DATED 20 MARCH 2002
GRANITE FINANCE FUNDING LIMITED
THE BANK OF NEW YORK
as Security Trustee
-and -
CITIBANK, N.A.
as Agent Bank
--------------------------------------------------------------------------------
SECOND AMENDED
INTERCOMPANY LOAN TERMS AND CONDITIONS
--------------------------------------------------------------------------------
SIDLEY ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
TELEPHONE ▇▇▇ ▇▇▇▇ ▇▇▇▇
FACSIMILE 020 7626 7937
REF:528005V4
CONTENTS
CLAUSE PAGE NO.
------ --------
1. Interpretation..........................................................1
2. The Intercompany Loans..................................................1
3. Purpose.................................................................3
4. Limited Recourse........................................................3
5. Utilisation of the Intercompany Loans...................................4
6. Interest................................................................5
7. Repayment...............................................................6
8. Prepayment..............................................................7
9. Taxes...................................................................8
10. Illegality..............................................................8
11. Mitigation..............................................................9
12. Representations and Warranties of Funding...............................9
13. Covenants..............................................................11
14. Default................................................................14
15. Default Interest and Indemnity.........................................16
16. Payments...............................................................17
17. Entrenched Provisions..................................................18
18. Further Provisions.....................................................18
19. Redenomination.........................................................20
20. Governing Law..........................................................20
21. Submission to Jurisdiction.............................................20
22. Assignment.............................................................20
SCHEDULE 1 SCHEDULE 1NOTICE OF DRAWDOWN OF INTERCOMPANY LOAN...............21
SCHEDULE 2 SOLVENCY CERTIFICATE............................................22
SCHEDULE 3 FORM OF INTERCOMPANY LOAN CONFIRMATION..........................25
i
THIS SECOND AMENDED INTERCOMPANY LOAN TERMS AND CONDITIONS DATED 20 MARCH 2002
FURTHER AMENDS AND RESTATES THE INTERCOMPANY LOAN TERMS AND CONDITIONS DATED 26
MARCH 2001
WHEREAS:
(A) On 26 March 2001 Granite Mortgages 01-1 plc (the "FIRST ISSUER") shall make
a loan to Granite Finance Funding Limited ("FUNDING") on the terms set out
in these terms and conditions (the "INTERCOMPANY LOAN TERMS AND
CONDITIONS") and the separate intercompany loan confirmation dated 26 March
2001 (the "FIRST ISSUER INTERCOMPANY LOAN CONFIRMATION" and, together with
the Intercompany Loan Terms and Conditions, the "FIRST ISSUER INTERCOMPANY
LOAN AGREEMENT").
(B) From time to time Funding may enter into new intercompany loan agreements
with New Issuers which shall be made on the terms set out in these
Intercompany Loan Terms and Conditions (as the same may be amended from
time to time in the manner set out herein) and the relevant new
intercompany loan confirmation (each a "NEW INTERCOMPANY LOAN CONFIRMATION"
and, together with these Intercompany Loan Terms and Conditions, a "NEW
INTERCOMPANY LOAN AGREEMENT").
(C) References in these Intercompany Loan Terms and Conditions to an "ISSUER"
shall refer to the First Issuer and any New Issuer from time to time.
References in these Intercompany Loan Terms and Conditions to an
"INTERCOMPANY LOAN AGREEMENT" shall refer to the First Issuer Intercompany
Loan Agreement and any New Intercompany Loan Agreement entered into from
time to time. References in these Intercompany Loan Terms and Conditions to
an "INTERCOMPANY LOAN CONFIRMATION" shall refer to the First Issuer
Intercompany Loan Confirmation and any New Intercompany Loan Confirmation
entered into from time to time.
1. INTERPRETATION
1.1. The provisions of the Master Definitions Schedule as amended and restated
by (and appearing in Appendix 1 to) the Master Definitions Schedule Second
Amendment and Restatement Deed made on 20 March 2002 between, among others,
the parties hereto (as the same have been and may be amended, varied or
supplemented from time to time with the consent of the parties hereto) are
expressly and specifically incorporated into and shall apply to these
Intercompany Loan Terms and Conditions. References in these Intercompany
Loan Terms and Conditions to the Intercompany Loan Agreement shall include
references to these Intercompany Loan Terms and Conditions as incorporated
into the Intercompany Loan Agreement by way of reference and shall be
construed accordingly.
2. THE INTERCOMPANY LOANS
2.1 CONDITIONS PRECEDENT: Save as an Issuer and the Security Trustee may
otherwise agree, a related Intercompany Loan will not be available for
utilisation unless:
(a) Funding and such Issuer have signed an Intercompany Loan Confirmation
(generally in the form set out in Schedule 3 (Form of Intercompany
Loan Confirmation) to these Intercompany Loan Terms and Conditions);
(b) the Issuer has confirmed to Funding (with a copy of such confirmation
to the Security Trustee) that it or its advisers have received all of
the information and documents listed in Schedule 1 to the Intercompany
Loan Confirmation in form and substance satisfactory to the Issuer and
such Issuer's advisers;
(c) the conditions set out in Clause 5.1 (Drawdown conditions relating to
an Intercompany Loan) have been satisfied; and
(d) Funding has established in respect of any Issuer an Issuer Reserve
Fund, Issuer Liquidity Reserve Fund or any other reserve fund or
liquidity facility (and has established or procured the establishment
of appropriate ledgers therefor), to the extent required by the Rating
Agencies in connection with the drawing of an Intercompany Loan by
Funding from an Issuer and the issuance of Notes by such Issuer.
2.2 NEW INTERCOMPANY LOAN AGREEMENTS: Funding may at any time, by written
notice to the Security Trustee and the Rating Agencies, enter into a New
Intercompany Loan Agreement with a New Issuer and borrow additional money
thereunder (each a "NEW INTERCOMPANY LOAN"). Each New Intercompany Loan
will be financed by the issue of New Notes by the New Issuer, and will only
be permitted if the following conditions precedent are satisfied on the
Drawdown Date:
(a) the New Issuer has satisfied the conditions precedent set forth in
Clause 2.1 (Conditions precedent) hereof;
(b) the proceeds of the New Intercompany Loan are used by Funding in
accordance with Clause 3.1 (Purpose and Application of the
Intercompany Loan) hereof;
(c) each of the Rating Agencies confirms in writing to the Security
Trustee that there will not, as a result of the New Issuer issuing any
New Notes, be any adverse effect on (i) the then current ratings by
the Rating Agencies of the existing Notes of any Issuer, the proceeds
of which have been advanced to Funding pursuant to, inter alia, these
Intercompany Loan Terms and Conditions;
(d) no Intercompany Loan Event of Default under any Intercompany Loan
Agreement is continuing or unwaived at the relevant drawdown date;
(e) there is no debit balance on any Principal Deficiency Ledger as at the
relevant date specified above;
(f) Funding entering into, as required by the Rating Agencies or
otherwise, any additional agreements (including any new bank account
agreement and any new guaranteed
2
investment contract agreement, if required, in relation to any New
Issuer) as a result of entering into the New Intercompany Loan; and
(g) any other relevant conditions precedent specified in the Intercompany
Loan Confirmation.
3. PURPOSE
3.1 PURPOSE AND APPLICATION OF AN INTERCOMPANY LOAN: An Intercompany Loan shall
be used by Funding either:
(a) to pay to the Mortgages Trustee Funding's Initial Contribution for the
Funding Share in respect of any New Trust Property (which shall
increase the Funding Share of the Trust Property); and/or
(b) to fund a Further Contribution to the Mortgages Trustee in order to
increase the Funding Share of the existing Trust Property; and/or
(c) to refinance the existing debt of Funding, including any existing
Intercompany Loan; and/or
(d) to fund or partly fund the Issuer Reserve Fund of the relevant Issuer.
3.2 APPLICATION OF AMOUNTS: Without prejudice to the obligations of Funding
under this Clause 3, neither the Security Trustee nor any of the Funding
Secured Creditors shall be obliged to concern themselves as to the
application of amounts raised by Funding under an Intercompany Loan
Agreement.
4. LIMITED RECOURSE
4.1 RECOURSE LIMITED TO AVAILABLE FUNDS: Notwithstanding the terms of any other
provision in any Intercompany Loan Agreement, each of the Issuer and the
Security Trustee agree that the liability of Funding in respect of its
obligations to repay principal and pay interest or any other amounts due
under the relevant Intercompany Loan Agreement or for any breach of any
other representation, warranty, covenant or undertaking of Funding under
the relevant Intercompany Loan Agreement shall be limited to:
(a) in respect of amounts payable prior to the enforcement of the Funding
Security:
(i) the amount of Funding Available Revenue Receipts in respect of
interest, fees or other amounts (but excluding principal) payable
by Funding to the relevant Issuer, but only to the extent of an
amount of Funding Available Revenue Receipts remaining after
paying amounts of a higher order of priority and providing for
amounts payable pari passu therewith in accordance with, and
subject to, the relevant Funding Pre-Enforcement Revenue Priority
of Payments; and
3
(ii) the amount of Funding Available Principal Receipts in respect of
principal payable by Funding to the relevant Issuer, but only to
the extent of the amount of Funding Available Principal Receipts
payable by Funding to such Issuer as determined by, and subject
to, the rules set forth in the relevant Funding Pre-Enforcement
Principal Priority of Payments; and
(b) in respect of amounts payable following enforcement of the Funding
Security, amounts received or recovered by Funding, the Security
Trustee or a Receiver appointed on behalf of the Security Trustee, but
only to the extent of such amount thereof as remains after paying
amounts of a higher order of priority and providing for amounts
payable pari passu therewith in accordance with, and subject to, the
Funding Post-Enforcement Priority of Payments,
provided that the application of such amounts set forth in sub-clauses (a)
and (b) above to the discharge of Funding's obligations under an
Intercompany Loan Agreement shall be subject to the terms of the Funding
Deed of Charge.
4.2 SHORTFALL ON FINAL REPAYMENT DATE: On the Final Repayment Date of an
Intercompany Loan, the amount of interest and principal due and payable on
such Intercompany Loan shall be an amount equal to the sum available to pay
all outstanding interest and/or principal amounts due (including interest
and principal amounts deferred and unpaid) on such Intercompany Loan after
paying amounts of a higher order of priority in accordance with the
relevant Funding Priority of Payments. To the extent that on the Final
Repayment Date of an Intercompany Loan there is a shortfall between the
amount available to Funding to pay such interest and principal on such
Intercompany Loan and the amount of interest and principal due and payable
on such Intercompany Loan, the Issuer agrees that Funding shall not be
obliged to pay that shortfall to such Issuer and that any claim that such
Issuer may otherwise have against Funding in respect of that shortfall will
be extinguished.
5. UTILISATION OF THE INTERCOMPANY LOANS
5.1 DRAWDOWN CONDITIONS RELATING TO AN INTERCOMPANY LOAN: Save as otherwise
provided in the relevant Intercompany Loan Agreement, an Intercompany Loan
will be made available by an Issuer to Funding on the relevant Closing Date
if:
(a) the Notes have been issued by such Issuer and the subscription
proceeds have been received by or on behalf of such Issuer;
(b) not later than 17.00 (London time) on such Closing Date (or such later
time as may be agreed by Funding, such Issuer and the Security
Trustee), such Issuer has received from Funding a Drawdown Notice
requesting a drawing under an Intercompany Loan Agreement (with copy
of such Drawdown Notice to the Security Trustee), receipt of which
shall (subject to the terms of such Intercompany Loan Agreement and to
the issue of the Notes by such Issuer) oblige Funding to borrow the
whole of the amount requested in the Drawdown Notice on the date
stated in the Drawdown Notice (which shall be the
4
Closing Date) upon the terms and subject to the conditions contained
in such Intercompany Loan Agreement;
(c) Funding has confirmed in the relevant Drawdown Notice that:
(i) no Intercompany Loan Event of Default has occurred and is
continuing unremedied (if capable of remedy) or unwaived or would
result from the making of such Intercompany Loan;
(ii) the representations set out in Clause 12 (Representations and
warranties of Funding) are true on and as of the Closing Date by
reference to the facts and circumstances then existing;
(d) the aggregate principal amount of such Intercompany Loan to be drawn
on the Drawdown Date would not exceed the amount available for drawing
under such Intercompany Loan Agreement as at the relevant Drawdown
Date;
(e) a group income election has been made under Section 247 of the Income
and Corporation Taxes ▇▇▇ ▇▇▇▇, as amended, in relation to Funding and
such Issuer, provided that such election will only be required to the
extent necessary in order that payments of interest can be made by
Funding to an Issuer without there being a requirement to deduct
income tax at source; and
(f) Funding has delivered to the Security Trustee a solvency certificate
in form and substance satisfactory to the Security Trustee and
substantially in the form set out in Schedule 2 to these Intercompany
Loan Terms and Conditions.
5.2 SINGLE DRAWING OF THE INTERCOMPANY LOAN: Each Intercompany Loan will only
be available for drawing in one amount by Funding on the Closing Date
subject to satisfaction of the matters specified in Clause 2.1 (Conditions
precedent) and Clause 5.1 (Drawdown conditions relating to an Intercompany
Loan).
6. INTEREST
6.1 INTEREST PERIODS: The first Interest Period will commence on (and include)
the Drawdown Date of an Intercompany Loan and end on (but exclude) the
first Payment Date falling thereafter. Each subsequent Interest Period
shall commence on (and include) a Payment Date and end on (but exclude) the
next following Payment Date.
6.2 DETERMINATION OF INTERCOMPANY LOAN INTEREST AMOUNT AND FEES:
(a) The Agent Bank shall, as soon as practicable after 11.00 a.m. (London
time) on the Distribution Date immediately preceding the relevant
Payment Date, determine and notify the relevant Issuer, Funding, the
Cash Manager and the Security Trustee of the sterling amount (the
"INTEREST AMOUNT") payable in respect of such Interest Period in
respect of the Outstanding Principal Balance of the relevant
Intercompany Loan. The Interest Amount payable to an Issuer in respect
of such Issuer's related Intercompany
5
Loan on each Payment Date shall be equal to the amount of interest
required by such Issuer on such Payment Date to fund (by payment to
any Swap Provider or otherwise) the amount payable on such Payment
Date by such Issuer on the outstanding Notes of such Issuer and
certain other amounts as set forth in the relevant Intercompany Loan
Confirmation.
(b) In addition to the foregoing, on each Payment Date or as and when
required, in connection with the provision of an Intercompany Loan,
Funding will pay additional fees to an Issuer calculated to be an
amount equal to the amount required by such Issuer to pay or provide
for all other amounts, if any, falling due on that Payment Date,
including amounts payable by such Issuer as set forth in the relevant
Intercompany Loan Confirmation; provided, however, that such fee shall
not include amounts of interest and principal due on the Notes issued
by such Issuer and tax that can be met out of such Issuer's profits.
(c) If the Agent Bank does not at any time for any reason determine the
Interest Amount for any of the Intercompany Loans in accordance with
paragraph (a) above, the Security Trustee shall (subject to it being
indemnified to its satisfaction) determine the Interest Amount for
each Intercompany Loan and any such determination shall be deemed to
have been made by the Agent Bank.
(d) All notifications, opinions, determinations, certificates,
calculations and decisions given, expressed, made or obtained for the
purposes of this Clause 6, whether by the Agent Bank or the Security
Trustee, shall (in the absence of wilful default, bad faith or
manifest error) be binding on Funding, the relevant Issuer, the Cash
Manager, the Agent Bank, the Security Trustee and (in such absence as
aforesaid) no liability to Funding shall attach to such Issuer, the
Agent Bank, the Security Trustee or the Cash Manager in connection
with the exercise or non-exercise by them or any of them of their
powers, duties and discretions hereunder.
(e) Notwithstanding the foregoing, Funding and each Issuer agree that, to
the extent that such Issuer receives from Funding on any Payment Date
an amount of interest and/or fees which such Issuer uses to credit the
Principal Deficiency Ledger of such Issuer (but only to the extent of
any deficiency resulting from (i) Losses on the Mortgage Loans that
have been allocated by Funding to such Issuer, and (ii) the
application of Funding Available Principal Receipts to fund any
liquidity reserve fund of such Issuer, and not as a result of any
other principal deficiency of such Issuer), such amount of interest
and/or fees will be re-characterised as, and will constitute, a
repayment of principal in respect of the Intercompany Loan of such
Issuer, and will thereby reduce the Outstanding Principal Balance of
such Intercompany Loan on such Payment Date by such amount.
6.3 PAYMENT ON PAYMENT DATES: Interest payable on each Intercompany Loan shall
be payable on the Payment Dates specified in the Intercompany Loan
Confirmation.
7. REPAYMENT
6
7.1 REPAYMENT OF INTERCOMPANY LOAN PRINCIPAL AMOUNT: The Principal Amount
repayable to an Issuer in respect of such Issuer's related Intercompany
Loan on each Payment Date shall equal the amount of principal required by
such Issuer on such Payment Date to fund (by payment to any Swap Provider
or otherwise) the amount repayable on such Payment Date by such Issuer on
the outstanding Notes of such Issuer as set forth in the relevant
Intercompany Loan Confirmation.
7.2 REPAYMENT ON PAYMENT DATES: Each Intercompany Loan shall be repaid on the
Payment Dates specified in the related Intercompany Loan Confirmation.
7.3 RE-CHARACTERISATION AS PRINCIPAL: Funding and each Issuer agree that
certain interest and fee amounts paid to an Issuer as set forth in Clause
6.2(e) shall reduce the Outstanding Principal Balance repayable by Funding
to such Issuer in respect of such Issuer's related Intercompany Loan.
7.4 ALLOCATION OF LOSSES: Save as otherwise provided herein, Funding and each
Issuer agree that all Losses sustained on the Mortgage Loans during a Trust
Calculation Period applied in reduction of the Funding Share of the Trust
Property on the Distribution Date immediately succeeding such Trust
Calculation Period pursuant to Clause 12 (Allocation of Losses) of the
Mortgages Trust Deed shall be applied on such date in reducing the
Outstanding Principal Balance repayable by Funding to any Issuer in respect
of such Issuer's Intercompany Loan by an amount equal to:
A X B
-------
C
where,
A = the amount of such Losses applied in reduction of the Funding Share
on the relevant Distribution Date;
B = the Outstanding Principal Balance of the Intercompany Loan on such
Distribution Date; and
C = the aggregate Outstanding Principal Balances of the Intercompany
Loans of all Issuers on such Distribution Date;
and for the purposes of "B" and "C" above, the Outstanding Principal
Balance of an Intercompany Loan shall be reduced by the Principal Amount
Outstanding on such Distribution Date of any Special Repayment Notes issued
by the related Issuer.
8. PREPAYMENT
8.1 PREPAYMENT FOR TAXATION OR OTHER REASONS: If:
(a) Funding is required to withhold or deduct from any payment of
principal or interest in respect of any Intercompany Loan any amount
for or on account of Tax; or
7
(b) the relevant Issuer is required to withhold or deduct from any payment
of principal, interest or premium in respect of its Notes any amount
for or on account of Tax; or
(c) an Intercompany Loan becomes illegal as described in Clause 10
(Illegality);
then, without prejudice to the obligations of Funding under Clause 10
(Illegality) and subject to Clause 11 (Mitigation), the relevant Issuer may
require Funding to prepay, on any Payment Date, having given not more than
60 days and not less than 30 days' (or such shorter period as may be
required by any relevant law in the case of any Intercompany Loan which
becomes illegal pursuant to Clause 10 (Illegality)) prior written notice to
the Issuer and the Note Trustee (or on or before the latest date permitted
by the relevant law in the case of Clause 10 (Illegality)) and while the
relevant circumstances continue, the related Intercompany Loan without
penalty or premium but subject to Clause 15 (Default interest and
indemnity), provided that such Issuer is able to repay its Notes on such
Payment Date from funds received from repayment of such Intercompany Loan.
8.2 PREPAYMENT AT OPTION OF ISSUER: An Issuer, at its option, may require
Funding to prepay the outstanding principal amount of an Intercompany Loan
(together with any accrued interest) on any Payment Date on which such
Issuer has decided to exercise its option, if any, to redeem in full the
Notes issued by such Issuer. The Issuer shall give Funding not more than 60
days' and not less than 30 days' prior written notice of such Issuer's
decision to exercise its option to require Funding to prepay the relevant
Intercompany Loan. Any prepayment by Funding will be made without penalty
or premium but will be subject to Clause 15 (Default interest and
indemnity).
8.3 APPLICATION OF MONIES: Each Issuer hereby agrees to apply any amounts
received by way of prepayment pursuant to Clause 8.1 (Prepayment for
taxation or other reasons) or Clause 8.2 (Prepayment at option of Issuer)
in making prepayments under the relevant Notes issued by such Issuer.
9. TAXES
9.1 NO GROSS UP: All payments by Funding under the Intercompany Loan Agreement
shall be made without any deduction or withholding for or on account of,
and free and clear of, any Taxes, except to the extent that Funding is
required by law to make payment subject to any Taxes.
9.2 TAX RECEIPTS: All Taxes required by law to be deducted or withheld by
Funding from any amounts paid or payable under an Intercompany Loan
Agreement shall be paid by Funding when due and Funding shall, within 30
days of the payment being made, deliver to the relevant Issuer evidence
satisfactory to such Issuer (including all relevant Tax receipts) that the
payment has been duly remitted to the appropriate authority.
10. ILLEGALITY
If, at any time, it is unlawful for an Issuer to make, fund or allow to
remain outstanding an Intercompany Loan made by it under the related
Intercompany Loan Agreement, then such Issuer
8
shall, promptly after becoming aware of the same, deliver to Funding, the
Security Trustee and the Rating Agencies a certificate to that effect and
if such Issuer so requires, Funding shall promptly to the extent necessary
to cure such illegality prepay such Intercompany Loan subject to and in
accordance with the provisions of Clause 8.1 (Prepayment for taxation or
other reasons).
11. MITIGATION
If circumstances arise in respect of an Issuer which would, or would upon
the giving of notice, result in:
(a) the prepayment of an Intercompany Loan pursuant to Clause 10
(Illegality);
(b) a withholding or deduction from the amount to be paid by Funding on
account of Taxes, pursuant to Clause 9 (Taxes),
then, without in any way limiting, reducing or otherwise qualifying
the obligations of Funding under this Agreement, such Issuer shall:
(i) promptly upon becoming aware of the circumstances, notify the
Security Trustee, Funding and the Rating Agencies; and
(ii) upon written request from Funding, take such reasonable steps as
may be practical to mitigate the effects of those circumstances
including (without limitation) the assignment by novation of the
Intercompany Loan Agreement of such Issuer of all of such
Issuer's rights under such Intercompany Loan Agreement to, and
assumption by novation of all such Issuer's obligations under
such Intercompany Loan Agreement by, another company, which is
willing to participate in the relevant Intercompany Loan in its
place and which is not subject to (a) and/or (b) above,
provided that no such transfer or assignment and transfer by novation
of such Intercompany Loan Agreement may be permitted unless the Rating
Agencies confirm in writing to Funding and the Security Trustee that
there will be no downgrading of the then current rating of the Notes
issued by such Issuer as a result and Funding indemnifies such Issuer
for any reasonable costs and expenses properly incurred as a result of
such transfer or assignment.
12. REPRESENTATIONS AND WARRANTIES OF FUNDING
12.1 REPRESENTATIONS AND WARRANTIES: Funding makes the representations and
warranties set out in this Clause 12 to each Issuer and the Security
Trustee (as trustee for each of the Funding Secured Creditors).
12.2 STATUS:
9
(a) It is a limited liability 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
(b) it has the power to own its property and assets and to carry on its
business as it is being conducted.
12.3 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 a party.
12.4 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 of Funding.
12.5 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 including,
without limitation, borrowing pursuant to the terms of an Intercompany Loan
Agreement or granting any security contemplated by the Transaction
Documents will not:
(a) result in the existence or imposition of, nor oblige it to create, any
Security Interest in favour of any person (other than the Security
Trustee for itself and on behalf of the other Funding Secured
Creditors or as otherwise contemplated in the Transaction Documents)
over all or any of its present or future revenues or assets;
(b) conflict with any document which is binding upon it or any of its
assets;
(c) conflict with its constitutional documents; or
(d) conflict with any law, regulation or official or judicial order of any
government, governmental body or court, domestic or foreign, having
jurisdiction over it.
12.6 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.
12.7 NO DEFAULT: No Intercompany Loan Event of Default is continuing unremedied
(if capable of remedy) or unwaived or would result from the making of any
Intercompany Loan.
12.8 AUTHORISATIONS: All governmental consents, licences and other approvals and
authorisations required or desirable 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.
12.9 REGISTRATION REQUIREMENTS: Except for due registration of the Funding Deed
of Charge under Section 395 of the Companies ▇▇▇ ▇▇▇▇, it is not necessary
that the Funding Deed of Charge or an Intercompany Loan Agreement be filed,
recorded or enrolled with any authority or that,
10
except for registration fees payable at Companies Registry in respect of
the Security Documents, any stamp, registration or similar tax be paid on
or in respect thereof.
12.10 RANKING OF SECURITY: The security conferred by the Funding Deed of Charge
constitutes a first priority security interest of the type described, and
over the security assets referred to, in the Funding Deed of Charge and
the Funding Charged Property is not subject to any prior or pari passu
Security Interests.
12.11 NO OTHER BUSINESS:
(a) It has not traded or carried on any business since its date of
incorporation or engaged in any activity whatsoever that is not
incidental to or necessary in connection with any of the
activities in which the Transaction Documents provide or envisage
that it will engage; and
(b) it is not party to any material agreements other than the
Transaction Documents.
12.12 OWNERSHIP:
(a) Its entire issued share capital is legally and beneficially owned
and controlled by Holdings; and
(b) its shares are fully paid.
12.13 GOOD TITLE AS TO ASSETS: Subject to the Security Interests created under
the Funding Deed of Charge, it is and will remain the absolute beneficial
owner of the Funding Share and absolute legal and beneficial owner of all
other assets charged or assigned by the Funding Deed of Charge to which
it is a party.
12.14 TAX: It is incorporated in Jersey but is centrally managed and controlled
from its branch office established in the UK (registered overseas company
number FC022999 and branch number BR0051916).
12.15 REPETITION: The representations in this Clause 12 (Representations and
Warranties of Funding) shall survive the execution of the Intercompany
Loan Agreement and the making of each Intercompany Loan under the
relevant Intercompany Loan Agreement, and shall be repeated by Funding on
each Drawdown Date of each Intercompany Loan by reference to the facts
and circumstances then existing.
13. COVENANTS
13.1 DURATION: The undertakings in this Clause 13 (Covenants) shall remain in
force from the date of the relevant Intercompany Loan Agreement for so
long as any amount is or may be outstanding under such Intercompany Loan
Agreement.
13.2 INFORMATION: Funding shall supply to the Security Trustee and the Rating
Agencies:
11
(a) as soon as the same are available its audited accounts for that
Financial Year; and
(b) promptly, such other information in connection with the matters
contemplated by the Transaction Documents as the Security Trustee
or the Rating Agencies may reasonably request.
13.3 NOTIFICATION OF DEFAULT: Funding shall notify the relevant Issuer and the
Security Trustee of any Intercompany Loan Event of Default (and the
steps, if any, being taken to remedy it) or any event which with the
giving of notice or lapse of time or certification would constitute the
same promptly upon Funding becoming aware of the occurrence of each
Intercompany Loan Event of Default or such other event.
13.4 AUTHORISATIONS: Funding shall promptly:
(a) obtain, maintain and comply with the terms of; and
(b) upon request, supply certified copies to the Issuer and the
Security Trustee of,
any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability of,
any Transaction Document to which it is a party.
13.5 PARI PASSU RANKING: Funding shall procure that its obligations under the
Transaction Documents do and will rank at least pari passu with all its
other present and future unsecured obligations, except for obligations
mandatorily preferred by law.
13.6 NEGATIVE PLEDGE: Funding shall not create or permit to subsist any
security interest (including but not limited to any mortgage, standard
security, charge (whether legal or equitable), assignment by way of
security, pledge, lien, hypothecation or other security interest securing
any obligation of any person (including, without limitation, any trust or
arrangement having the effect of providing security)) over or in respect
of any of its assets (unless arising by operation of law) other than as
provided pursuant to the Transaction Documents.
13.7 DISPOSALS; MERGERS AND ACQUISITIONS: Funding shall not, either in a
single transaction or in a series of transactions, whether related or not
and whether voluntarily or involuntarily, sell, assign, transfer, lease
or otherwise dispose of or grant any option over all or any part of its
assets, properties or undertakings or any interest, estate, right, title
or benefit therein, other than as provided for pursuant to the
Transaction Documents. In addition to the foregoing:
(a) Funding shall not enter into any amalgamation, demerger, merger or
reconstruction; and
(b) Funding shall not acquire any assets or business or make any
investments other than as contemplated in the Transaction
Documents.
13.8 LENDING AND BORROWING:
(a) Except as provided or contemplated under the Transaction
Documents, Funding shall not make any loans or provide any other
form of credit to any person.
12
(b) Funding shall not give any guarantee or indemnity to or for the
benefit of any person in respect of any obligation of any other
person or enter into any document under which Funding assumes any
liability of any other person.
(c) Funding shall not incur any indebtedness in respect of any
borrowed money other than under the Transaction Documents.
13.9 SHARES AND DIVIDENDS: Funding shall not:
(a) declare or pay any dividend or make any other distribution in
respect of any of its shares other than in accordance with the
Funding Deed of Charge;
(b) issue any further shares or alter any rights attaching to its
issued shares as at the date hereof; or
(c) repay or redeem any of its share capital.
13.10 CHANGE OF BUSINESS:
(a) Funding shall not carry on any business or engage in any activity
other than as contemplated by the Transaction Documents or which
is not incidental to or necessary in connection with any of the
activities in which the Transaction Documents provide or envisage
that Funding will engage.
(b) Other than in respect of an Issuer, Funding shall not have any
subsidiaries or subsidiary undertakings as defined in the
Companies ▇▇▇ ▇▇▇▇, as amended.
(c) Funding shall not own any premises.
13.11 TAX:
(a) For so long as is necessary in order that payments of interest can
be made by Funding to an Issuer without there being a requirement
to deduct income tax at source, Funding shall join with each
Issuer in making a group income election under section 247 of the
Income and Corporation Taxes Act 1988 (as amended) in relation to
any such payments as are referred to in section 247(4) of that Act
and which are made under the relevant Intercompany Loan Agreement
by Funding to the related Issuer and Funding will ensure that no
steps will be taken (whether by act, omission or otherwise) by it
which would reasonably be expected to lead to the revocation or
invalidation of the aforementioned election. Funding shall
immediately notify such Issuer and the Security Trustee if it
becomes aware that the aforementioned election has ceased to be in
full force and effect or if circumstances arise, of which it is
aware, which would be reasonably likely to result in that election
ceasing to be in full force and effect; and
(b) Funding shall not apply to become part of any group for the
purposes of section 43 of the Value Added Tax Act 1994 (as
amended) with an Issuer unless required to do so by law.
13
13.12 UNITED STATES ACTIVITIES: Funding will not engage in any activities in
the United States (directly or through agents), will not derive any
income from United States sources as determined under United States
income tax principles and will not hold any property if doing so would
cause it to be engaged or deemed to be engaged in a trade or business
within the United States as determined under United States tax
principles.
13.13 FUNDING LEDGERS: Funding shall maintain, or cause to be maintained, the
Funding Ledgers in accordance with the Cash Management Agreement.
14. DEFAULT
14.1 INTERCOMPANY LOAN EVENTS OF DEFAULT: Each of the events set out in Clause
14.2 (Non-payment) to Clause 14.8 (Ownership) (inclusive) is an
Intercompany Loan Event of Default (whether or not caused by any reason
whatsoever outside the control of Funding or any other person).
14.2 NON-PAYMENT: Subject to Clause 4.1 (Recourse limited to available funds),
Funding does not pay on the due date or for a period of five London
Business Days after such due date any amount payable by it under any
Intercompany Loan Agreement at the place at and in the currency in which
it is expressed to be payable.
14.3 BREACH OF OTHER OBLIGATIONS: Funding does not comply in any material
respect with any of its obligations under the Transaction Documents
(other than those referred to in Clause 14.2 (Non-payment)) and such
non-compliance, if capable of remedy, is not remedied promptly and in any
event within twenty London Business Days of Funding becoming aware of the
non-compliance or receipt of a notice from the Security Trustee requiring
Funding's non-compliance to be remedied.
14.4 MISREPRESENTATION: A representation, warranty or statement made or
repeated in or in connection with any Transaction Document or in any
document delivered by or on behalf of Funding under or in connection with
any Transaction Document is incorrect in any material respect when made
or deemed to be made or repeated.
14.5 INSOLVENCY:
(a) An order is made or an effective resolution is passed for the
winding up of Funding (except, in any such case, a winding-up or
dissolution for the purpose of a reconstruction, amalgamation or
merger the terms of which have been previously approved by the
Security Trustee or as approved by an Extraordinary Resolution of
the Class A Noteholders of all Issuers); or
(b) Except for the purposes of an amalgamation, merger or
restructuring as described in (a) above, Funding ceases or
threatens to cease to carry on all or a substantial part of its
business or stops payment or threatens to stop payment of its
debts or is deemed unable to pay its debts within the meaning of
Section 123(a), (b), (c) or (d) of the Insolvency ▇▇▇ ▇▇▇▇ (as
amended, modified or re-enacted) or becomes unable to pay its
debts within the
14
meaning of Section 132(2) of the Insolvency Act 1986 (as amended,
modified or re-enacted); or
(c) Proceedings are otherwise initiated against Funding under any
applicable liquidation, insolvency, composition, reorganisation or
other similar laws (including, but not limited to, presentation of
a petition for an administration order) and (except in the case of
presentation of a petition for an administration order) such
Proceedings are not, in the opinion of the Security Trustee being
disputed in good faith with a reasonable prospect of success; or
an administrative receiver or other receiver, liquidator or other
similar official being appointed in relation to Funding or in
relation to the whole or any substantial part of the undertaking
or assets of Funding; or an encumbrancer taking possession of the
whole or any substantial part of the undertaking or assets of
Funding; or a distress, execution, diligence or other process
being levied or enforced upon or sued out against the whole or any
substantial part of the undertaking or assets of Funding and such
possession or process (as the case may be) not being discharged or
not otherwise ceasing to apply within 30 days; or Funding
initiating or consenting to judicial proceedings relating to
itself under applicable liquidation, insolvency, composition,
reorganisation or other similar laws or making a conveyance or
assignment for the benefit of its creditors generally.
14.6 UNLAWFULNESS: It is or becomes unlawful for Funding to perform any of its
obligations under any Transaction Document.
14.7 THE FUNDING DEED OF CHARGE: The Funding Deed of Charge is no longer
binding on or enforceable against Funding or effective to create the
security intended to be created by it.
14.8 OWNERSHIP: The entire issued share capital of Funding ceases to be
legally and beneficially owned and controlled by Holdings.
14.9 ACCELERATION: Upon the Security Trustee's receipt from an Issuer or other
party to a Transaction Document of notice of the occurrence of an
Intercompany Loan Event of Default which is continuing unremedied and/or
has not been waived, the Security Trustee may by written notice to
Funding (the "INTERCOMPANY LOAN ENFORCEMENT NOTICE") which is copied to
each of the Funding Secured Creditors and the Mortgages Trustee:
(a) declare the relevant Intercompany Loan and all other Intercompany
Loans to be immediately due and payable, whereupon the same shall,
subject to Clause 14.10 (Repayment of Intercompany Loans on
acceleration), become so payable together with accrued interest
thereon and any other sums then owed by Funding under each
relevant Intercompany Loan Agreement; and/or
(b) declare the relevant Intercompany Loan and all other Intercompany
Loans to be due and payable on demand of the Security Trustee.
14.10 REPAYMENT OF INTERCOMPANY LOANS ON ACCELERATION: Upon the Security
Trustee declaring all Intercompany Loans to be immediately due and
payable pursuant to Clause 14.9(a)
15
(Acceleration), the amount due and payable in respect of such
Intercompany Loans shall be paid by Funding without penalty or premium
but subject to Clause 15 (Default interest and indemnity).
15. DEFAULT INTEREST AND INDEMNITY
15.1 DEFAULT LOAN INTEREST PERIODS: If any sum due and payable by Funding
under an Intercompany Loan Agreement is not paid on the due date for
payment in accordance with the relevant provision of such Intercompany
Loan Agreement or if any sum due and payable by Funding under any
judgment or decree of any court in connection with an Intercompany Loan
Agreement is not paid on the date of such judgment or decree, the period
beginning on such due date or, as the case may be, the date of such
judgment or decree and ending on the date upon which the obligation of
Funding to pay such sum (the balance thereof for the time being unpaid
being herein referred to as an "UNPAID SUM") is discharged shall be
divided into successive periods, each of which (other than the first)
shall start on the last day of the preceding such period and the duration
of each of which shall (except as otherwise provided in this Clause 15)
be selected by the Security Trustee having regard to when such unpaid sum
is likely to be paid.
15.2 DEFAULT INTEREST: During each such period relating to an unpaid sum as is
mentioned in this Clause 15 an unpaid sum shall bear interest at the rate
per annum which the relevant Issuer, acting reasonably, determines and
certifies to Funding and the Security Trustee, will be sufficient to
enable it to pay interest and other costs and indemnities on or in
respect of any amount which such Issuer does not pay as a result of
Funding's non-payment under the related Intercompany Loan Agreement, as a
result of such unpaid sum not being paid to it.
15.3 PAYMENT OF DEFAULT INTEREST: Any interest which shall have accrued under
Clause 15.2 (Default interest) in respect of an unpaid sum shall be due
and payable and shall be paid by Funding at the end of the period by
reference to which it is calculated or on such other date or dates as the
Security Trustee may specify by written notice to Funding.
15.4 BROKEN PERIODS: Funding shall forthwith on demand indemnify an Issuer
against any loss or liability that such Issuer incurs as a consequence of
any payment of principal being received from any source otherwise than on
a Payment Date or an overdue amount being received otherwise than on its
due date.
15.5 FUNDING'S PAYMENT INDEMNITY: Funding undertakes to indemnify an Issuer:
(a) against any cost, claim, loss, expense (including legal fees) or
liability together with any amount in respect of Irrecoverable VAT
thereon (other than by reason of the negligence or wilful default
by such Issuer) which it may sustain or incur as a consequence of
the occurrence of any Intercompany Loan Event of Default or any
default by Funding in the performance of any of the obligations
expressed to be assumed by it in any of the Transaction Documents
(other than by reason of negligence or wilful default on the part
of such Issuer or prior breach by such Issuer of the terms of any
of the Transaction Documents to which it is a party);
16
(b) against any loss it may suffer as a result of its funding an
Intercompany Loan requested by Funding under a related
Intercompany Loan Agreement (which shall include the amounts
referred to in Clause 6 of the related Intercompany Loan
Confirmation) but not made; and
(c) against any other loss or liability (other than by reason of the
negligence or default of such Issuer or breach by such Issuer of
the terms of any of the Transaction Documents to which it is a
party (except where such breach is caused by the prior breach of
Funding) or loss of profit) it may suffer by reason of having made
the related Intercompany Loan available or entering into the
related Intercompany Loan Agreement or enforcing any security
granted pursuant to the Funding Deed of Charge.
15.6 FUNDING'S WAIVERS: Funding undertakes to the Issuer that it will waive
and abandon:
(a) any right which it has or may have at any time under the existing
or future laws of Jersey, whether by virtue of the droit de
discussion or otherwise, which requires that recourse be had to
the assets of any other person before any claim is enforced
against Funding in respect of Funding's obligations hereunder; and
(b) any right which it at any time has or may have under the existing
or future laws of Jersey, whether by virtue of the droit de
division or otherwise, which requires that any liability under the
indemnity in Clause 15.5 above be divided or apportioned with any
other person or reduced in any manner whatsoever.
16. PAYMENTS
16.1 PAYMENT:
(a) Subject to Clause 4 (Limited Recourse), interest and principal
shall be paid in sterling on the Intercompany Loans for value by
Funding to the Issuer Transaction Account specified by the
relevant Issuer in the relevant Intercompany Loan Confirmation on
each Payment Date and the relevant irrevocable payment instruction
for such payment shall be given by Funding by no later than noon
to the Issuer Cash Manager under the Issuer Cash Management
Agreement (with a copy to the relevant Issuer and the Security
Trustee) on the Distribution Date immediately preceding the
relevant Payment Date.
(b) On each date on which an Intercompany Loan Agreement requires any
amount other than the amounts specified in Clause 16.1(a) to be
paid by Funding under such Intercompany Loan Agreement, Funding
shall, unless such Intercompany Loan Agreement specifies
otherwise, make the same available to the related Issuer in
accordance with the terms of such Intercompany Loan Agreement and
by payment in sterling in immediately available, freely
transferable, cleared funds to the Issuer Transaction Account
specified in the related Intercompany Loan Confirmation or, if
such Intercompany Loan Agreement specifies otherwise, to the
relevant account or to such other account as such Issuer (with the
prior consent of the Security Trustee) may notify to Funding for
this purpose.
17
16.2 ALTERNATIVE PAYMENT ARRANGEMENTS: If, at any time, it shall become
impracticable (by reason of any action of any governmental authority or
any change in law, exchange control regulations or any similar event) for
Funding to make any payments under an Intercompany Loan Agreement in the
manner specified in Clause 16.1 (Payment), then Funding shall make such
alternative arrangements for the payment direct to the relevant Issuer of
amounts due under such Intercompany Loan Agreement as are acceptable to
the Security Trustee.
16.3 NO SET-OFF: Subject to the terms of the relevant Intercompany Loan
Confirmation, all payments required to be made by Funding under an
Intercompany Loan Agreement shall be calculated without reference to any
set-off or counterclaim and shall be made free and clear of, and without
any deduction for or on account of, any set-off or counterclaim.
17. ENTRENCHED PROVISIONS
Each of Funding, the Issuer and the Security Trustee acknowledge and
agree that Funding may from time to time enter into New Intercompany Loan
Agreements subject to the provisions of Clause 2 (The Intercompany Loans)
of these Intercompany Loan Terms and Conditions. If Funding intends to
enter into a New Intercompany Loan Agreement then the provisions of these
Intercompany Loan Terms and Conditions may be varied (with the consent of
the parties to these Intercompany Loan Terms and Conditions) in the
Intercompany Loan Confirmation to the extent necessary to reflect the
terms of that New Intercompany Loan PROVIDED THAT no variation shall be
made to any of the following terms without the prior written consent of
the Funding Secured Creditors and the Rating Agencies:
(a) the Payment Dates;
(b) Clause 4 (Limited Recourse);
(c) Clause 9 (Taxes); and
(d) Clause 18.5 (Security Trustee).
18. FURTHER PROVISIONS
18.1 EVIDENCE OF INDEBTEDNESS: In any proceeding, action or claim relating to
an Intercompany Loan Agreement a statement as to any amount due to the
relevant Issuer under such Intercompany Loan Agreement which is certified
as being correct by an officer of the Security Trustee shall, unless
otherwise provided in such Intercompany Loan Agreement, be prima facie
evidence that such amount is in fact due and payable.
18.2 AMENDMENTS AND WAIVER:
(a) Entire Agreement: Each Intercompany Loan Agreement sets out the
entire agreement and understanding between the parties with
respect to the subject matter of such Agreement superseding all
prior oral or written understandings other than the other
Transaction Documents.
18
(b) Amendments and Waiver: Subject to Clause 17 (Entrenched
Provisions), no amendment or waiver of any provision of an
Intercompany Loan 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.
(c) Rights cumulative: The respective rights of each of the parties to
an Intercompany Loan 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 Intercompany Loan Agreement are cumulative and
not exclusive of any remedies provided by law.
18.3 SEVERABILITY: Where any provision in or obligation under an Intercompany
Loan Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations under such Intercompany Loan Agreement, or of
such provision or obligation in any other jurisdiction, shall not be
affected or impaired thereby.
18.4 NOTICES: Any notices or other communication or document to be given or
delivered pursuant to an Intercompany Loan Agreement to any of the
parties thereto shall be sufficiently served if sent by prepaid first
class post, by hand or 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 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 post, and shall be sent to such addresses as
are set out in the related Intercompany Loan Confirmation or to such
other address or facsimile number or for the attention of such other
person or entity as may from time to time be notified by any party to the
others by written notice in accordance with the provisions of this Clause
18.4.
18.5 SECURITY TRUSTEE:
(a) The Security Trustee shall have no responsibility for any of the
obligations of an Issuer or any other party to an Intercompany
Loan Agreements (other than itself). For the avoidance of doubt,
the parties to an Intercompany Loan Agreement acknowledge that the
rights and obligations of the Security Trustee under such
Intercompany Loan Agreements are governed by the Funding Deed of
Charge.
(b) As between the Security Trustee and the parties hereto 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 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.
18.6 COUNTERPARTS: An Intercompany Loan Agreement may be executed in any
number of
19
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.
18.7 THIRD PARTY RIGHTS: A person who is not a party to an Intercompany Loan
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.
18.8 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.
19. REDENOMINATION
Each obligation under this Agreement which has been denominated in
sterling shall be redominated in Euro in accordance with applicable
legislation passed by the European Monetary Union upon such redomination
of the Notes.
20. GOVERNING LAW
Each Intercompany Loan Agreement is governed by, and shall be construed
in accordance with, English law.
21. SUBMISSION TO JURISDICTION
Each of the parties to an Intercompany Loan Agreement 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 such Intercompany Loan
Agreement and, for such purposes, irrevocably submits to the jurisdiction
of such courts.
22. ASSIGNMENT
The parties hereto agree that an Intercompany Loan Agreement shall not be
assigned to any third party PROVIDED THAT an Issuer may assign an
Intercompany Loan Agreement or any of its rights, title, interest or
benefit thereunder to the Note Trustee by way of security.
IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed on
the day and year appearing on page three.
20
SCHEDULE 1
SCHEDULE 1NOTICE OF DRAWDOWN OF INTERCOMPANY LOAN
From: Granite Finance Funding Limited ("FUNDING")
To: [ ] (the "ISSUER")
Copy: The Bank of New York (the "SECURITY TRUSTEE")
Dear Sirs,
1. We refer to the agreement between, inter alios, ourselves, the Issuer and
the Security Trustee (as from time to time amended, varied, novated or
supplemented (the "INTERCOMPANY LOAN AGREEMENT")) dated [ ] whereby an
Intercompany Loan was made available to Funding. Terms defined in the
Intercompany Loan Agreement shall have the same meaning in this notice.
2. We hereby give you notice that, pursuant to the Intercompany Loan Agreement
and upon the terms and subject to the conditions contained therein, we wish
an Intercompany Loan to be made to us as follows:
(a) Amount:(pound)[ ] of which(pound)[ ] is to be retained by you by
way of set off against our obligation to reimburse such amount to you
on the Closing Date under Clause 6.1 (Fee for provision of the
Intercompany Loan of the Intercompany Loan Confirmation).
(b) Drawdown Date: [ ]
3. We confirm that no Intercompany Loan Event of Default has occurred and is
continuing which has not been waived, or would result from the making of
such Intercompany Loan.
4. We confirm that the principal amount of the Intercompany Loan requested
does not exceed the amount available under the Intercompany Loan Agreement
as at [relevant Drawdown Date].
5. The net proceeds of this drawdown should be credited to our account
numbered [ ] with [ ].
Yours faithfully,
For and on behalf of
GRANITE FINANCE FUNDING LIMITED
21
SCHEDULE 2
SOLVENCY CERTIFICATE
GRANITE FINANCE FUNDING LIMITED (the "COMPANY")
To: [ ]
(the "ISSUER")
The Bank of New York (the "SECURITY TRUSTEE")
We, the undersigned, HEREBY CERTIFY that (i) having made all appropriate
searches and investigations of the Company's books and records and the Company's
accounts (both management and those required by law); and (ii) the officers of
the Company having duly considered the provisions of the insolvency laws of
Jersey, Channel Islands and the United Kingdom (including, without limitation,
the provisions of sections 123 and 238 to 242 (inclusive) and 423 of the UK
Insolvency Act 1986 (the "ACT")):
(a) an order has not been made or an effective resolution has not been
passed for the winding up of the Company (except, in any such case, a
winding-up or dissolution for the purpose of a reconstruction,
amalgamation or merger the terms of which have been previously
approved by the Security Trustee or as approved by an Extraordinary
Resolution of the Class A Noteholders of all Issuers); or
(b) except for the purposes of an amalgamation, merger or restructuring as
described in (a) above, the Company has not ceased or threatened to
cease to carry on all or a substantial part of its business or has
stopped payment or threatened to stop payment of its debts or has been
deemed unable to pay its debts within the meaning of Section 123(a),
(b), (c) or (d) of the Insolvency ▇▇▇ ▇▇▇▇ (as amended) or has become
unable to pay its debts within the meaning of Section 132(2) of the
Insolvency Act 1986 (as amended);
(c) to the best of our knowledge and belief Proceedings have not been
otherwise initiated against the Company under any applicable
liquidation, insolvency, composition, reorganisation or other similar
laws (including, but not limited to, presentation of a petition for an
administration order) and (except in the case of presentation of a
petition for an administration order) such Proceedings are not, as far
as we are aware in the opinion of the Security Trustee, being disputed
in good faith with a reasonable prospect of success; and no
administrative receiver or other receiver, liquidator or other similar
official has been appointed in relation to the Company or in relation
to the whole or any substantial part of the undertaking or assets of
the Company; and no encumbrancer has
22
taken possession of the whole or any substantial part of the
undertaking or assets of the Company; and no distress, execution,
diligence or other process has been levied or enforced upon or sued
out against the whole or any substantial part of the undertaking or
assets of the Company and such possession or process (as the case may
be) has not been discharged or has not otherwise ceased to apply
within 30 days; and the Company has not initiated or consented to
judicial proceedings relating to itself under applicable liquidation,
insolvency, composition, reorganisation or other similar laws and has
not made a conveyance or assignment for the benefit of its creditors
generally. No equivalent to any of the foregoing has occurred in or
under the laws of any relevant jurisdiction;
(d) neither the entry into of the Transaction Documents to which it is a
party nor the making of any drawing nor granting of security under the
Transaction Documents to which it is a party would be a transaction at
an undervalue within the meaning of section 238 of the Act, since the
value of any consideration received by the Company as a result of such
drawing and/or grant of security would not be significantly less than
the value of any consideration provided by the Company under the
Transaction Documents to which it is a party;
(e) the entry into of the Transaction Documents to which it is a party,
any drawing made by the Company under or pursuant to the Transaction
Documents to which it is a party, and any security granted by the
Company under or pursuant to the Transaction Documents to which it is
a party will be entered into or made, as the case may be, by the
Company, in good faith and for the purpose of carrying on its
business, and there are reasonable grounds for believing that such
entry into of such Transaction Documents, such drawings and grants of
security would benefit the Company; and
(f) in entering into the Transaction Documents to which it is a party,
making a drawing under or pursuant to the Transaction Documents to
which it is a party and/or granting security under or pursuant to the
Transaction Documents to which it is a party the Company has no desire
to give a preference to any person as contemplated by section 239 of
the Act nor is it the purpose of the Company to put assets beyond the
reach of a person who is making, or may at some time make, a claim
against the Company or of otherwise prejudicing the interests of such
a person in relation to the claim which he is making or may make.
Terms defined in the Master Definitions Schedule signed for the purposes of
identification by ▇▇▇▇▇ & ▇▇▇▇ and ▇▇▇▇▇▇▇▇ Chance Limited Liability Partnership
on 26 March 2001 shall have the same respective meanings when used in this
Certificate.
DATED [ ]
Signed for and on behalf of Granite Finance Funding Limited
------------------------------------
Director
23
------------------------------------
Director/Secretary
24
SCHEDULE 3
FORM OF INTERCOMPANY LOAN CONFIRMATION
25
GRANITE FINANCE FUNDING LIMITED
[O]
as [O] Issuer
THE BANK OF NEW YORK
as Security Trustee
CITIBANK, N.A.
as Agent Bank
---------------------------------------------
LOAN CONFIRMATION
INTERCOMPANY LOAN AGREEMENT
---------------------------------------------
Dated [O]
CONTENTS
CLAUSE PAGE NO.
------ --------
1. Interpretation................................................... 26
2. Intercompany Loan Terms and Conditions........................... 27
3. The First Issuer Intercompany Loan............................... 27
4. Interest......................................................... 27
5. Repayment........................................................ 28
6. Certain Fees, etc................................................ 28
7. Additional Covenants............................................. 29
8. Declaration of Trust............................................. 30
9. Addresses........................................................ 30
SCHEDULE 1 CONDITIONS PRECEDENT IN RESPECT OF DRAWDOWN ......... 32
i
THIS AGREEMENT is dated [O] between:
(1) GRANITE FINANCE FUNDING LIMITED (registered number 79308) a private limited
liability company incorporated under the laws of Jersey, but acting out of
its branch office established in England (registered overseas company
number FC022999 and branch number BR0051916) at ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ("FUNDING");
(2) [O] (registered in England and Wales No. [O]) a public limited company
incorporated under the laws of England and Wales whose registered office is
at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (the "[O] ISSUER");
(3) THE BANK OF NEW YORK, whose offices are at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "SECURITY TRUSTEE" which expression shall include such
person and all other persons for the time being acting as the security
trustee or trustees pursuant to the Funding Deed of Charge); and
(4) CITIBANK, N.A., acting through its offices at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ (the "AGENT BANK" which expression shall include such person for
the time being acting as the agent bank pursuant to the Paying Agent and
Agent Bank Agreement).
IT IS AGREED as follows:
1. INTERPRETATION
1.1 GENERAL INTERPRETATION: The Master Definitions Schedule and the [O] Issuer
Master Definitions Schedule signed for the purposes of identification by
[O] on [O] (as the same may be amended, varied or supplemented from time to
time with the consent of the parties hereto) are expressly and specifically
incorporated into this Agreement and, accordingly, the expressions defined
in the Master Definitions Schedule and/or the [O] Issuer 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 (Interpretation and Construction) of the
Master Definitions Schedule and the [O] Issuer Master Definitions Schedule.
In the event of a conflict between the Master Definitions Schedule and the
[O] Issuer Master Definitions Schedule, the [O] Issuer Master Definitions
Schedule shall prevail.
1.2 SPECIFIC TERMS: Unless the context otherwise requires, references in the
Intercompany Loan Terms and Conditions to:
"CLOSING DATE" shall mean the Initial Closing Date;
"INTERCOMPANY LOAN" shall mean the [O] Issuer Intercompany Loan;
"INTERCOMPANY LOAN AGREEMENT" shall mean the [O] Issuer Intercompany Loan
Agreement;
"INTERCOMPANY LOAN CONFIRMATION" shall mean the [O] Issuer Intercompany
Loan Confirmation;
26
"ISSUER" shall mean the [O] Issuer;
"ISSUER TRANSACTION ACCOUNT" shall mean the [O] Issuer Transaction Account;
and
"NOTES" shall mean the [O] Issuer Notes.
2. INTERCOMPANY LOAN TERMS AND CONDITIONS
Each of the parties to this Agreement agrees that the Intercompany Loan
Terms and Conditions signed by Funding, the Security Trustee and the Agent
Bank for the purposes of identification on [O] and the provisions set out
therein shall form part of this Agreement and shall be binding on the
parties to this Agreement as if they had been expressly set out herein.
References in this Agreement to "THIS AGREEMENT" shall be construed
accordingly.
3. THE [O] ISSUER INTERCOMPANY LOAN
3.1 GRANT OF [O] ISSUER INTERCOMPANY LOAN: On and subject to the terms of this
Agreement, the [O] Issuer hereby grants to Funding a loan in the maximum
principal amount of (pound)[O], which amount corresponds to the principal
amount upon issue of the [O] Issuer Notes.
3.2 CONDITIONS PRECEDENT: Save as the [O] Issuer may otherwise agree, the [O]
Issuer Intercompany Loan will not be available for utilisation unless the
[O] Issuer has confirmed to Funding (with a copy of such confirmation to
the Security Trustee) that it or its advisers have received all the
information and documents listed in Schedule 1 in form and substance
satisfactory to the [O] Issuer.
4. INTEREST
4.1 PAYMENT SUBJECT TO TERMS OF THE [O] ISSUER CASH MANAGEMENT AGREEMENT: The
terms and conditions of this Clause 4 are to be read in conjunction with
the provisions of Part 3 of Schedule 2 to the [O] Issuer Cash Management
Agreement, as the same may be amended or varied from time to time in
accordance with the provisions thereof.
4.2 PAYMENT OF INTEREST: Subject to Clause 4 of the Intercompany Loan Terms and
Conditions, on each Payment Date Funding will pay to the [O] Issuer an
amount of interest equal to the amount of interest required by the [O]
Issuer on such Payment Date (or such other date on which an amount of
interest is payable by the [O] Issuer) to fund (by payment to any Swap
Provider or otherwise) the amount payable by the [O] Issuer on such Payment
Date (or such other date on which an amount of interest is payable by the
[O] Issuer) on the [O] Issuer Notes and certain other amounts (including an
amount equal to the [O] Issuer's retained profit) as specified in and in
accordance with the [O] Issuer Priority of Payments as calculated by the
[O] Issuer Cash Manager on the Distribution Date that immediately precedes
such Payment Date and communicated by the [O] Issuer Cash Manager to the
Agent Bank by the close of business on such Distribution Date.
4.3 INTEREST PERIODS: The first Interest Period shall commence on (and include)
the Initial Closing Date and end on (but exclude) the Payment Date falling
in July 2001. Each subsequent Interest Period shall commence on (and
include) a Payment Date and end
27
on (but exclude) the following Payment Date.
5. REPAYMENT
5.1 PAYMENT SUBJECT TO TERMS OF THE [O] ISSUER CASH MANAGEMENT AGREEMENT: The
terms and conditions of this Clause 5 are to be read in conjunction with
the provisions of Part 4 of Schedule 2 to the [O] Issuer Cash Management
Agreement, as the same may be amended or varied from time to time in
accordance with the provisions thereof.
5.2 REPAYMENT: Subject to Clause 4 of the Intercompany Loan Terms and
Conditions, on each Payment Date Funding will repay to the [O] Issuer an
amount of principal equal to the amount of principal required by the [O]
Issuer on such Payment Date (or such other date on which an amount of
principal is payable by the [O] Issuer) to fund (by payment to any Swap
Provider or otherwise) the amount payable by the [O] Issuer on such Payment
Date (or such other date on which an amount of principal is payable by the
Issuer on the [O] Issuer Notes) on the [O] Issuer Notes, as determined by
the [O] Issuer Cash Manager under the terms of the [O] Issuer Cash
Management Agreement on the Distribution Date that immediately precedes
such Payment Date and communicated by the [O] Issuer Cash Manager to the
Agent Bank by the close of business on such Distribution Date.
5.3 ACKNOWLEDGEMENT OF NEW INTERCOMPANY LOANS: The [O] Issuer hereby
acknowledges and agrees that from time to time Funding may enter into New
Intercompany Loans with New Issuers and that the obligation of Funding to
repay this [O] Issuer Intercompany Loan will rank pari passu with the
obligations of Funding to repay any such New Intercompany Loan.
6. CERTAIN FEES, ETC.
6.1 FEE FOR PROVISION OF [O] ISSUER INTERCOMPANY LOAN: In addition to the
interest and principal payments to be made by Funding under Clauses 4 and
5, respectively, on each Payment Date (or, in respect of the payment to be
made as set forth in (a) below, on the Drawdown Date) or on any other date
on which the [O] Issuer notifies Funding, Funding shall pay to the [O]
Issuer for same day value to the [O] Issuer Transaction Account a fee for
the provision of the [O] Issuer Intercompany Loan (except that in the case
of payments due under paragraphs (c), (e), (f) and (j) below, such payments
shall be paid when due). Such fee shall be an amount or amounts in the
aggregate equal to the following:
(a) the amount payable on the Drawdown Date as previously communicated to
Funding by the [O] Issuer;
(b) the fees, costs, charges, liabilities and expenses and any other
amounts due and payable to the Note Trustee pursuant to the [O] Issuer
Trust Deed, the [O] Issuer Trust Deed or any other Transaction
Document, together with interest thereon as provided therein;
(c) the reasonable fees and expenses of any legal advisers, accountants
and auditors appointed by the [O] Issuer and properly incurred in
their
28
performance of their functions under the Transaction Documents which
have fallen due;
(d) the fees, costs and expenses due and payable to the Paying Agents and
the Agent Bank pursuant to the Paying Agent and Agent Bank Agreement
and the fees, costs and expenses due and payable to the Transfer
Agent, the Registrar and the Note Depository;
(e) any amounts due and payable by the [O] Issuer to the Inland Revenue in
respect of the [O] Issuer's liability to United Kingdom corporation
tax (insofar as payment is not satisfied by the surrender of group
relief or out of the profits, income or gains of the [O] Issuer and
subject to the terms of the [O] Issuer Deed of Charge) or any other
Taxes payable by the [O] Issuer;
(f) the fees, costs, charges, liabilities and expenses due and payable to
the [O] Issuer Account Bank pursuant to the [O] Issuer Bank Account
Agreement (if any);
(g) the fees, costs, charges, liabilities and expenses due and payable to
the [O] Issuer Cash Manager pursuant to the [O] Issuer Cash Management
Agreement;
(h) any termination payment due and payable by the [O] Issuer to a [O]
Issuer Swap Provider pursuant to a [O] Issuer Swap Agreement;
(i) the fees, costs, charges, liabilities and expenses due and payable to
the Corporate Services Provider pursuant to the Corporate Services
Agreement; and
(j) any other amounts due or overdue by the [O] Issuer to third parties
including the Rating Agencies and the amounts paid by the [O] Issuer
under the Subscription Agreement and the Underwriting Agreement
(excluding, for these purposes, the Noteholders) other than amounts
specified in paragraphs (b) to (j) above,
together with, (i) in respect of taxable supplies made to the [O] Issuer,
any amount in respect of any VAT or similar tax payable in respect thereof
against production of a valid tax invoice; and (ii) in respect of taxable
supplies made to a person other than the [O] Issuer, any amount in respect
of any Irrecoverable VAT or similar tax payable in respect thereof (against
production of a copy of the relevant tax invoice), and to be applied
subject to and in accordance with the provisions of the [O] Issuer
Pre-Enforcement Revenue Priority of Payments in the [O] Issuer Cash
Management Agreement.
6.2 SET-OFF: Funding and each of the other parties to the Intercompany Loan
Agreement agree that the [O] Issuer shall be entitled to set-off those
amounts due and payable by Funding pursuant to this Clause 6 on the Initial
Closing Date against the amount to be advanced by the [O] Issuer to Funding
under the [O] Issuer Intercompany Loan on the Initial Closing Date.
30
7. ADDITIONAL COVENANTS
Funding undertakes to establish the [O] Issuer Liquidity Reserve Fund, and
an appropriate ledger therefor, on behalf of the [O] Issuer should the
long-term, unsecured, unsubordinated and unguaranteed debt obligations of
the Seller cease to be rated at least A3 by ▇▇▇▇▇'▇ or A- by Fitch (unless
▇▇▇▇▇'▇ or Fitch, as applicable, confirms the then current ratings of the
[O] Issuer Notes will not be adversely affected by such ratings downgrade).
Any such [O] Issuer Liquidity Reserve Fund and the [O] Issuer Liquidity
Reserve Ledger shall be established and maintained in accordance with the
provisions of the Cash Management Agreement.
8. DECLARATION OF TRUST
The [O] Issuer declares the Security Trustee, and the Security Trustee
hereby declares itself, trustee of all the covenants, undertakings, rights,
powers, authorities and discretions in, under or in connection with this
Agreement for the Funding Secured Creditors in respect of the Funding
Secured Obligations owed to each of them respectively upon and subject to
the terms and conditions of the Funding Deed of Charge.
9. ADDRESSES
The addresses referred to in Clause 18.4 (Notices) of the Intercompany Loan
Terms and Conditions are as follows:
THE SECURITY TRUSTEE:
For the attention of: [O]
Address: [O]
Facsimile: [O]
THE [O] ISSUER:
For the attention of: [O]
Address: [O]
Telephone: [O]
Facsimile: [O]
FUNDING:
For the attention of: [O]
Address: [O]
Telephone: [O]
Facsimile: [O]
30
RATING AGENCIES:
▇▇▇▇▇'▇: [O]
For the attention of: [O]
Telephone: [O]
Facsimile:
S&P: [O]
For the attention of: [O]
Telephone: [O]
Facsimile:
FITCH: [O]
For the attention of: [O]
Telephone: [O]
Facsimile:
IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed on
the day and year appearing on page 1.
31
SCHEDULE 1
CONDITIONS PRECEDENT IN RESPECT OF DRAWDOWN
1. AUTHORISATIONS
(a) A copy of the memorandum and articles of association and certificate
of incorporation of Funding.
(b) A copy of a resolution of the board of directors of Funding
authorising the entry into, and the execution and performance of, each
of the Transaction Documents to which Funding is a party and
authorising specified persons to execute those on its behalf.
(c) A certificate of a director of Funding certifying:
(i) that each document delivered under this paragraph 1 of Schedule 1
is correct, complete and in full force and effect as at a date no
later than the date of the Intercompany Loan Agreement and
undertaking to notify the [O] Issuer (with a copy of such
certification to the Security Trustee) if that position should
change prior to the Drawdown Date; and
(ii) as to the identity and specimen signatures of the directors
and signatories of Funding.
2. SECURITY
(a) The Funding Deed of Charge duly executed by the parties thereto.
(b) Duly completed bank account mandates in respect of the Funding GIC
Account and the Funding Transaction Account.
(c) Security Power of Attorney for Funding.
3. LEGAL OPINION
Legal opinions of:
(a) [O], English legal advisers to the Seller, the [O] Issuer and Funding,
addressed to the Security Trustee; and
(b) [O], U.S. legal advisers to the Seller, the [O] Issuer and Funding,
addressed to the Security Trustee.
4. TAX
Evidence of a group income election made under section 247 of the Income
and Corporation Taxes Act 1988 in relation to Funding and the [O] Issuer.
32
5. TRANSACTION DOCUMENTS
Duly executed copies of:
(a) the [O] Issuer Deed of Charge;
(b) the [O] Issuer Trust Deed;
(c) the Cash Management Agreement;
(d) the Global Notes;
(e) the Corporate Services Agreement;
(f) the Currency Swap Agreements;
(g) the Basis Rate Swap Agreements;
(h) the Bank Account Agreement;
(i) the Master Definitions Schedule and the [O] Issuer Master Definitions
Schedule;
(j) the Paying Agent and Agent Bank Agreement;
(k) the Start-up Loan Agreement;
(l) the Mortgage Sale Agreement;
(m) the Mortgages Trust Deed;
(n) the Administration Agreement;
(o) the Mortgages Trustee Guaranteed Investment Contract;
(p) the Funding Guaranteed Investment Contract;
(q) the Funding ([O] Issuer) Guaranteed Investment Contract;
(r) the Post Enforcement Call Option Agreement;
(s) the Subscription Agreement;
(t) the Underwriting Agreement;
(u) the Seller Power of Attorney;
(v) the Funding Deed of Charge;
(w) the Depository Agreement;
(x) the [O] Issuer Cash Management Agreement;
33
(y) the Funding ([O] Issuer) Bank Account Agreement; and
(z) the [O] Issuer Bank Account Agreement.
6. BOND DOCUMENTATION
(a) Confirmation that the [O] Issuer Notes have been issued and the
subscription proceeds received by the [O] Issuer; and
(b) Copy of the Prospectus and the Offering Circular.
7. MISCELLANEOUS
Solvency certificates from Funding signed by two directors of Funding in or
substantially in the form set out in Schedule 2 (Solvency Certificate) to
the Intercompany Loan Terms and Conditions.
34
EXECUTION PAGE
EXECUTED for and on behalf of )
GRANITE FINANCE FUNDING LIMITED )
by: )
---------------------------------
Authorised Signatory
Name:
Title:
EXECUTED for and on behalf of )
GRANITE MORTGAGES 01-1 PLC )
by: )
---------------------------------
Authorised Signatory
Name:
Title:
EXECUTED for and on behalf of )
THE BANK OF NEW YORK )
by: )
---------------------------------
Authorised Signatory
Name:
Title:
35
EXECUTED for and on behalf of )
CITIBANK, N.A. )
by: )
---------------------------------
Authorised Signatory
36
EXECUTION PAGE
Executed on 26 March 2001 for the purposes of identification by:
EXECUTED for and on behalf of )
GRANITE FINANCE FUNDING LIMITED )
by: )
------------------------------------
Authorised Signatory
Name:
Title:
EXECUTED for and on behalf of )
THE BANK OF NEW YORK )
by: )
------------------------------------
Authorised Signatory
Name:
Title:
EXECUTED for and on behalf of )
CITIBANK, N.A. )
by: )
-----------------------------------
Authorised Signatory
37
