DRAFT: 14.03.03
SERIES 1 CLASS B
ICM:663595.1
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of {circle}, 2003
between
(1) {circle} ("PARTY A");
(2) XXXXXX FINANCING (NO. 7) PLC ("PARTY B"); and
(3) {circle} (the "ISSUER SECURITY TRUSTEE", which expression shall include
its successors and assigns and which has agreed to become a party to
this Agreement solely for the purpose of taking the benefit of Parts
5(b) and (l) of the Schedule to this Agreement).
Part 1.TERMINATION PROVISIONS
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:-
Section 5(a)(v), none
Section 5(a)(vi), none
Section 5(a)(vii), none
Section 5(b)(iv), none
and in relation to Party B for the purpose of:-
Section 5(a)(v), none
Section 5(a)(vi), none
Section 5(a)(vii), none
Section 5(b)(iv), none
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will not apply to
Party A and will not apply to Party B.
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will not
apply to Party A and will not apply to Party B.
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(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not
apply to Party A and will not apply to Party B.
(f) PAYMENTS ON EARLY TERMINATION. For the purposes of Section 6(e) of this
Agreement:-
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means Sterling.
20
Part 0.XXX REPRESENTATIONS
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this
Agreement, Party A and Party B will each make the following
representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
under this Agreement. In making this representation, it may rely on (i)
the accuracy of any representations made by the other party pursuant to
Section 3(f) of this Agreement, (ii) the satisfaction of the agreement
contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the
accuracy and effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the
satisfaction of the agreement of the other party contained in
Section 4(d) of this Agreement, provided that it shall not be a breach
of this representation where reliance is placed on clause (ii) and the
other party does not deliver a form or document under Section 4(a)(iii)
by reason of material prejudice to its legal or commercial position.
(b) PAYEE REPRESENTATIONS. For the purposes of Section 3(f) of the
Agreement, Party A makes the representation specified below (the
"ADDITIONAL TAX REPRESENTATION"):
(i) it is a party to each Transaction solely for the purposes of a
trade (or part of a trade) carried on by it in the United Kingdom
through a branch or agency; or
(ii) it is resident in the United Kingdom or in a jurisdiction with
which the United Kingdom has a double tax treaty which makes
provision, whether for relief or otherwise, in relation to
interest.
(c) ADDITIONAL TERMINATION EVENT. The Additional Tax Representation proves
to have been incorrect or misleading in any material respect with
respect to one or more Transactions (each an "Affected Transaction" for
the purpose of this Additional Termination Event) when made or repeated
or deemed to have been made or repeated. The sole Affected Party shall
be Party A.
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Part 3.AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:-
(a) Tax forms, documents or certificates to be delivered are:-
PARTY REQUIRED FORM/DOCUMENT/ DATE BY WHICH
TO DELIVER CERTIFICATE TO BE DELIVERED
DOCUMENT
None
(b) Other documents to be delivered are:-
PARTY REQUIRED FORM/DOCUMENT/ DATE BY WHICH COVERED BY
TO DELIVER CERTIFICATE TO BE DELIVERED SECTION 3(D)
DOCUMENT REPRESENTATION
Party A and Appropriate On signing of Yes
Party B evidence of this Agreement
its signatory's
authority
Party B Certified copy of On signing of Yes
board resolution this Agreement
Party A Legal opinion On signing of No
in form and this Agreement
substanc
satisfactory to
Party B
[Party A Credit Support On signing of Yes]
Document this Agreement
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Part 4.MISCELLANEOUS
(a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this
Agreement:-
Address for notices or communications to Party A (other than by
facsimile):-
[PLEASE PROVIDE]
Address: [ ]
Attention: [ ]
Facsimile No:[ ]
Telephone No:[ ]
With a copy in the case of notices or communications relating to
Sections 5, 6, 7, 11 or 13 to:
Address: [ ]
Attention: [ ]
Facsimile No:[ ]
Telephone No:[ ]
Address for notices or communications to Party B:- [PLEASE CONFIRM]
Address: [c/o Abbey National plc
Abbey Xxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Regents Place
London NW1 3AN]
Attention: [Company Secretary]
Facsimile No.:[x00 000 000 0000]
Copy: [c/o Abbey National plc
Abbey House (AAM126)
000 Xxxxxxx Xxxx Xxxx
Xxxxxx Xxxxxx XX0 1AN]
Attention: [Securitisation Team, Business Relationship Management]
Facsimile No.:[x00 0000 000000]
With a copy to the Issuer Security Trustee:-
[PLEASE PROVIDE]
Address: [ ]
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Attention: [ ]
Facsimile No.:[ ]
(b) PROCESS AGENT. For the purpose of Section 13(c) of this Agreement:-
Party A appoints as its Process Agent: [PLEASE CONFIRM]
Party B appoints as its Process Agent: None.
(c) OFFICES. The provisions of Section 10(a) will apply to this Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:-
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:-
In respect of Party A, [PLEASE CONFIRM]
In respect of Party B, none
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to
Party A, [PLEASE CONFIRM].
Credit Support Provider means in relation to Party B, none.
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of England and Wales.
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this
Agreement will apply to Transactions entered into under this Agreement
unless otherwise specified in a Confirmation.
(j) "AFFILIATE" will have the meaning specified in Section 14 of this
Agreement.
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Part 5. OTHER PROVISIONS
(a) NO SET-OFF
(i) All payments under this Agreement shall be made without set-off or
counterclaim, except as expressly provided for in Section 6.
(ii) Section 6(e) shall be amended by the deletion of the following
sentence; "The amount, if any, payable in respect of an Early
Termination Date and determined pursuant to this Section will be
subject to any Set-off."
(b) SECURITY INTEREST
Notwithstanding Section 7, Party A hereby agrees and consents to the
assignment by way of security by Party B of its interests under this
Agreement (without prejudice to, and after giving effect to, any
contractual netting provision contained in this Agreement) to the Issuer
Security Trustee (or any successor thereto) pursuant to and in
accordance with the Seventh Issuer Deed of Charge and acknowledges
notice of such assignment. Each of the parties hereby confirms and
agrees that the Issuer Security Trustee shall not be liable for any of
the obligations of Party B hereunder.
(c) DISAPPLICATION OF CERTAIN EVENTS OF DEFAULT
Sections 5(a)(ii), 5(a)(iii), 5(a)(iv), 5(a)(v),
5(a)(vii)(2),(5),(6),(7) and (9), and 5(a)(viii) will not apply in
respect of Party B.
Section 5(a)(vii)(8) will not apply to Party B to the extent that it
applies to Section 5(a)(vii)(2) (5),(6),(7) and (9).
(d) DISAPPLICATION OF CERTAIN TERMINATION EVENTS
The "Tax Event" and "Tax Event upon Merger" provisions of Section
5(b)(ii) and 5(b)(iii) will not apply to Party A or to Party B.
(e) ADDITIONAL EVENT OF DEFAULT
The following shall constitute an additional Event of Default with
respect to Party B:
"NOTE ENFORCEMENT NOTICE. The Issuer Security Trustee serves a Class B
Issuer Note Enforcement Notice, as defined in Condition 9 of the Offered
Issuer Notes, on Party B (in which case Party B shall be the Defaulting
Party)."
(f) ADDITIONAL TERMINATION EVENT
The following shall constitute an Additional Termination Event with
respect to Party B:
"REDEMPTION AND PREPAYMENT OF THE SERIES 1 CLASS B NOTES. Party B
exercises its option to redeem the Series 1 Class B Notes in whole in
accordance with the provisions of Condition [5(E)] of the Offered Issuer
Notes."
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In connection with this Additional Termination Event, Party B shall be
the sole Affected Party and all Transactions shall be Affected
Transactions.
(g) RATINGS EVENT
(i) STANDARD & POOR'S RATING DOWNGRADE
In the event that the [LONG-TERM][short term]* , unsecured and
unsubordinated debt obligations of Party A (or its successor or
assignee) and, if relevant, any Credit Support Provider of Party
A, are downgraded below ["AA-"]["A-1+"]* by Standard & Poor's
Rating Services, a division of The XxXxxx-Xxxx Companies Inc.
("S&P") and, as a result of such downgrade, the then current
rating of the Series 1 Class B Seventh Issuer Notes may in the
reasonable opinion of S&P be downgraded or placed under review for
possible downgrade (an "S&P RATING EVENT"), then Party A will,
within 30 days of the occurrence of such S&P Rating Event, at its
own cost, either:
(A) put in place an appropriate xxxx-to-market collateral
agreement, (which may be based on the credit support
documentation published by ISDA, or otherwise, and relates
to collateral in the form of cash or securities or both) in
support of its obligations under this Agreement provided
that (x) Party A shall be deemed to have satisfied the
requirements of S&P if the amount of collateral agreed to be
provided in the form of cash and/or securities (the
"COLLATERAL AMOUNT") is determined on a basis which is no
more onerous than the criteria of S&P as at 31st September,
1999 which enable entities rated lower than a specified
level to participate in structured finance transactions
which, through collateralisation, are rated at a higher
level (as referred to, in part, in the article entitled New
Structured Finance Interest Rate and Currency Swap Criteria
Broadens Allowable Counterparties in the January 1999 issue
of S&P's Structured Finance publication) (the "S&P
CRITERIA"), and (y) the Collateral Amount shall not be
required to exceed such amount as would be required (in
accordance with the S&P Criteria) to restore the rating of
the Series 1 Class B Seventh Issuer Notes to the level at
which they would have been immediately prior to such
downgrading; or
(B) transfer all of its rights and obligations with respect to
this Agreement to a replacement third party whose short-
term, unsecured and unsubordinated debt obligations are
rated at least as high as ""F1" by Fitch Ratings Limited
("FITCH") and whose long-term, unsecured and unsubordinated
debt obligations are rated at least as high as ["AA-"]["A-
1+"]* by S&P and "A1" by Xxxxx'x Investors Services
("MOODY'S") or, in each case, such other ratings as are
commensurate with the ratings assigned to the Series 1 Class
B Seventh Issuer Notes by such rating agencies from time to
time; or
(C) procure another person to become co-obligor in respect of
the obligations of Party A under this Agreement or take such
other action as Party A may agree with S&P as will result in
the rating of the Series 1
---------------------
* Upon allocation of the swaps, the rating downgrade provisions may vary. Where
wording is contained in square brackets, if the wording highlighted in bold is
selected then all such options in bold will apply and if the wording highlighted
in italics is selected then all such options in italics will apply.
26
Class B Seventh Issuer Notes then outstanding following the
taking of such action being rated no lower than the rating of
the Series 1 Class B Seventh Issuer Notes immediately prior
to such downgrade.
(ii) MOODY'S "A1/P-1" RATINGS DOWNGRADE
In the event that:
(A) the long-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) and, if relevant,
any Credit Support Provider of Party A, cease to be rated
at least as high as "A1" (or its equivalent) by Moody's, or
(B) the short-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) and, if relevant,
any Credit Support Provider of Party A, cease to be rated
at least as high as "Prime-1" (or its equivalent) by
Moody's,
and as a result of such downgrade the then current ratings of the
Series 1 Class B Seventh Issuer Notes may, in the opinion of
Moody's, be downgraded or placed under review for possible
downgrade (such downgrade or placing under review for downgrade,
an "INITIAL XXXXX'X RATING EVENT"), then Party A will, on a
reasonable efforts basis and at its own cost attempt to:
(1) transfer all of its rights and obligations with
respect to this Agreement to either (x) a
replacement third party with the Moody's Required
Ratings (as defined below) domiciled in the same
legal jurisdiction as Party A or Party B, or (y) a
replacement third party in relation to whom Moody's
has confirmed that there would be no Initial Xxxxx'x
Rating Event; or
(2) procure another person to become co-obligor in
respect of the obligations of Party A under this
Agreement; such co-obligor may be either (x) a
person with the Moody's Required Ratings domiciled
in the same legal jurisdiction as Party A or Party
B, or (y) a person in relation to whom Moody's has
confirmed that there would be no Initial Xxxxx'x
Rating Event; or
(3) take such other action Moody's shall confirm to
Party A will remedy an Initial Xxxxx'x Rating Event
[; OR][.]*
[(4) PUT IN PLACE A XXXX-TO-MARKET COLLATERAL AGREEMENT
IN A FORM AND SUBSTANCE ACCEPTABLE TO MOODY'S (WHICH
MAY BE BASED ON THE CREDIT SUPPORT DOCUMENTATION
PUBLISHED BY ISDA, OR OTHERWISE, AND RELATES TO
COLLATERAL IN THE FORM OF CASH OR SECURITIES OR
BOTH) IN SUPPORT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT WHICH COMPLIES WITH THE XXXXX'X CRITERIA
(OR SUCH OTHER AMOUNT AS MAY BE AGREED WITH
MOODY'S).]
[Pending compliance with any of (ii)(B)(1), (ii)(B)(2) or
(ii)(B)(3) above, Party A will, at its own cost:
27
(4) within 30 days of the occurrence of a Xxxxx'x Rating
Event,put in place a xxxx-to-market collateral
agreement in a form and substance acceptable to
Moody's (which may be based on the credit support
documentation published by ISDA, or otherwise, and
relates to collateral in the form of cash or
securities or both) in support of its obligations
under this Agreement which complies with the Moody's
Criteria (or such other amount as may be agreed with
Moody's).]*
If any of (ii)(B)(1), (ii)(B)(2) or (ii)(B)(3) above are satisfied
at any time, all collateral (or the equivalent thereof, as
appropriate) transferred by Party A pursuant to (ii)(B)(4) will be
re-transferred to Party A and Party A will not be required to
transfer any additional collateral.
(iii) MOODY'S ["BAA2/P-2"]["A3/P-2"]* RATINGS DOWNGRADE
In the event that:
(A) the long-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) and, if relevant,
any Credit Support Provider of Party A, cease to be rated
at least as high as ["BAA2"]["A3"]* (or its equivalent) by
Moody's, or
(B) the short-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) and, if relevant,
any Credit Support Provider of Party A, cease to be rated
at least as high as "Prime-2" (or its equivalent) by
Moody's (such downgrade or placing under review for
downgrade, a " SUBSEQUENT XXXXX'X RATING EVENT"),
then Party A will, on a [BEST][reasonable]* efforts basis, within
30 days of the occurrence of such downgrade, and at its own cost:
(1) transfer all of its rights and obligations with
respect to this Agreement to either (x) a
replacement third party with the Moody's Required
Ratings domiciled in the same legal jurisdiction as
Party A or Party B, or (y) a replacement third party
in relation to whom Moody's has confirmed that there
would be no Subsequent Xxxxx'x Rating Event; or
(2) procure another person to become co-obligor in
respect of the obligations of Party A under this
Agreement; such co-obligor may be either (x) a
person with the Moody's Required Ratings domiciled
in the same legal jurisdiction as Party A or Party
B, or (y) a person in relation to whom Moody's has
confirmed that there would be no Subsequent Xxxxx'x
Rating Event; or
(3) take such other action as Moody's shall confirm to
Party A will remedy a Subsequent Xxxxx'x Rating
Event.
Pending compliance with (iii)(B)(1), (iii)(B)(2) or
(iii)(B)(3) above, Party A will at its own cost:
(4) within 10 days of the occurrence of such Subsequent
Moody's
28
Rating Event, put in place a xxxx-to-market
collateral agreement in a form and substance
acceptable to Moody's (which may be based on the
credit support documentation published by ISDA, or
otherwise, and relates to collateral in the form of
cash or securities or both) in support of its
obligations under this Agreement which complies with
the Moody's Criteria (or such other amount as may be
agreed with Moody's).
If any of (iii)(B)(1), (iii)(B)(2) or (iii)(B)(3) are satisfied at
any time, all collateral (or the equivalent thereof, as
appropriate) transferred by Party A pursuant to (iii)(B)(4) will
be retransferred to Party A and Party A will not be required to
transfer any additional collateral.
[In relation to this sub-paragraph (iii)(B)(4) and sub-paragraph
(ii)(B)(4) above, Party A will, upon receipt of reasonable notice
from Moody's, demonstrate to Moody's the calculation by it of the
xxxx-to-market value of the outstanding Transactions.]*
For the purposes of this sub-paragraph (iii) and sub-paragraph
(ii) above,
"MOODY'S REQUIRED RATINGS" means, in respect of the relevant
entity, its short-term, unsecured and unsubordinated debt
obligations are rated at least as high as "Prime-1" and its long-
term, unsecured and unsubordinated debt obligations are rated at
least as high as "A1", or such other ratings as may be agreed with
Moody's from time to time; and
"MOODY'S CRITERIA" means that the Collateral Amount shall equal
the sum of (a) the product of A multiplied by the xxxx-to-market
value of the outstanding Transactions as determined by Party A in
good faith on each Local Business Day and (b) the product of B
multiplied by the current aggregate notional amounts of the
outstanding Transactions, where:
(1) "A" means 102% and "B" means 1.6% if the long-term,
unsecured and unsubordinated debt obligations or the short-
term, unsecured and unsubordinated debt obligations of
Party A (or its successor) and any Credit Support Provider
of Party A cease to be rated as high as "A1" or "Prime-1"
by Moody's;
(2) "A" means 102% and "B" shall be equal to or greater than 3%
(as determined by Moody's) if the long-term, unsecured and
unsubordinated debt obligations or the short-term,
unsecured and unsubordinated debt obligations of Party A
(or its successor) and any Credit Support Provider of Party
A cease to be rated as high as ["BAA2"]["A3"]* or "Prime-2"
by Moody's; and
(3) "A" means 0% and "B" means 0% in all other cases.
(iv) FITCH "F1" RATING DOWNGRADE
In the event that the short-term, unsecured and unsubordinated
debt obligations of Party A (or its successor), or any Credit
Support Provider of Party A, cease to be rated at least as high as
"F1" (or its equivalent) by Fitch and as a result the then
current rating of the Series 1 Class B Seventh Issuer Notes may in
the
29
reasonable opinion of Fitch be downgraded or placed on credit watch
for possible downgrade (for the purposes of this sub- paragraph, a
"FITCH RATING EVENT"), then Party A will, on a reasonable efforts
basis, within 30 days of the occurrence of such downgrade, at its
own cost, either:
(A) attempt to transfer all of its rights and obligations with
respect to this Agreement to either (x) a replacement third
party with the Fitch Required Ratings (as defined below) or
(y) a replacement third party in relation to whom Fitch has
confirmed that there would be no Fitch Rating Event; or
(B) procure another person with the Fitch Required Ratings to
become co-obligor or guarantor in respect of the
obligations of Party A under this Agreement; or
(C) put in place an appropriate xxxx-to-market collateral
agreement (which may be based on the credit support
documentation published by ISDA, or otherwise, and relates
to collateral in the form of cash or securities or both) in
support of its obligations under this Agreement which
complies with the Fitch Criteria (or such other amount as
may be agreed with Fitch); or
(D) take such other action as Party A may agree with Fitch as
will result in the rating of the Series 1 Class B Seventh
Issuer Notes then outstanding being maintained.
(v) FITCH "F2" RATING DOWNGRADE
In the event that the short-term, unsecured and unsubordinated
debt obligations of Party A (or its successor), or any Credit
Support Provider of Party A, cease to be rated at least as high as
"F2" (or its equivalent) by Fitch and as a result the then
current rating of the Series 1 Class B Seventh Issuer Notes may in
the reasonable opinion of Fitch be downgraded or placed on credit
watch for possible downgrade, (for the purposes of this sub-
paragraph, a "FITCH RATING EVENT") then Party A will, on a
reasonable efforts basis, within 30 days of the occurrence of such
downgrade, at its own cost, either:
(A) attempt to transfer all of its rights and obligations with
respect to this Agreement to either (x) a replacement third
party with the Fitch Required Ratings (as defined below) or
(y) a replacement third party in relation to whom Fitch has
confirmed that there would be no Fitch Rating Event; or
(B) procure another person with the Fitch Required Ratings to
become co-obligator or guarantor in respect of the
obligations of Party A under this Agreement; or
(C) take such other action as Party A may agree with Fitch as
will result in the rating of the Series 1 Class B Seventh
Issuer Notes then outstanding being maintained.
Pending compliance with (A),(B) or (C) above, Party A will, at its
own cost:
30
(D) within 30 days of the occurrence of such downgrade, put in
place a xxxx-to-market collateral agreement in a form and
substance acceptable to Fitch (which may be based on the
credit support documentation published by ISDA, or
otherwise, and relates to collateral in the form of cash or
securities or both) in support of its obligations under
this Agreement which complies with the Fitch Criteria (or
such other amount as may be agreed with Fitch).
If any of (v)(A),(v)(B) or (v)(C) above are satisfied at any time,
all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to (v)(D) will be re-transferred
to Party A and Party A will not be required to transfer any
additional collateral.
For the purposes of this sub-paragraph (v) and sub-paragraph (iv)
above, "FITCH REQUIRED RATINGS" means, in respect of the relevant
entity, its short-term, unsecured and unsubordinated debt
obligations are rated at least as high as "F1" (or its equivalent)
by Fitch or such other rating as is commensurate with the rating
assigned to the Series 1 Class B Seventh Issuer Notes by Fitch
from time to time.
"FITCH CRITERIA" means the Collateral Amount shall equal the sum
of (i) the product of A multiplied by the xxxx-to-market value of
the outstanding Transactions determined by Party A in good faith
from time to time, and (ii) the product of B multiplied by the
current aggregate notional amount of the outstanding Transactions,
where:
(1) "A" means 100% and "B" means 1.25% of the xxxx-to-market
value of the outstanding Transactions is determined by
Party A on each Local Business Day; or
(2) "A" means 100% and "B" means 2.5% where the xxxx-to-market
value of the outstanding Transactions is determined by
Party A on a weekly basis.
(vi) CONSEQUENCES OF RATING EVENTS
(A) If Party A does not take any of the measures described in
(i), (ii), (iv) or (v) above, such failure shall not be or
give rise to an Event of Default but shall constitute an
Additional Termination Event with respect to Party A and
shall be deemed to have occurred on the thirtieth day
following the relevant S&P Rating Event, Fitch Rating
Event, or Xxxxx'x Initial Rating Event or Xxxxx'x
Subsequent Rating Event (as applicable) with Party A as the
sole Affected Party and all Transactions as Affected
Transactions.
(B) If Party A does not take the measures described in
(iii)(B)(4) above, such failure shall give rise to an Event
of Default with respect to Party A and shall be deemed to
have occurred on the tenth day following such Subsequent
Xxxxx'x Rating Event with Party A as the Defaulting Party.
Further, notwithstanding Section 5(a)(ii) of this
Agreement, if ten days after receiving notice of failure to
use its [BEST] [reasonable]* efforts to either transfer as
described in (iii)(B)(1), find a co-obligor as described in
(iii)(B)(2) or take such other action as described in
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(iii)(B)(3), Party A still has not used [BEST]
[reasonable]* efforts to take one of the above courses of
action, this shall not constitute an Event of Default but
shall be an Additional Termination Event with Party A as
the sole Affected Party and all Transactions as Affected
Transactions.
(C) In the event that Party B were to designate an Early
Termination Date and there would be a payment due to Party
A, Party B may only designate such Early Termination Date
in respect of an Additional Termination Event under this
Part 5(g) if Party B has found a replacement counterparty
willing to enter into a new transaction on terms that
reflect as closely as reasonably possible [(as the Issuer
Security Trustee may, in its absolute discretion,
determine)]* the economic, legal and credit terms of the
Terminated Transactions with Party A.
(vii) CO-OPERATION OF PARTY B AND ISSUER SECURITY TRUSTEE
Each of Party B and the Issuer Security Trustee shall use their
reasonable endeavours to co-operate with Party A in putting in
place any credit support documentation, including agreeing to such
arrangements in such documentation as may satisfy S&P, Xxxxx'x and
Fitch with respect to the operation and management of the
collateral (subject always to proviso (x) and (y) in (i)(A) above)
and entering into such documents as may reasonably be requested by
Party A in connection with the provision of such collateral.
(h) ADDITIONAL REPRESENTATIONS
(i) Section 3 is amended by the addition at the end thereof of the
following additional representations:
"(g) NO AGENCY. It is entering into this Agreement and each
Transaction as principal and not as agent of any person."
(ii) The following additional representation shall be given by Party A
only:
"(h) PARI PASSU. Its obligations under this Agreement rank pari
passu with all of its other unsecured, unsubordinated
obligations except those obligations preferred by operation
of law."
(i) RECORDING OF CONVERSATIONS
Each party to this Agreement acknowledges and agrees to the tape
recording of conversations between the parties to this Agreement.
(j) RELATIONSHIP BETWEEN THE PARTIES
The Agreement is amended by the insertion after Section 14 of an
additional Section 15, reading in its entirety as follows:
32
"15. RELATIONSHIP BETWEEN THE PARTIES
Each party will be deemed to represent to the other party on the date on
which it enters into a Transaction that (absent a written agreement
between the parties that expressly imposes affirmative obligations to
the contrary for that Transaction):
(a) NON RELIANCE. It is acting for its own account, and it has made
its own decisions to enter into that Transaction and as to whether
that Transaction is appropriate or proper for it based upon advice
from such advisers as it has deemed necessary. It is not relying
on any communication (written or oral) of the other party as
investment advice or as a recommendation to enter into that
Transaction; it being understood that information and explanations
related to the terms and conditions of a Transaction shall not be
considered investment advice or a recommendation to enter into
that Transaction. It has not received from the other party any
assurance or guarantee as to the expected results of that
Transaction.
(b) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the
merits of and understanding (through independent professional
advice), and understands and accepts, the terms, conditions and
risks of that Transaction. It is also capable of assuming, and
assumes, the financial and other risks of that Transaction.
(c) STATUS OF PARTIES. The other party is not acting as a fiduciary
or an adviser for it in respect of that Transaction."
(k) TAX
The Agreement is amended by deleting Section 2(d) in its entirety and
replacing it with the following:
"(d) Deduction or Withholding for Tax
(i) Requirement to Withhold
All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such
deduction or withholding is required (including, for the avoidance
of doubt, if such deduction or withholding is required in order
for the payer to obtain relief from Tax) by any applicable law, as
modified by the practice of any relevant governmental revenue
authority, then in effect. If a party ("X") is so required to
deduct or withhold, then that party (the "DEDUCTING PARTY"):
(1) will promptly notify the other party ("Y") of such
requirement;
(2) will pay to the relevant authorities the full amount
required to be deducted or withheld (including the full
amount required to be deducted or withheld from any Gross
Up Amount (as defined below) paid by the Deducting Party to
Y under this Section 2(d)) promptly upon the earlier of
determining that such deduction or withholding is required
or receiving notice that such amount has been assessed
against Y;
33
(3) will promptly forward to Y an official receipt (or a
certified copy), or other documentation reasonably
acceptable to Y, evidencing such payment to such
authorities; and
(4) if X is Party A, X will promptly pay in addition to the
payment to which Party B is otherwise entitled under this
Agreement, such additional amount (the "GROSS UP AMOUNT")
as is necessary to ensure that the net amount actually
received by Party B will equal the full amount which Party
B would have received had no such deduction or withholding
been required.
(ii) Liability
If:
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to
make any deduction or withholding for or on account of any
Tax in respect of payments under this Agreement; and
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X,
then, except to the extent that Y has satisfied or then satisfies
the liability resulting from such Tax, (A) where X is Party B,
Party A will promptly pay to Party B the amount of such liability
(the "LIABILITY AMOUNT") (including any related liability for
interest and together with an amount equal to the Tax payable by
Party B on receipt of such amount but including any related
liability for penalties only if Party A has failed to comply with
or perform any agreement contained in Section 4(a)(i), 4(a)(iii)
or 4(d)) and Party B will promptly pay to the relevant government
revenue authority the amount of such liability (including any
related liability for interest and penalties) and (B) where X is
Party A and Party A would have been required to pay a Gross Up
Amount to Party B, Party A will promptly pay to the relevant
government revenue authority the amount of such liability
(including any related liability for interest and penalties).
(iii) Tax Credit etc.
Where Party A pays an amount in accordance with Section 2(d)(i)(4)
above, Party B undertakes as follows:
(1) to the extent that Party B obtains any Tax credit,
allowance, set-off or repayment from the tax authorities of
any jurisdiction relating to any deduction or withholding
giving rise to such payment ("TAX CREDIT"), it shall pay to
Party A, as soon as practical after receipt of the same, so
much of the cash benefit (as calculated below) relating
thereto which it has received as will leave Party B in
substantially the same (but in any event no worse) position
as Party B would have been in if no such deduction or
withholding had been required;
(2) the "cash benefit" shall, in the case of credit, allowance
or set-off, be the additional amount of Tax which would
have been payable by Party
34
B in the relevant jurisdiction referred to in (1) above but
for the obtaining by it of the said Tax credit, allowance or
set-off and, in the case of a repayment, shall be the amount
of the repayment together with any related interest or
similar payment obtained by Party B;
(3) it will use all reasonable endeavours to obtain any Tax
Credit as soon as is reasonably practicable and it shall,
upon request by Party A, supply Party A with a reasonably
detailed explanation of its calculation of the amount of
any such Tax Credit and of the date on which the same is
received; and
(4) it will ensure that any Tax Credit obtained is paid
directly to Party A, and not applied in whole or part to
pay any other Issuer Secured Creditor or any other party,
both prior to and subsequent to any enforcement of the
security constituted by the Seventh Issuer Deed of Charge.
(l) SECURITY, ENFORCEMENT AND LIMITED RECOURSE
(a) Party A agrees with Party B and the Issuer Security Trustee to be
bound by the terms of the Seventh Issuer Deed of Charge and, in
particular, confirms that:
(i) no sum shall be payable by or on behalf of Party B to it
except in accordance with the provisions of the Seventh
Issuer Deed of Charge; and
(ii) it will not take any steps for the winding up, dissolution
or reorganisation, or for the appointment of a receiver,
administrator, administrative receiver, trustee,
liquidator, sequestrator or similar officer of Party B or
of any or all of its revenues and assets nor participate in
any ex parte proceedings nor seek to enforce any judgment
against Party B, subject to the provisions of the Seventh
Issuer Deed of Charge.
(b) In relation to all sums due and payable by Party B to Party A,
Party A agrees that it shall have recourse only to Seventh Issuer
Available Funds, but always subject to the order of priority of
payments set out in the Seventh Issuer Cash Management Agreement
and the Seventh Issuer Deed of Charge.
(m) CONDITION PRECEDENT
Section 2(a)(iii) shall be amended by the deletion of the words "a
Potential Event of Default" in respect of obligations of Party B only.
(n) REPRESENTATIONS
Section 3(b) shall be amended by the deletion of the words "or Potential
Event of Default" in respect of the representation given by Party B
only.
(o) ADDITIONAL DEFINITIONS
Words and expressions defined in the Amended and Restated Master
Definitions and Interpretation Schedule (the "MASTER SCHEDULE") and the
Seventh Issuer Master
35
Definitions and Construction Schedule (the "ISSUER SCHEDULE") (together
the "MASTER DEFINITIONS SCHEDULE") signed for the purposes of
identification on {circle}, 2003 shall, except so far as the context
otherwise requires, have the same meaning in this Agreement. In the event
of any inconsistency between the definitions in this Agreement and in the
Master Definitions Schedule the definitions in this Agreement shall
prevail. In the event of any inconsistency between the Master Schedule
and the Issuer Schedule, the Issuer Schedule shall prevail. The rules of
interpretation set out in the Master Definitions Schedule shall apply to
this Agreement.
(p) CALCULATIONS
Upon the occurrence of an Event of Default or an Additional Termination
Event with respect to Party A, Party B will be entitled (but not obliged
in the event that it does not designate an Early Termination Date) to
proceed in accordance with Section 6 of the Agreement subject to the
following:
(i) For the purposes of Section 6(d)(i), Party B's obligation with
respect to the extent of information to be provided with its
calculations is limited to information Party B has already
received in writing and provided Party B is able to release this
information without breaching the provisions of any law applicable
to, or any contractual restriction binding upon, Party B.
(ii) The following amendments shall be deemed to be made to the
definitions of "Market Quotation":
(A) the word "firm" shall be added before the word "quotations"
in the second line;
(B) the words "provided that the documentation relating thereto
is either the same as this Agreement and the existing
confirmations hereto (and the short-term, unsecured and
unsubordinated debt obligations of the Reference Market-
maker are rated not less than "F1" by Fitch and the long-
term, unsecured and unsubordinated debt obligations of the
Reference Market-maker are rated not less than "AA-" by S&P
and "A1" by Xxxxx'x (or, if such Reference Market-maker is
not rated by a Rating Agency, at such equivalent rating (by
another Rating Agency) that is acceptable to such Rating
Agency) or the Rating Agencies have confirmed in writing
such proposed documentation will not adversely impact the
ratings of the Series 1 Class B Issuer Notes " shall be
added after "agree" in the sixteenth line; and
(C) the last sentence shall be deleted and replaced with the
following:
"If, on the last date set for delivery of quotations,
exactly two quotations are provided, the Market Quotation
will be either (a) the lower of the two quotations where
there would be a sum payable by Party A to Party B, or (b)
the higher of the two quotations where there would be a sum
payable by Party B to Party A. If only one quotation is
provided on such date, Party B may, in its discretion,
accept such quotation as the Market Quotation and if Party
B does not accept such quotation (or if no quotation has
been provided), it will be deemed that the Market Quotation
in respect of the Terminated Transaction cannot be
determined."
36
(iii) For the purpose of the definition of "Market Quotation", and
without limiting the general rights of Party B under the
Agreement:
(A) Party B will undertake to use its reasonable efforts to
obtain at least three firm quotations as soon as reasonably
practicable after the Early Termination Date and in any
event within the time period specified pursuant to (iii)(C)
below;
(B) Party A shall, for the purposes of Section 6(e), be
permitted to obtain quotations from Reference Market-
makers; and
(C) if no quotations have been obtained within 6 Local Business
Days after the occurrence of the Early Termination Date or
such longer period as Party B may specify in writing to
Party A, then it will be deemed that the Market Quotation
in respect of the Terminated Transaction cannot be
determined.
(iv) Party B will be deemed to have discharged its obligations under
(iii)(A) above if it promptly requests, in writing, Party A (such
request to be made within two Local Business Days after the
occurrence of the Early Termination Date) to obtain quotations
from Reference Market-makers.
(v) Party B will not be obliged to consult with Party A as to the day
and time of obtaining any quotations.
(q) TRANSFERS
Section 7 of this Agreement shall not apply to Party A, who shall be
required to comply with, and shall be bound by, the following:
Without prejudice to Section 6(b)(ii), Party A may transfer all its
interest and obligations in and under this Agreement upon providing five
Business Days prior written notice to the Issuer Security Trustee, to
any other entity (a "TRANSFEREE") provided that:
[(A) THE TRANSFEREE'S SHORT-TERM UNSECURED AND UNSUBORDINATED DEBT
OBLIGATIONS ARE THEN RATED NOT LESS THAN "F1" BY FITCH AND ITS LONG-TERM
UNSECURED AND UNSUBORDINATED DEBT OBLIGATIONS ARE THEN RATED NOT LESS
THAN "AA-" BY S&P AND "A1" BY XXXXX'X (OR ITS EQUIVALENT BY ANY
SUBSTITUTE RATING AGENCY) OR SUCH TRANSFEREE'S OBLIGATIONS UNDER THIS
AGREEMENT ARE GUARANTEED BY AN ENTITY WHOSE SHORT-TERM, UNSECURED AND
UNSUBORDINATED DEBT OBLIGATIONS ARE THEN RATED NOT LESS THAN "F1" BY
FITCH AND WHOSE LONG-TERM, UNSECURED AND UNSUBORDINATED DEBT OBLIGATIONS
ARE THEN RATED NOT LESS THAN "AA-" BY S&P AND "A1" BY XXXXX'X (OR ITS
EQUIVALENT BY ANY SUBSTITUTE RATING AGENCY);]
37
[(a) the Transferee's short-term unsecured and unsubordinated debt
obligations are then rated not less than "F1" by Fitch and "A-1+"
by S&P its long-term unsecured and unsubordinated debt obligations
are then rated not less than "A1" by Xxxxx'x (or its equivalent by
any substitute rating agency) or such Transferee's obligations
under this Agreement are guaranteed by an entity whose short-term,
unsecured and unsubordinated debt obligations are then rated not
less than "F1" by Fitch and "A-1+" by S&P and whose long-term,
unsecured and unsubordinated debt obligations are then rated not
less than "A1" by Xxxxx'x (or its equivalent by any substitute
rating agency);]*
(b) as of the date of such transfer the Transferee will not, as a
result of such transfer, be required to withhold or deduct on
account of tax under this Agreement;
(c) a Termination Event or an Event of Default does not occur under
this Agreement as a result of such transfer;
(d) no additional amount will be payable by Party B to Party A or the
Transferee on the next succeeding Scheduled Payment Date as a
result of such transfer; and
(e) (if the Transferee is domiciled in a different country from both
Party A and Party B) S&P, Xxxxx'x and Fitch have provided prior
written notification that the then current ratings of the Series 1
Class B Seventh Issuer Notes will not be adversely affected.
Following such transfer all references to Party A shall be deemed to be
references to the Transferee.
Save as otherwise provided for in this Agreement and notwithstanding
Section 7, Party A shall not be permitted to transfer (by way of
security or otherwise) this Agreement nor any interest or obligation in
or under this Agreement without the prior written consent of the Issuer
Security Trustee.
38
DRAFT: 14.03.03
SERIES 1 CLASS B
From: [ ]
To: Xxxxxx Financing (No. 7) PLC
Abbey National House
0 Xxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxxxxx
XX0 0XX
Attention: Company Secretary
To: [Issuer Security Trustee]
Attention: [ ]
{circle}, 2003
Dear Sirs,
CONFIRMATION - SERIES 1 CLASS B DOLLAR TO STERLING CURRENCY SWAP
The purpose of this letter is to confirm the terms and conditions of the swap
transaction entered into between us on the Trade Date specified below (the "SWAP
TRANSACTION"). This letter constitutes a "CONFIRMATION" as referred to in the
1992 ISDA Master Agreement (Multicurrency-Cross Border) (Series 1 Class B)
entered into between us, you and [ ] (the "ISSUER SECURITY TRUSTEE") on the date
hereof as amended and supplemented from time to time (the "AGREEMENT").
The definitions and provisions contained in the 2000 ISDA Definitions as
published by the International Swaps & Derivatives Association, Inc. (the
"DEFINITIONS") are incorporated into this Confirmation. In the event of any
inconsistency between any of the following, the first listed shall govern: (i)
this Confirmation, (ii) the Master Definitions Schedule, and (iii) the
Definitions.
The term "TRANSACTION" as used herein shall, for the purposes of the
Definitions, have the same meaning as "SWAP TRANSACTION".
1. The following terms relate to all Transactions to which this Confirmation
relates:
Party A: [ ]
Party B: Xxxxxx Financing (No. 7) PLC
Trade Date: {circle}, 2003
Effective Date: {circle}, 2003
Termination Date: The earlier of the Party A Payment Date
falling in [ ] and the date on which all
of the Series 1 Class B Seventh Issuer Notes
are redeemed in full.
Dollar Currency Swap Rate: {circle} (USD per GBP)
Business Days: London, New York and TARGET
Business Day Convention: Following
Calculation Agent: Party A
Party A Floating Amounts:
Party A
Currency Amount: In respect of each Party A Calculation
Period, an amount in Dollars equal to the
principal amount outstanding of the Series
1 Class B Seventh Issuer Notes on the first
day of such Calculation Period (after
taking into account any redemption on such
day).
Party A
Payment Dates: The [{circle}] of each month from and
including {circle}, 2003 up to and
including the Termination Date, provided
that upon the occurrence of a Trigger Event
or the enforcement of the Seventh Issuer
Security in accordance with the Seventh
Issuer Deed of Charge, the Party A Payment
Dates shall occur on each [{circle}],
[{circle}], [{circle}] and [{circle}] up to
and including the Termination Date.
Floating Rate for
Initial Calculation Period: Linear Interpolation applicable.
Party A
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 3 months
Spread: {circle} per cent. per annum
Rounding: Rounded to the nearest cent
Reset Dates: The Effective Date and thereafter the
[{circle}] of each month from and including
{circle}, 2003 (or if such day is not a
Business Day, the next succeeding Business
Day)
Party A Floating Rate Day
Count Fraction: Actual/360
2
Party A Compounding: Compounding shall be applicable in respect
of each Party A Calculation Period of two
or three months.
Party A Compounding Dates: The [{circle}] of each month for each Party
A Calculation Period to which compounding
applies from and including the first day of
the first Party A Calculation Period to
which Compounding applies up to and
including the last day prior to the
Termination Date that is the [{circle}] day
of a month and the Termination Date.
Party A Compounding Period: Means in respect of a Party A Calculation
Period to which Compounding applies, each
period from and including one Party A
Compounding Date to but excluding the next
Party A Compounding Date.
Party B Floating Amounts:
Party B
Currency Amount: In respect of each Party B Calculation
Period, an amount in Sterling equivalent to
the Party A Currency Amount for the Party A
Calculation Period commencing on the first
day of such Party B Calculation Period,
converted by reference to the Dollar
Currency Swap Rate.
Party B
Payment Dates: The [{circle}], [{circle}], [{circle}], and
[{circle}] of each year commencing on
{circle}, 2003 up to and including the
Termination Date.
Floating Rate for
Initial Party B Calculation
Period: Linear Interpolation applicable.
Party B
Floating Rate Option: GBP-LIBOR-BBA
Designated Maturity: 3 months
Spread: {circle} per cent. per annum
Floating Rate Day
Count Fraction: Actual/365(Fixed)
Rounding: Rounded to the nearest xxxxx
Reset Dates: First day of each Calculation Period
3
Initial Exchange:
Initial Exchange Date: {circle}, 2003
Party A Initial
Exchange Amount: GBP [{circle}]
Party B Initial
Exchange Amount: USD [{circle}]
Interim Exchange:
Interim Exchange Dates: Each [Quarterly Interest Payment Date]
(other than the Termination Date) on which
any of the Series 1 Class B Seventh Issuer
Notes are redeemed in whole or in part.
Party A Interim
Exchange Amount: In respect of each Interim Exchange Date,
an amount in Dollars equal to the amount of
the Series 1 Class B Seventh Issuer Notes
redeemed on such Interim Exchange Date.
Party B Interim
Exchange Amount: In respect of each Interim Exchange Date,
the Sterling equivalent of the Party A
Interim Exchange Amount for such Interim
Exchange Date converted by reference to the
Dollar Currency Swap Rate.
Final Exchange:
Final Exchange Date: Termination Date
Party A Final
Exchange Amount: An amount in Dollars equal to the principal
amount outstanding of the Series 1 Class B
Seventh Issuer Notes on the Final Exchange
Date (before taking into account any
redemption on such day).
Party B Final
Exchange Amount: The Sterling equivalent of the Party A
Final Exchange Amount for the Final
Exchange Date converted by reference to the
Dollar Currency Swap Rate.
2. Additional Termination Event: In relation to Part 5(f) of the Agreement,
in the case of a redemption in full of the
Series 1 Class B Seventh Issuer Notes
pursuant to Condition 5(e) of the Offered
Issuer Notes, Market Quotation in respect
of the Terminated Transaction(s) shall be
determined based on the anticipated rate of
reduction in the Party A Currency
4
Amount and Party B Currency Amount had
such redemption not occurred.
3. ACCOUNT DETAILS:
Payments to Party A
in USD: Bank: Please provide
ABA No.: Please provide
Account Number: Please provide
Account Name: Please provide
Swift Code: Please provide
Favour: Please provide
Payments to Party A
in Sterling: Bank: Please provide
Sort Code: Please provide
Account Number: Please provide
Account Name: Please provide
SWIFT: Please provide
Payments to Party B
in USD: Correspondent Bank:Please provide
ABA No.: Please provide
Beneficiary Bank: Please provide
Account Number: Please provide
Sort Code: Please provide
Beneficiary: Please provide
IBAN No: Please provide
Payments to Party B
in Sterling: Bank: Please provide
Account Number: Please provide
5
Sort Code: Please provide
Beneficiary: Please provide
4. NOTICE DETAILS:
Party A: Please provide
Address: Please provide
Facsimile Number: Please provide
Attention: Please provide
Party B: [Xxxxxx Financing (No. 7) PLC]
Address: [c/o Abbey National plc
0 Xxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxxxxx
XX0 0XX]
Facsimile Number: [x00 00 0000 0000]
Attention: [Company Secretary]
With a copy to: [Abbey National plc
Abbey House (AAM 126)
000 Xxxxxxx Xxxx Xxxx
Xxxxxx Xxxxxx
XX0 0XX]
Facsimile Number: [x00 0000 000000]
Attention: [Securitisation Team Business Relationship Management]
With a copy to the
Issuer Security
Trustee: Please provide
Address: Please provide
Facsimile Number: Please provide
Attention: Please provide
6
Yours faithfully,
[SWAP COUNTERPARTY]
By:
Name:
Title:
Confirmed as of the date first written:
XXXXXX FINANCING (NO. 7) PLC
By:
Name:
Title:
[ISSUER SECURITY TRUSTEE]
By:
Name:
Title:
7
