclosed to the professional
advisers of the recipient or (in connection with a prospective
rating of any debt to be issued by any Issuer) to any credit rating
agency or any prospective new cash manager or prospective new
security trustee.
16. NO PARTNERSHIP
It is hereby acknowledged and agreed by the parties that nothing in this
Agreement shall be construed as giving rise to any partnership between any
of the parties.
17. ASSIGNMENT
17.1 ASSIGNMENT BY THE MORTGAGES TRUSTEE AND FUNDING: Neither of the Mortgages
Trustee nor Funding may assign or transfer any of its respective rights
and obligations under this Agreement without the prior written consent of:
(a) in the case of the Mortgages Trustee, each of the Beneficiaries and
the Security Trustee; and
(b) in the case of Funding, each of the Security Trustee and the Cash
Manager,
except that Funding may assign its respective rights hereunder without
such consent pursuant to the Funding Deed of Charge.
17.2 NO ASSIGNMENT BY CASH MANAGER: The Cash Manager may not assign or transfer
any of its rights and obligations under this Agreement without the prior
written consent of the Mortgages Trustee, each of the Beneficiaries and
the Security Trustee.
18. THE SECURITY TRUSTEE
18.1 CHANGE IN SECURITY TRUSTEE: If there is any change in the identity of the
security trustee in accordance with the Funding Deed of Charge, the Cash
Manager, the Seller, Funding and the Mortgages Trustee shall execute such
documents and take such action as the successor security trustee and the
outgoing security trustee may require for the purpose of vesting in the
successor security trustee the rights and obligations of the outgoing
security trustee under this Agreement and releasing the outgoing security
trustee from its future obligations under this Agreement.
18.2 NO OBLIGATIONS: It is hereby acknowledged and agreed that by its execution
of this Agreement the Security Trustee shall not assume or have any of the
obligations or
24
liabilities of the Cash Manager, the Seller, Funding or the Mortgages
Trustee under this Agreement. Furthermore, any liberty or power which may
be exercised or any determination which may be made hereunder by the
Security Trustee may be exercised or made in the Security Trustee's
absolute and unfettered discretion without any obligation to give reasons
therefor, but in any event must be exercised or made in accordance with
the provisions of the Funding Deed of Charge.
19. NEW INTERCOMPANY LOAN AGREEMENTS
If Funding enters into a New Intercompany Loan Agreement, then the Cash
Manager, the Seller, Funding, the Security Trustee and the Mortgages
Trustee shall execute such documents and take such action as may be
necessary or required by the Rating Agencies for the purpose of including
the New Issuer, any Basis Rate Swap Provider, any Currency Swap Provider,
any New Start-up Loan Provider and any other person who has executed an
Accession Undertaking or any New Intercompany Loan Agreement in the
Transaction Documents.
20. NON PETITION COVENANT; LIMITED RECOURSE
20.1 ONLY TRUSTEE TO ENFORCE: The Cash Manager hereby undertakes to each of the
other parties hereto that only the Security Trustee may enforce the
security created in favour of the Security Trustee by the Funding Deed of
Charge in accordance with the provisions thereof.
20.2 LIMITED RECOURSE: The Cash Manager hereby undertakes to each of the other
parties hereto that, notwithstanding any other provision of this Agreement
or any other Transaction Document, no sum due or owing to the Cash Manager
from or by Funding or the Mortgages Trustee under this Agreement shall be
payable by Funding or the Mortgages Trustee except to the extent that
Funding or the Mortgages Trustee, as applicable, has sufficient funds
available subject to the applicable Funding Priority of Payments set out
in the Funding Deed of Charge or the applicable Priority of Payments for
the Mortgages Trustee under the Mortgages Trust Deed, as the case may be,
or, following enforcement of the Funding Security the Security Trustee has
realised sufficient funds from the Funding Security to pay such sum
subject to and in accordance with the relevant Funding Priority of
Payments, and provided that all liabilities of Funding or the Mortgages
Trustee required to be paid in priority thereto or pari passu therewith
pursuant to the applicable Funding Priority of Payments set out in the
Funding Deed of Charge or the applicable Priority of Payments for the
Mortgages Trustee under the Mortgages Trust Deed, as the case may be, have
been paid, discharged and/or otherwise provided for in full.
20.3 NON-PETITION: The Cash Manager hereby undertakes to each of the other
parties hereto that it shall not take any steps for the purpose of
recovering any amount payable under this Agreement (including, without
limitation, by exercising any rights of set-off) or enforcing any rights
arising out of this Agreement against Funding or the Mortgages Trustee and
it shall not take any steps or legal proceedings for the winding-up,
dissolution or reorganisation of, or the institution of insolvency
proceedings against, either Funding or the Mortgages Trustee or for the
appointment
25
of a receiver, administrator, liquidator or similar officer of Funding or
the Mortgages Trustee in respect of any or all of its revenues except to
the extent expressly permitted under the Funding Deed of Charge or the
Mortgages Trust Deed, as the case may be.
20.4 FOLLOWING ENFORCEMENT: The Cash Manager hereby undertakes to each of the
other parties hereto that, following any enforcement of the Funding
Security, it will hold on trust for, and will pay to, the Security Trustee
or the Receiver, as the case may be, all monies received or recovered by
it (whether by way of set-off or otherwise) from Funding or in respect of
any amount due hereunder by Funding, otherwise than in accordance with the
Funding Post-Enforcement Priority of Payments in order that such monies
may be applied by the Security Trustee or the Receiver in accordance with
the Funding Post-Enforcement Priority of Payments.
20.5 CORPORATE OBLIGATIONS: To the extent permitted by law, no recourse under
any obligation, covenant, or agreement of any person contained in this
Agreement shall be had against any shareholder, officer or director of
such person as such, by the enforcement of any assessment or by any legal
proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that this Agreement is a corporate obligation of
each person expressed to be a party hereto and no personal liability shall
attach to or be incurred by the shareholders, officers, agents or
directors of such person as such, or any of them, under or by reason of
any of the obligations, covenants or agreements of such person contained
in this Agreement, or implied therefrom, and that any and all personal
liability for breaches by such person of any of such obligations,
covenants or agreements, either under any applicable law or by statute or
constitution, of every such shareholder, officer, agent or director is
hereby expressly waived by each person expressed to be a party hereto as a
condition of and consideration for the execution of this Agreement.
21. AMENDMENTS AND WAIVER
21.1 ENTIRE AGREEMENT: This Agreement sets out the entire agreement and
understanding between the parties with respect to the subject matter of
this Agreement superseding all prior oral or written understandings other
than the other Transaction Documents.
21.2 AMENDMENTS AND WAIVER: No amendment or waiver of any provision of this
Agreement nor consent to any departure by any of the parties therefrom
shall in any event be effective unless the same shall be in writing and
signed by each of the parties hereto. In the case of a waiver or consent,
such waiver or consent shall be effective only in the specific instance
and as against the party or parties giving it for the specific purpose for
which it is given.
21.3 RIGHTS CUMULATIVE: The respective rights of each of the parties to this
Agreement are cumulative and may be exercised as often as they consider
appropriate. No failure on the part of any party to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right preclude any other
or further exercise thereof or the exercise of any other right. The
remedies in this Agreement are cumulative and not exclusive of any
remedies provided by law.
26
21.4 RATINGS: No variation or waiver of this Agreement shall be made if the
same would adversely affect the then-current ratings of any of the Notes.
22. NOTICES
Any notices or other communication or document to be given or delivered
pursuant to this Agreement to any of the parties hereto shall be
sufficiently served if sent by prepaid first class post, by hand or by
facsimile transmission and shall be deemed to be given (in the case of
facsimile transmission) when despatched or (where delivered by hand) on
the day of delivery if delivered before 17.00 hours on a London Business
Day or on the next London Business Day if delivered thereafter or (in the
case of first class post) when it would be received in the ordinary course
of the post and shall be sent:
(a) in the case of the Cash Manager and the Seller, to Northern Rock
plc, ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
(facsimile number: 0191 213 2203) for the attention of the Group
Secretary;
(b) in the case of the Mortgages Trustee, to Granite Finance Trustees
Limited, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Channel
Islands (facsimile number 0153 469 9333) for the attention of
Securitisation Team, Treasury;
(c) in the case of Funding, to Granite Finance Funding Limited, ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile
number 0207 332 6199) for the attention of Securitisation Team,
Treasury;
(d) in the case of the Security Trustee, to The Bank of New York, at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (facsimile number 020 7964
6399) for the attention of Corporate Trust (Global Structured
Finance);
(e) in the case of Fitch, to Fitch Ratings Ltd., at ▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile number 0207 417 6262) for the
attention of European Structured Finance Surveillance;
(f) in the case of Moody's, to ▇▇▇▇▇'▇ Investors Services, Inc., at 1st
Floor, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile
number 0207 772 5400) for the attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
(g) in the case of S&P, to Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., at ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile number 0207 826 3598)
for the attention of ▇▇▇▇▇▇▇ ▇▇▇▇;
or to such other address or facsimile number or for the attention of such
other person or entity as may from time to time be notified by any party
or by any Rating Agency to the others by written notice in accordance with
the provisions of this Clause 22. All notices served under this Agreement
shall be simultaneously copied to the Security Trustee by the person
serving the same.
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23. THIRD PARTY RIGHTS
A person who is not a party to this Agreement may not enforce any of its
terms under the Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇, but this
shall not affect any right or remedy of a third party which exists or is
available apart from that Act.
24. EXECUTION IN COUNTERPARTS; SEVERABILITY
24.1 COUNTERPARTS: This Agreement may be executed in any number of counterparts
(manually or by facsimile) and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the
same instrument.
24.2 SEVERABILITY: Where any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations under this Agreement, or of such provision or obligation in
any other jurisdiction, shall not be affected or impaired thereby.
25. GOVERNING LAW AND SUBMISSION TO JURISDICTION
25.1 GOVERNING LAW: This Agreement is governed by, and shall be construed in
accordance with, English law.
25.2 SUBMISSION TO JURISDICTION: Each of the parties hereto irrevocably agrees
that the courts of England shall have jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may
arise out of or in connection with this Agreement and, for such purposes,
irrevocably submits to the jurisdiction of such courts.
25.3 PROCESS AGENT: The Mortgages Trustee irrevocably and unconditionally
appoints Mourant & Co. Capital (SPV) Limited at ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ or otherwise at its registered
office for the time being as its agent for service of process in England
in respect of any proceedings in respect of this Agreement and undertakes
that in the event of Mourant & Co. Capital (SPV) Limited ceasing so to act
it will appoint another person with a registered office in London as its
agent for service of process.
25.4 FORUM: Each of the parties hereto irrevocably waives any objection which
it might now or hereafter have to the courts of England being nominated as
the forum to hear and determine any Proceedings and to settle any
disputes, and agrees not to claim that any such court is not a convenient
or appropriate forum.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed the day
and year first before written.
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SCHEDULE 1
THE CASH MANAGEMENT SERVICES
The Cash Manager shall:
(a) make the determinations set out in Schedule 2 hereto;
(b) invest sums, if any, standing to the credit of the Funding Transaction
Account in short-term Authorised Investments as determined by Funding
and, if applicable, the Security Trustee;
(c) invest sums, if any, standing to the credit of the Mortgages Trustee
Transaction Account in short-term Authorised Investments as determined
by the Mortgages Trustee and, if applicable, the Security Trustee;
(d) maintain the Funding Principal Deficiency Ledger, and record (1) any
principal Losses on the Mortgage Loans allocated to Funding pursuant
to the terms of the Mortgages Trust and (2) to record the application
of Funding Available Principal Receipts to any Issuer to fund the
Issuer Liquidity Reserve Fund of any Issuer.
(e) provide the Mortgages Trustee, Funding, the Security Trustee (upon its
request) and the Rating Agencies with quarterly reports in relation to
the Mortgages Trustee and Funding as set forth on Schedule 3;
(f) operate the Mortgages Trustee Transaction Account, the Mortgages
Trustee GIC Account, the Funding GIC Account, any Funding (Issuer) GIC
Account and the Funding Transaction Account and ensure that payments
are made into and from such accounts in accordance with this
Agreement, the Mortgages Trust Deed, the Funding Deed of Charge, the
Bank Account Agreement, any Funding (Issuer) Bank Account Agreement,
the Mortgages Trustee Guaranteed Investment Contract, the Funding
Guaranteed Investment Contract, any Funding (Issuer) Guaranteed
Investment Contract and any other applicable Transaction Document,
PROVIDED HOWEVER, that nothing herein shall require the Cash Manager
to make funds available to the Mortgages Trustee or Funding to enable
such payments to be made other than as expressly required by the
provisions of this Agreement;
(g) in relation to the payments to be made to each Issuer, make
withdrawals under the Issuer Reserve Fund, if required;
(h) in relation to the payments to be made to each Issuer, make any
required withdrawals under the Issuer Liquidity Reserve Fund;
(i) maintain any Issuer Reserve Fund Ledger, and record the amount
credited to any Issuer Reserve Fund on the Initial Closing Date, and
subsequent withdrawals and deposits in respect of any Issuer Reserve
Fund;
29
(j) maintain any Issuer Liquidity Reserve Ledger, if any, and record the
amount credited to any Issuer Liquidity Reserve Fund from time to
time, and subsequent withdrawals and deposits in respect of any Issuer
Liquidity Reserve Fund;
(k) keep records for all taxation purposes (including, without limitation
VAT);
(l) subject to any applicable law, assist the auditors of the Mortgages
Trustee and Funding and provide such information to them as they may
reasonably request for the purpose of carrying out their duties as
auditors;
(m) make all filings, give all notices and make all registrations and
other notifications required in the day-to-day operation of the
respective businesses of the Mortgages Trustee and Funding or required
to be given by the Mortgages Trustee or Funding pursuant to the
Transaction Documents;
(n) arrange for all payments due to be made by the Mortgages Trustee
and/or Funding under any of the Transaction Documents, PROVIDED THAT
such monies are at the relevant time available to the Mortgages
Trustee and/or Funding and PROVIDED FURTHER that nothing herein shall
constitute a guarantee by the Cash Manager of all or any of the
obligations of the Mortgages Trustee or Funding under any of the
Transaction Documents;
(o) without prejudice to the role of and in conjunction with the Corporate
Services Provider to Funding and the Mortgages Trustee under the
relevant Corporate Services Agreement, keep general books of account
and records of the Mortgages Trustee and Funding; provide accounting
services, including reviewing receipts and payments, supervising and
assisting in the preparation of interim statements and final accounts
and supervising and assisting in the preparation of Tax returns;
(p) without prejudice to the role of and in conjunction with the Corporate
Services Provider to Funding and the Mortgages Trustee under the
relevant Corporate Services Agreement, provide or procure the
provision of company secretarial and administration services to the
Mortgages Trustee and Funding including the keeping of all registers
and the making of all returns and filings required by applicable law
or by U.S., U.K. or Jersey regulatory authorities (including the
Securities and Exchange Commission), co-operate in the convening of
board and general meetings and provide registered office facilities;
(q) itself on behalf of the Mortgages Trustee and Funding, PROVIDED THAT
such monies are at the relevant time available to the Mortgages
Trustee and Funding, pay all the out-of-pocket expenses of the
Mortgages Trustee and Funding, incurred by the Cash Manager on behalf
of the Mortgages Trustee and Funding in the performance of the Cash
Manager's duties hereunder including without limitation:
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(i) all Taxes which may be due or payable by the Mortgages Trustee
and Funding;
(ii) all registration, transfer, filing and other fees and other
charges payable in respect of the sale by the Seller of the
Mortgage Portfolio to the Mortgages Trustee;
(iii) all necessary filing and other fees in compliance with
regulatory requirements;
(iv) all legal and audit fees and other professional advisory fees;
(v) all communication expenses including postage, courier and
telephone charges; and
(vi) all premiums payable by the Mortgages Trustee in respect of the
Insurance Policies;
(r) at the request of Funding (and following the enforcement of the
Funding Security, with the prior written consent of the Security
Trustee), the Cash Manager may invest monies standing from time to
time to the credit of the Funding GIC Account or any Funding (Issuer)
GIC Account (including any amounts credited thereto and representing
amounts standing to the credit of such Issuer Liquidity Reserve Fund,
if any) in Authorised Investments, subject to the following
provisions:
(i) any such Authorised Investment shall be made in the joint names
of Funding and the Security Trustee;
(ii) any costs properly and reasonably incurred in making and changing
Authorised Investments will be reimbursed to the Cash Manager and
the Security Trustee by Funding;
(iii) all income or proceeds following the disposal or maturity of
Authorised Investments shall be credited to the Funding GIC
Account or any Funding (Issuer) GIC Account, as applicable; and
(iv) following the enforcement of the Funding Security no such
investment may be made without the prior written consent of the
Security Trustee.
The Security Trustee and the Cash Manager shall not be responsible
(save where any loss results from the Security Trustee's or the Cash
Manager's own fraud, wilful default or gross negligence or that of its
officers or employees) for any loss occasioned by reason of any such
Authorised Investments whether by depreciation in value or otherwise
provided that such Authorised Investments were made in accordance with
the above provisions; and
(s) take such other action or provide any other Cash Management Services
as is required in the Transaction Documents.
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SCHEDULE 2
CASH MANAGEMENT AND MAINTENANCE OF LEDGERS
1. DETERMINATION
(a) On or before each Distribution Date based on the aggregate amount of
monies standing to the credit of the Mortgages Trustee Transaction
Account and the Mortgages Trustee GIC Account as at close of business
on the preceding day, the Cash Manager shall determine each of the
following:
(i) the amount of Principal Receipts and Revenue Receipts received
during the immediately preceding Trust Calculation Period and
during each Interim Calculation Period (as defined in the
Mortgages Trust Deed), if any, during such immediately preceding
Trust Calculation Period;
(ii) the amount of any Mortgages Trustee Available Revenue Receipts
received during the immediately preceding Trust Calculation
Period;
(iii) the amount of any net credit on the Non-Flexible Overpayments
Sub Ledger;
(iv) the amount of Mortgages Trustee Available Revenue Receipts and
Principal Receipts to be distributed to Funding and to the Seller
on such Distribution Date;
(v) whether each of the Issuer Arrears Test, the Issuer Reserve
Requirement and the Subordinated Principal Test is satisfied on
such date and shall promptly notify the Issuer Cash Manager of
such determinations; and
(vi) the various amounts, balances and rates to be calculated in
accordance with any Basis Rate Swap and/or any Currency Rate
Swap, and shall promptly notify the Issuer, the First Issuer Cash
Manager, the Note Trustee and each Calculation Agent (as defined
in each Basis Rate Swap Agreement and Currency Swap Agreement) of
such amounts, balances and rates.
(b) On or before each Distribution Date (and, in respect of Clause
1(b)(ii) below, on each Assignment Date), the Cash Manager shall
determine each of the following:
(i) the amount of any Losses incurred on the Mortgage Loans during
the immediately preceding Trust Calculation Period and during
each Interim Calculation Period (as defined in the Mortgages
Trust Deed), if any, during such immediately preceding Trust
Calculation Period;
32
(ii) (the Funding Share, the Seller Share, the Funding Share
Percentage and the Seller Share Percentage in accordance with
Clause 8 (ADJUSTMENT OF FUNDING SHARE PERCENTAGE AND SELLER SHARE
PERCENTAGE) of the Mortgages Trust Deed;
(iii) to the extent the Seller has assigned New Mortgage Loans to the
Mortgages Trustee during the immediately preceding Trust
Calculation Period, the Weighted Average Funding Share Percentage
and the Weighted Average Seller Share Percentage (in respect of
Revenue Receipts, Principal Receipts and Losses) in accordance
with Clause 8.3 (WEIGHTED AVERAGE FUNDING SHARE PERCENTAGE) and
Clause 8.7 (WEIGHTED AVERAGE SELLER SHARE PERCENTAGE),
respectively, of the Mortgages Trust Deed; and
(iv) the Minimum Seller Share in accordance with Clause 9.2
(FLUCTUATION OF MINIMUM SELLER SHARE ON EACH DISTRIBUTION DATE)
of the Mortgages Trust Deed.
(c) No later than each Distribution Date immediately prior to each Payment
Date, the Cash Manager shall determine each of the following:
(i) the amount of any Funding Available Revenue Receipts to be
applied on the relevant Payment Date in accordance with the
Funding Pre-Enforcement Revenue Priority of Payments; and
(ii) the amount of any Funding Available Principal Receipts to be
applied on the following Payment Date in accordance the Funding
Pre-Enforcement Principal Priority of Payments.
(d) No later than each Distribution Date immediately prior to each Payment
Date, the Cash Manager shall determine each of the following:
(i) the amount of any Issuer Allocable Revenue Receipts for each
Issuer to be applied on the relevant Payment Date in accordance
with the Funding Pre-Enforcement Revenue Priority of Payments;
(ii) the amount of any Issuer Allocable Principal Receipts for each
Issuer to be applied on the following Payment Date in accordance
the Funding Pre-Enforcement Principal Priority of Payments; and
(iii) the amount of any Shared Issuer Revenue Receipts and Shared
Issuer Principal Receipts to be applied on the following Payment
Date in accordance with the Funding Priority of Payments.
(e) The Cash Manager shall make all the determinations referred to in
paragraphs 1(a) to (d) herein on the basis of the following
assumptions:
(i) that the amount of any Losses will not increase;
33
(ii) that any debit balance on any Issuer Principal Deficiency Ledger
will not increase; and
(iii) such other assumptions (including without limitation as to the
amount of any payments or provisions to be made in accordance
with the applicable Funding Priority of Payments during the
period from and including the Distribution Date immediately prior
to each Payment Date to and excluding such Payment Date) as the
Cash Manager considers appropriate.
The Cash Manager shall notify the Mortgages Trustee, Funding and the
Security Trustee on request of any such other assumptions and shall
take account of any representations made by the Mortgages Trustee,
Funding and the Security Trustee (as the case may be) in relation
thereto.
(f) The Cash Manager shall:
(i) make or procure to be made all returns and filings required to be
made by Funding and the Mortgages Trustee;
(ii) itself on behalf of Funding and the Mortgages Trustee, provided
that such moneys are at the relevant time available to Funding
and the Mortgages Trustee, pay all out-of-pocket expenses of
Funding and the Mortgages Trustee incurred in the performance of
the Cash Manager's duties hereunder including, without
limitation, all fees payable to the London Stock Exchange
Limited.
(g) The Cash Manager shall, if necessary, perform all currency conversions
free of charge, cost or expense at the relevant exchange rate (for the
purposes of any calculations referred to above, (i) all percentages
resulting from such calculations will be rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point (e.g. 9.876541%
being rounded down to 9.87654% and (ii) any currency amounts used in
or resulting from such calculations will be rounded in accordance with
the relevant market practice).
(h) Each determination made in accordance with this paragraph 1 shall (in
the absence of bad faith, wilful default, negligence and manifest
error) be final and binding on all persons.
2. NOTIFICATION OF DETERMINATIONS
The Cash Manager shall cause each determination of Principal Receipts,
Revenue Receipts, Losses, Mortgages Trustee Available Revenue Receipts, the
Funding Share, the Seller Share, the Funding Share Percentage, the Seller
Share Percentage, the Weighted Average Funding Share Percentage, the
Weighted Average Seller Share Percentage and the Minimum Seller Share to be
notified forthwith to the Mortgages Trustee, the Beneficiaries and the
Security Trustee and will cause each determination of Funding Available
Principal Receipts and Funding Available Revenue Receipts to be notified
forthwith to Funding, the Security Trustee and the Issuer Cash Manager.
34
3. PRIORITY OF PAYMENTS FOR MORTGAGES TRUSTEE AVAILABLE REVENUE RECEIPTS
The Cash Manager shall (unless the intended recipient of the relevant
payment agrees otherwise) on each Distribution Date withdraw Cash from the
Mortgages Trustee GIC Account and/or, in the case of sums to be provided
for, retain Cash in the amounts required (to the extent that such
withdrawal does not cause the Mortgages Trustee GIC Account to become
overdrawn or, if any amounts are retained by way of provision for the
relevant liability and are thus not withdrawn, to the extent that
withdrawal of those amounts that are withdrawn would not, if such retained
amounts were also to be withdrawn, cause the balance on the Mortgages
Trustee GIC Account to become overdrawn). The aggregate amount of the
withdrawal shall equal the Mortgages Trustee Available Revenue Receipts on
each Distribution Date. The withdrawal shall be used to make the payments
and provisions in the order of priority set out in Clause 10.2
(DISTRIBUTION OF MORTGAGES TRUSTEE AVAILABLE REVENUE RECEIPTS) of the
Mortgages Trust Deed (in each case only if and to the extent that payments
or provisions of a higher priority have been made in full).
4. PRIORITY OF PAYMENTS FOR MORTGAGES TRUSTEE PRINCIPAL RECEIPTS
The Cash Manager shall (unless the intended recipient of the relevant
payment agrees otherwise) on each Distribution Date, (i) withdraw Cash from
the Mortgages Trustee GIC Account in an amount equal to the Mortgages
Trustee Principal Receipts (to the extent only that such withdrawal does
not cause the Mortgages Trustee GIC Account to become overdrawn or, if any
amounts are retained by way of provision for the relevant liability and are
thus not withdrawn, to the extent that withdrawal of those amounts that are
withdrawn would not, if such retained amounts were also to be withdrawn,
cause the balance on the Mortgages Trustee GIC Account to become overdrawn)
to make the payments in the order of priority set out in Clause 11 of the
Mortgages Trust Deed (DISTRIBUTION OF PRINCIPAL RECEIPTS) and/or, (ii)
until such time as the same may be distributed in accordance with the
Mortgages Trust Deed, retain Cash in the Mortgages Trustee GIC Account in
the amount of any net credit on the Non-Flexible Overpayments Sub Ledger.
5. PRIORITY OF PAYMENTS FOR FUNDING AVAILABLE REVENUE RECEIPTS
Funding Available Revenue Receipts (including Issuer Allocable Revenue
Receipts) will be applied by the Cash Manager on each Payment Date until
enforcement of the Funding Security pursuant to the Funding Deed of Charge
or until such time as there are no outstanding Funding Secured Obligations,
in making such payments and provisions in the order of priority set out in
the Funding Pre-Enforcement Revenue Priority of Payments (in each case only
if and to the extent that payments or provisions of a higher priority have
been made in full) as set out in Part I of Schedule 3 to the Funding Deed
of Charge (as the same may be amended, varied or restated from time to
time).
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6. PRIORITY OF PAYMENTS FOR FUNDING AVAILABLE PRINCIPAL RECEIPTS
Funding Available Principal Receipts (including Issuer Allocable Principal
Receipts) will be applied by the Cash Manager on each Payment Date until
enforcement of the Funding Security pursuant to the Funding Deed of Charge
or until such time as there are no outstanding Funding Secured Obligations,
in making such payments and provisions in the order of priority (in each
case only if and to the extent that payments or provisions of a higher
priority have been made in full) set out in Part II of Schedule 3 to the
Funding Deed of Charge.
7. OTHER PAYMENTS
Each of the Beneficiaries and the Cash Manager agrees, and the Mortgages
Trustee concurs, that (save as otherwise specified below) the following
payments may be made from the Mortgages Trustee GIC Account (to the extent
that withdrawal of those amounts would not cause the balance of the
Mortgages Trustee GIC Account to become overdrawn) on any date:
(a) if any amount has been received from a Borrower for the express
purpose of payment being made to a third party for the provision of a
service (including giving insurance cover) to any of that Borrower or
the Seller or the Mortgages Trustee, to pay such amount when due to
such third party or, in the case of the payment of an insurance
premium, where such third party and the Cash Manager have agreed that
payment of commission should be made by deduction from such insurance
premium, to pay such amount less such commissions when due to such
third party and to pay such commission to the Cash Manager and to pay
any premiums in respect of any Insurance Policy or other insurance
policy relating to any Mortgage Loan comprised in the Mortgage
Portfolio;
(b) to pay to any person (including the Cash Manager) any amounts due
arising from any unintentional overpayment (and not an Overpayment) by
any person or arising from any reimbursement by any person of any such
overpayment (including, for the avoidance of doubt, where arising from
the failure of a direct debit);
(c) to pay when due (but subject to any right to refuse or withhold
payment or of set-off that has arisen by reason of the Borrower's
breach of the terms of the relevant Mortgage or Mortgage Loan) any
amount payable to a Borrower under the terms of the Mortgage or the
Mortgage Loan to which that Borrower is a party, and to pay when due
any amount payable by the Mortgages Trustee to the Seller pursuant to
Clauses 3.2, 4.5 and 5.2 of the Mortgage Sale Agreement;
(d) to pay to the Seller any amounts (including, for the avoidance of
doubt, any Early Repayment Charges) received and held by the Mortgages
Trustee on trust for the Seller pursuant to Clause 5 (TRUST OF MONIES)
of the Mortgage Sale Agreement;
36
(e) to pay when due and payable any amounts due and payable by the
Mortgages Trustee to third parties and incurred without breach by the
Mortgages Trustee of the Mortgages Trust Deed and not provided for
payment elsewhere in this paragraph 7;
(f) to refund any amounts due arising from the rejection of any payments
in respect of a Mortgage Loan and any other amounts which have not
been received by the Mortgages Trustee as cleared funds; and
(g) to refund to the Seller any amounts which represent amounts received
from Borrowers but which do not form part of the Mortgage Account or
comprise unpaid interest as at the relevant Closing Date and which are
amounts owed by such Borrowers in respect of any period prior to the
relevant Closing Date as and when identified by the Cash Manager and
if a Borrower fails to pay the full amount that it owes, the Cash
Manager shall be obliged to refund to the Seller only such portion of
the amount which relates to any period prior to the relevant Closing
Date.
8. USE OF LEDGERS
The Cash Manager shall forthwith record monies received or payments made by
it on behalf of the Mortgages Trustee or Funding in the ledgers in the
manner set out in this Agreement. If, at any time, the Cash Manager is in
any doubt as to which ledger a particular amount should be credited or
debited, it shall consult with the Security Trustee thereon.
Except in the case of the Funding Principal Deficiency Ledger, a debit item
shall only be made in respect of any of the Mortgages Trustee Ledgers and
the Funding Ledgers and the corresponding payment or transfer (if any) may
only be made from the Mortgages Trustee Transaction Account, the Mortgages
Trustee GIC Account, the Funding GIC Account, the Funding Transaction
Account or any Funding (Issuer) GIC Account, as the case may be, to the
extent that such entry does not cause the relevant ledger to have a debit
balance. In the case of the Funding Principal Deficiency Ledger, a credit
item shall only be made to the extent that such entry does not cause such
ledger to have a credit balance.
9. REVENUE LEDGER
The Cash Manager shall ensure that:
(a) the following amounts shall be credited to the Revenue Ledger:
(i) all Revenue Receipts; and
(ii) all interest received by the Mortgages Trustee on the Mortgages
Trustee Transaction Account and the Mortgages Trustee GIC
Account; and
37
(b) any payment or provision made under paragraph 3 herein shall be
debited to the Revenue Ledger.
10. PRINCIPAL LEDGER
The Cash Manager shall ensure that:
(a) all Principal Receipts shall be credited to the Principal Ledger; and
(b) any payment or provision made under paragraph 4 herein shall be
debited to the Principal Ledger.
11. LOSSES LEDGER
The Cash Manager shall ensure that all Losses shall be recorded in the
Losses Ledger.
12. FUNDING SHARE/SELLER SHARE LEDGER
The Cash Manager shall ensure that the Current Funding Share and the
Current Funding Share Percentage of the Trust Property and the Current
Seller Share and the Current Seller Share Percentage of the Trust Property
are recorded in the Funding Share/Seller Share Ledger on the Initial
Closing Date and thereafter on each Distribution Date. In addition to the
foregoing, if the Seller has assigned New Mortgage Loans to the Mortgages
Trustee during the Trust Calculation Period immediately preceding a
Distribution Date, the Cash Manager shall ensure that the Current Funding
Share and the Current Funding Share Percentage of the Trust Property and
the Current Seller Share and the Current Seller Share Percentage of the
Trust Property, as recalculated on each Assignment Date, and the Weighted
Average Funding Share Percentage and the Weighted Average Seller Share
Percentage, as calculated on such Distribution Date in respect of Revenue
Receipts, Principal Receipts and Losses, are recorded on the Funding
Share/Seller Share Ledger on each such Distribution Date.
13. FUNDING REVENUE LEDGER
The Cash Manager shall ensure that:
(c) the following amounts shall be credited to the Funding Revenue Ledger:
(i) all Funding Revenue Receipts;
(ii) all interest received by Funding in respect of the Funding Bank
Accounts, including in respect of any Funding (Issuer) GIC
Account, provided that the Cash Manager shall keep a separate
record in respect of each Issuer of the amount of interest
received by Funding in respect of the Funding (Issuer) GIC
Account of such Issuer;
(iii) all amounts received by Funding representing income on any of
Funding's Authorised Investments; and
38
(iv) any amount debited to the Funding Principal Ledger under
paragraph 16(b)(ii) herein; and
(d) any payment or provision made under paragraph 5 above shall be debited
to the Funding Revenue Ledger.
14. ISSUER RESERVE FUND LEDGER
If an Issuer Reserve Fund is required to be established, the Cash Manager
will record on such Issuer Reserve Fund Ledger:
(a) an amount initially from that portion of Funding's Contribution to the
Mortgages Trust which will be retained by Funding and not paid to the
Mortgages Trustee and deposited into the related Funding (Issuer) GIC
Account;
(b) amounts credited to the relevant Issuer Liquidity Reserve Ledger in
accordance with the Funding Priority of Payments above; and
(c) amounts debited to an Issuer Liquidity Reserve Ledger in order to be
applied in accordance with the Funding Priority of Payments.
15. ISSUER LIQUIDITY RESERVE LEDGER
If an Issuer Liquidity Reserve Fund is required to be established, the Cash
Manager will record on such Issuer Liquidity Reserve Ledger:
(a) an amount funded initially from Funding Available Principal Receipts
which are allocated to the relevant Issuer in accordance with the
Funding Pre-Enforcement Principal Priority of Payments up to the
amount of the Issuer Liquidity Reserve Required Amount and such amount
will be deposited in the relevant Funding (Issuer) GIC Account;
(b) amounts credited to the relevant Issuer Liquidity Reserve Ledger in
accordance with the Funding Priority of Payments above; and
(c) amounts debited to an Issuer Liquidity Reserve Ledger in order to be
applied in accordance with Funding Priority of Payments.
16. FUNDING PRINCIPAL LEDGER
Without prejudice to paragraph 18 below, the Cash Manager shall ensure
that:
(a) the following amounts shall be credited to the Funding Principal
Ledger:
(i) all Funding Principal Receipts; and
(ii) amounts credited to the Funding Principal Deficiency Ledger under
paragraphs 8 and 17 herein; and
39
(b) the following amounts shall be debited to the Funding Principal
Ledger:
(i) the aggregate amount of principal repaid on the Intercompany Loan
Agreement pursuant to paragraph 6 herein.
17. FUNDING PRINCIPAL DEFICIENCY LEDGER
The Cash Manager will establish a Principal Deficiency Ledger for Funding
and ensure that:
(a) on each occasion on which an Issuer Principal Deficiency Ledger is
credited with respect to (1) Losses and (2) Issuer Liquidity Reserve
Funds, the Funding Principal Deficiency Ledger is credited with
respect to such Issuer; and
(b) on each occasion on which the principal deficiency of an Issuer is
reduced with respect to a credit described in (a) above, the Funding
Principal Deficiency Ledger will record a parallel reduction in
aggregate principal deficiencies.
18. FUNDING RESERVE LEDGER
(a) An amount initially drawn from excess Revenue Receipts distributed to
Funding from the Mortgages Trust and deposited in the Funding GIC
Account will be credited to the Funding Reserve Ledger.
(b) Amounts shall be credited to the Funding Reserve Ledger in accordance
with the Funding Priority of Payments above.
(c) Amounts shall be debited to the Funding Reserve Ledger on each Payment
Date in order to be applied in accordance with the Funding Priority of
Payments.
19. INTERCOMPANY LOAN LEDGER
The Cash Manager shall ensure that all payments of interest and repayments
of principal on each of the Intercompany Loans are recorded in the
Intercompany Loan Ledger.
20. OVERPAYMENTS LEDGER
The Cash Manager shall ensure that:
(a) with respect to the Non-Flexible Mortgage Loans:
(i) there shall be credited to the Non-Flexible Overpayments Sub
Ledger all Overpayments (not being Capital Payments) made on
Non-Flexible Mortgage Loans; and
40
(ii) there shall be debited from the Non-Flexible Overpayments Sub
Ledger:
(A) all underpayments made by any Borrower on Non-Flexible
Mortgage Loans which do not exceed the amount of the
Overpayment previously made by such Borrower in the same
calendar year; and
(B) on the first Trust Determination Date of each calendar year,
all outstanding credits made to the Non-Flexible
Overpayments Sub Ledger during the previous calendar year;
and
(b) all Overpayments on the Flexible Mortgage Loans are recorded in the
Flexible Overpayments Sub Ledger.
21. NON-FLEXIBLE UNDERPAYMENTS LEDGER
The Cash Manager shall ensure that all amounts debited from the
Overpayments Ledger under paragraph 20(a)(ii) above shall be recorded on
the Non-Flexible Underpayments Ledger.
22. RE-DRAWS LEDGER
The Cash Manager shall ensure that, with respect to the Flexible Mortgage
Loans:
(a) all Non-Cash Re-Draws are recorded in the Non-Cash Re-Draws Sub
Ledger; and
(b) all Cash Re-Draws are recorded in the Cash Re-Draws Sub Ledger.
23. RECORDS
The Cash Manager shall ensure that a separate record is kept of any amount
drawn under any Issuer Reserve Fund or Issuer Liquidity Reserve Fund.
41
SCHEDULE 3A
FORM OF MORTGAGES TRUSTEE QUARTERLY REPORT
GRANITE FINANCE TRUSTEES LIMITED
MEMORANDUM OF ACCOUNT
Period Ended This Quarter Prior Quarter
(pound) 000's (pound) 000's
------------- -------------
Fees Receivable
Fees Payable
Operating Expenses
Taxation
Dividend 0 0
Retained profit brought forward 0 0
------------ -------------
Retained profit for the year 0 0
============ =============
GRANITE FINANCE TRUSTEES LIMITED
BALANCE SHEET
Period Ended
(pound) (pound)
------- -------
Fixed Asset Investments
Current Assets
New Mortgage Loans 0
Interest Receivable 0
Other debtors 0
Cash at Bank 0
------------
0
------------
Creditors: Amounts falling due within
one year
Accruals 0
Interest Payable Accrual 0
Taxation 0
============
0
============
Net current assets 0
=============
Total Assets less current liabilities 0
=============
Share Capital 0
Reserves 0
=============
0
=============
Diff 0
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SCHEDULE 3B
FORM OF FUNDING QUARTERLY REPORT
GRANITE FINANCE FUNDING LIMITED
PROFIT & LOSS ACCOUNT
Period Ended This Quarter Prior Quarter
(pound) 000's (pound) 000's
------------- -------------
Interest Receivable
-- Mortgages
Interest Receivable
-- Cash/ Authorised
Investments
0 0
Interest Payable
-- Intercompany Loan
Interest Payable
0 0
Net Operating Income 0 0
Other Income
Operating Expenses
Deferred Consideration
Profit/loss on 0 0
ordinary activities
before tax
Taxation
Profit/loss on 0 0
ordinary activities
after tax
Dividend 0 0
Retained profit 0 0
brought forward
Retained profit for 0 0
the year
43
GRANITE FINANCE FUNDING LIMITED
BALANCE SHEET
Period Ended
(pound)000's (pound)000's
------------ ------------
Fixed Asset Investments
Beneficial Interest in Mortgage Portfolio 0
Current Assets
Interest Receivable 0
Deferred Expenditure (costs of Securing) 0
Other debtors 0
Cash at Bank 0
Creditors: Amounts falling due within one year
Accruals 0
Deferred Consideration Creditor 0
Interest Payable Accrual 0
Taxation 0
-----------
0
-----------
Net current assets 0
Creditors: Amounts falling due after one year
Intercompany Loan 0
Start-up Loan(s) (specify) 0
-----------
Total Assets less current liabilities 0
===========
Share Capital 0
Reserves 0
-----------
0
===========
Diff 0
44
GRANITE FINANCE FUNDING LIMITED
NOTES TO BALANCE SHEET
Period Ended
Balance on Cash Accumulation Ledger 0
Available Credit Enhancement
Reserve Fund at closing
Last Quarter Closing Reserve Fund
Drawings to make a bullet repayment
Other drawings
Closing Reserve Balance
Target Reserve Fund
Issuer Principal Deficiency Ledger AAA AA BBB
Opening PDL Balance 0 0 0
Losses this Quarter 0 0 0
PDL top up from Revenue Income 0 0 0
Closing PDL Balance 0 0 0
Subordinated Loan Outstanding
Initial Balance
Last Quarter Closing Outstanding
Accrued Interest
Repayments Made
Closing Balance
45
SCHEDULE 4
CASH MANAGER REPRESENTATIONS AND WARRANTIES
The Cash Manager makes the following representations and warranties to each of
the Mortgages Trustee, Funding and the Security Trustee:
1. STATUS: It is a public limited company duly incorporated, validly existing
and registered under the laws of the jurisdiction in which it is
incorporated, capable of being sued in its own right and not subject to any
immunity from any proceedings, and it has the power to own its property and
assets and to carry on its business as it is being conducted.
2. POWERS AND AUTHORITY: It has the power to enter into, perform and deliver,
and has taken all necessary corporate and other action to authorise the
execution, delivery and performance by it of each of the Transaction
Documents to which it is or will be a party, and each such Transaction
Document has been duly executed and delivered by it.
3. LEGAL VALIDITY: Each Transaction Document to which it is or will be a party
constitutes or when executed in accordance with its terms will constitute,
a legal, valid and binding obligation.
4. NON-CONFLICT: The execution by it of each of the Transaction Documents to
which it is a party and the exercise by it of its rights and the
performance of its obligations under such Transaction Documents will not:
(a) conflict with any document which is binding upon it or any of its
assets;
(b) conflict with its constitutional documents; or
(c) conflict with any law, regulation or official or judicial order of any
government, governmental body or court, domestic or foreign, having
jurisdiction over it.
5. NO LITIGATION: It is not a party to any material litigation, arbitration or
administrative proceedings and, to its knowledge, no material litigation,
arbitration or administrative proceedings are pending or threatened against
it.
6. CONSENTS AND LICENSES: All governmental consents, licences and other
approvals and authorisations required in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Transaction Documents have been obtained or effected
(as appropriate) and are in full force and effect.
7. SOLVENCY: No Insolvency Event has occurred in respect of the Cash Manager,
and the Cash Manager is not insolvent.
8. FINANCIAL STATEMENTS: The most recent financial statements of the Cash
Manager:
46
(a) were prepared in accordance with accounting principles generally
accepted in England and Wales consistently applied;
(b) disclose all liabilities (contingent or otherwise) and all unrealised
and or anticipated losses of the Cash Manager; and
(c) save as disclosed therein, give a true and fair view of the financial
condition and operations of the Cash Manager during the relevant
financial year.
9. NO ADVERSE CHANGE: Since the date as of which the most recent financial
statements of the Cash Manager were stated to be prepared, there has been:
(a) no significant change in the financial position of the Cash Manager;
and
(b) no material adverse change in the financial position or prospects of
the Cash Manager.
10. RANKING OF CLAIMS:
Under the laws of England and Wales in force as at the date of making this
representation, claims against the Cash Manager under the Transaction
Documents will rank at least PARI PASSU with the claims of all its other
unsecured and unsubordinated creditors, save those whose claims are
preferred solely by any bankruptcy, liquidation or other similar laws of
general application.
11. INFORMATION IN PROSPECTUS AND OFFERING CIRCULAR:
All information in the Prospectus and the Offering Circular with regard to
the Cash Manager are true and accurate in all material respects and not
misleading in any material respect.
The Cash Manager has made all proper inquiries to ascertain and to verify
the foregoing.
47
EXECUTION PAGE
AS CASH MANAGER
EXECUTED for and on behalf of )
NORTHERN ROCK PLC )
by: )
--------------------------
Authorised Signatory
Name:
Title:
AS SELLER
EXECUTED for and on behalf of )
NORTHERN ROCK PLC )
by: )
--------------------------
Authorised Signatory
Name:
Title:
EXECUTED for and on behalf of )
GRANITE FINANCE TRUSTEES LIMITED )
by: )
--------------------------
Authorised Signatory
Name:
Title:
EXECUTED for and on behalf of )
GRANITE FINANCE FUNDING LIMITED )
by: )
--------------------------
Authorised Signatory
Name:
Title:
48
EXECUTED for and on behalf of )
THE BANK OF NEW YORK )
by: )
--------------------------
Authorised Signatory
Name:
Title:
49
