Exhibit 4.1.1
Dated 24 September 2003
GRANITE FINANCE FUNDING LIMITED
THE BANK OF NEW YORK
as Security Trustee
-and -
CITIBANK, N.A.
as Agent Bank
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THIRD AMENDED
INTERCOMPANY LOAN TERMS AND CONDITIONS
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SIDLEY AUSTIN BROWN & WOOD
1 THREADNEEDLE STREET
LONDON EC2R 8AW
TELEPHONE 020 7360 3600
FACSIMILE 020 7626 7937
REF:624580
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.......................................................21
Schedule 1 SCHEDULE 1NOTICE OF DRAWDOWN OF INTERCOMPANY LOAN.............22
Schedule 2 SOLVENCY CERTIFICATE..........................................23
Schedule 3 FORM OF INTERCOMPANY LOAN CONFIRMATION........................26
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THIS THIRD AMENDED INTERCOMPANY LOAN TERMS AND CONDITIONS DATED 24 SEPTEMBER
2003 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 Sixth Amendment and Restatement Deed made on 24 September 2003
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
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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
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(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
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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 Act 1988, 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
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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
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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
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(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:
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(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 Act 1985, 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:
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(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 Act 1985, 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
14
meaning of Section 123(a), (b), (c) or (d) of the Insolvency Act
1986 (as amended, modified or re-enacted) or becomes unable to
pay its debts within the 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 or the
making of an application for an administration order or the
filing of documents for an adminstration 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 a formal notice is given of intention to appoint
an administrator; or an administration order being granted 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.
15
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) (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
16
of such Issuer or prior breach by such Issuer of the terms of
any of the Transaction Documents to which it is a party);
(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
17
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.
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:
18
(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.
(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
19
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 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) Act 1999, 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.
20
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.
21
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: (GBP)[ ] of which (GBP)[ ] 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
22
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 Act 1986 (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
23
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 Brown & Wood and Clifford 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
24
- -----------------------------
Director/Secretary
25
SCHEDULE 3
FORM OF INTERCOMPANY LOAN CONFIRMATION
26
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 4th
Floor, 35 New Bridge Street, Blackfriars, London EC4V 6BW ("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 Fifth Floor, 100 Wood Street, London EC2V 7EX (the "[o]
Issuer");
(3) THE BANK OF NEW YORK, whose offices are at One Canada Square, 48th
Floor, London E14 5AL (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 5 Carmelite Street,
London EC4Y 0PA (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;
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"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 (GBP)[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
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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
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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.
7. Additional Covenants
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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 Moody's or
A- by Fitch (unless Moody's 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]
Rating Agencies:
30
Moody's: [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.
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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