DRAFT: 14.07.04 EXHIBIT 10.2.3
SERIES [1/2] CLASS [A/B/C]
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of [22nd] July, 2004
between
(1) UBS LIMITED, LONDON BRANCH ("PARTY A");
(2) PERMANENT FINANCING (NO. 5) PLC ("PARTY B"); and
(3) THE BANK OF NEW YORK (the "SECURITY TRUSTEE", which expression will
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 5(l) of this Schedule and assuming the obligations under
the final paragraph of Part 5(f) of this Schedule).
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 of
this Agreement.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi), will not apply to
Party A and will not apply to Party B.
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(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.
(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.
(h) "ADDITIONAL TERMINATION EVENT" will apply. In addition to the
Additional Termination Events set forth in Parts 5(f)(iv) and 5(f)(vi)
of this Schedule, the following will each constitute an Additional
Termination Event:
(i) The Additional Tax Representation (as defined in Part 2(b) of this
Schedule), 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. For the purpose of the foregoing Termination
Event, the Affected Party will be Party A only.
(ii) A redemption or purchase of the Series [1/2] Class [A/B/C] Fifth
Issuer Notes occurs pursuant to Condition 5(F) (redemption or
purchase following a regulatory event) of the terms and conditions
thereof. For the purpose of the foregoing Termination Event: (A)
for the purpose of Section 6(b)(iv), both parties will be Affected
Parties; and (B) for the purpose of Section 6(e), the Affected
Party will be Party B only.
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Part 0.XXX REPRESENTATIONS
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this
Agreement, Party A and Party B 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, except that it will 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 purpose of Section 3(f) of the
Agreement, Party A makes the following representation (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 permanent establishment; or
(ii) it is resident for tax purposes 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.
For the purpose of Section 3(f) of the Agreement, Party B does not make
any representation.
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Part 3. AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Sections 4(a)(i) and 4(a)(ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are: none
(b) Other documents to be delivered are:
PARTY REQUIRED
TO DELIVER FORM/DOCUMENT/ DATE BY WHICH COVERED BY
DOCUMENT CERTIFICATE TO BE DELIVERED SECTION 3(d)
REPRESENTATION
Party A and Appropriate evidence of On signing of this Yes
Party B its signatory's authority Agreement
Party B Certified copy of On signing of this Yes
board resolution and Agreement
constitutional documents
Party A Legal opinions in form and On signing of this No
substance satisfactory to Agreement
Party B
Party B Legal opinions from On signing of this No
Xxxxx & Xxxxx in form and Agreement
substance satisfactory to
Party A
Party A and A copy of the annual report Upon request, as Yes
Party B for such party containing soon as publicly
audited or certified financial available
statements for the most
recently ended financial year
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Part 4. MISCELLANEOUS
(a) ADDRESSES FOR NOTICES.
Notwithstanding the terms of Section 12(a) of this Agreement, notices
and other communications under Section 5 or 6 of this Agreement may be
given by facsimile transmission to the relevant facsimile number
specified below.
Address for notices or communications to Party A:
Address: UBS Limited, London Branch
000 Xxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attention: Credit Risk Management - Documentation Unit/Legal
Facsimile no: x00 00 0000 0000 / x00 00 0000 0000
Telephone no: x00 00 0000 0000
For confirmations, reset notices, payment notices etc:
For notices regarding operation, payment and confirmation matters only,
notices should be sent to the address of the relevant branch set out in
the relevant Confirmation (as may be amended from time to time).
For all other matters:
Attention: Credit Risk Management - Documentation Unit/Legal
Facsimile no: x00 00 0000 0000 / x00 00 0000 0000
Telephone no: x00 00 0000 0000
Address for notices or communications to Party B:
Address: Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxx
Xxxxxx
XX0X 0XX
Attention: The Secretary
Facsimile No.: 020 7566 0975
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With a copy to: (i) HBOS Treasury Services plc:
Address: 00 Xxx Xxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Attention: Head of Capital Markets and Securitisation
Facsimile No.: 020 7574 8784
(ii) the Security Trustee:
Address: The Bank of Xxx Xxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx
X00 0XX
Attention: Global Structured Finance - Corporate Trust
Facsimile No.: 020 7964 6061/6399
(b) PROCESS AGENT. For the purpose of Section 13(c) of this Agreement:
Party A appoints as its Process Agent: None.
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: The Guarantee of UBS AG.
In respect of Party B: None.
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to
Party A, UBS AG.
Credit Support Provider means in relation to Party B, none.
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with English law.
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(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 will be made without set-off or
counterclaim, except as expressly provided for in Section 6.
(ii) Section 6(e) will 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 Security Trustee (or any successor thereto)
pursuant to and in accordance with the Fifth Issuer Deed of Charge and
acknowledges notice of such assignment, provided that Party A shall not be
obliged to pay any greater amounts and shall not receive less as a result of
such transfer or assignment than would have been the case if such transfer or
assignment had not taken place and shall not incur any costs, expenses or
liabilities in respect of any such transfer or assignment. Each of the parties
hereby confirms and agrees that the Security Trustee will not be liable for any
of the obligations of Party B hereunder.
Any payments made on behalf of Party B by the Security Trustee in accordance
with this Agreement will be deemed to be payments made by Party B, and payments
made by Party A to the Security Trustee will satisfy the related Party A
payment obligations to Party B.
(c) DISAPPLICATION OF CERTAIN EVENTS OF DEFAULT
Section 5(a)(ii), Section 5(a)(iii), Section 5(a)(iv), Section 5(a)(v), Section
5(a)(vii)(2), (6), (7) and (9) and Section 5(a)(viii) will not apply in respect
of Party B.
Section 5(a)(vii)(8) will not apply in respect of Party B to the extent that it
applies to Section 5(a)(vii)(2), (6), (7) and (9).
(d) DISAPPLICATION OF CERTAIN TERMINATION EVENTS
The "Tax Event Upon Merger" provisions of Section 5(b)(iii) will not apply to
Party A or to Party B.
(e) ADDITIONAL EVENT OF DEFAULT
The following will constitute an additional Event of Default with respect to
Party B:
"NOTE ACCELERATION NOTICE. A Note Acceleration Notice is served on Party B in
relation to the Series [1/2] Class [A/B/C] Fifth Issuer Notes."
(f) RATINGS EVENT
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(i) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A's Credit Support Provider cease to be rated at
least as high as ["A-1+"] by Standard & Poor's Rating Services, a
division of The XxXxxx-Xxxx Companies, Inc. ("S&P") and, as a result of
such cessation, the then current rating of the Series [1/2] Class
[A/B/C] Fifth Issuer Notes is downgraded or placed under review for
possible downgrade by S&P (an "INITIAL S&P RATING EVENT"), then Party A
will, within 30 days of the occurrence of such Initial 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 on terms satisfactory to the Security Trustee
(whose consent will be given if S&P confirms that the provision of
such collateral would maintain the rating of the Series [1/2]
Class [A/B/C] Fifth Issuer Notes by S&P at, or restore the rating
of the Series [1/2] Class [A/B/C] Fifth Issuer Notes by S&P to,
the level it would have been at immediately prior to such Initial
S&P Rating Event) provided that (x) Party A will 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 satisfies (but
is no more onerous than) the criteria of S&P published on 17th
December, 2003, which enables entities rated lower than a
specified level to participate in structured finance transactions
which, through collateralisation are rated at a higher level (the
"S&P CRITERIA") and (y) the Collateral Amount will not be required
to exceed such amount as would be required (in accordance with the
S&P Criteria) to maintain or restore the rating of the Series
[1/2] Class [A/B/C] Fifth Issuer Notes at or to the level they
would have been at immediately prior to such Initial S&P Rating
Event;
(B) transfer all of its rights and obligations with respect to this
Agreement to a replacement third party satisfactory to the
Security Trustee (whose consent will be given if S&P confirms that
such transfer would maintain the rating of the Series [1/2] Class
[A/B/C] Fifth Issuer Notes by S&P at, or restore the rating of the
Series [1/2] Class [A/B/C] Fifth Issuer Notes by S&P to, the level
it would have been at immediately prior to such Initial S&P Rating
Event);
(C) obtain a guarantee of its rights and obligations with respect to
this Agreement from a third party satisfactory to the Security
Trustee (whose consent will be given if S&P confirms that such
guarantee would maintain the rating of the Series [1/2] Class
[A/B/C] Fifth Issuer Notes at, or restore the rating of the Series
[1/2] Class [A/B/C] Fifth Issuer Notes to, the level it would have
been at immediately prior to such Initial S&P Rating Event); or
(D) take such other action as Party A may agree with S&P as will
result in the rating of the Series [1/2] Class [A/B/C] Fifth
Issuer Notes following the taking of such action being maintained
at, or restored to, the level it would have been at immediately
prior to such Initial S&P Rating Event.
If any of paragraphs (i)(B), (i)(C) or (i)(D) above are satisfied at any
time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (i)(A) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
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(ii) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A's Credit Support Provider cease to be rated at
least as high as ["A-3"] by S&P and, as a result of such downgrade, the
then current rating of the Series [1/2] Class [A/B/C] Fifth Issuer Notes
may in the reasonable opinion of S&P be downgraded or placed under
review for possible downgrade (such event, a "SUBSEQUENT S&P RATING
EVENT"), then Party A will, within 30 days of the occurrence of such
Subsequent S&P Rating Event, at its own cost either:
(A) transfer all of its rights and obligations with respect to this
Agreement to a replacement third party satisfactory to the
Security Trustee (whose consent will be given if S&P confirms that
such transfer would maintain the rating of the Series [1/2] Class
[A/B/C] Fifth Issuer Notes by S&P at, or restore the rating of the
Series [1/2] Class [A/B/C] Fifth Issuer Notes by S&P to, the level
it would have been at immediately prior to such Subsequent S&P
Rating Event);
(B) take such other action as Party A may agree with S&P as will
result in the rating of the Series [1/2] Class [A/B/C] Fifth
Issuer Notes following the taking of such action being maintained
at, or restored to, the level it would have been at immediately
prior to such Subsequent S&P Rating Event; or
(C) obtain a guarantee of its rights and obligations with respect to
this Agreement from a third party satisfactory to the Security
Trustee (whose consent will be given if S&P confirms that such
guarantee would maintain the rating of the Series [1/2] Class
[A/B/C] Fifth Issuer Notes at, or restore the rating of the Series
[1/2] Class [A/B/C] Fifth Issuer Notes to, the level it would have
been at immediately prior to such Subsequent S&P Rating Event),
and, if, at the time a Subsequent S&P Rating Event occurs, Party A has
provided collateral pursuant to a xxxx-to-market collateral arrangement
put in place pursuant to paragraph (i)(A) above following an Initial S&P
Rating Event, it will continue to post collateral notwithstanding the
occurrence of a Subsequent S&P Rating Event until such time as any of
paragraphs (ii)(A), (ii)(B) or (ii)(C) above have been satisfied.
If any of paragraphs (ii)(A), (ii)(B) or (ii)(C) above are satisfied at
any time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (i)(A) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
(iii) In the event that:
(A) the long-term, unsecured and unsubordinated debt obligations of
Party A's Credit Support Provider cease to be rated at least as
high as ["A1"] (or its equivalent) by Xxxxx'x; or
(B) the short-term, unsecured and unsubordinated debt obligations of
Party A's Credit Support Provider cease to be rated at least as
high as ["Prime-1"] (or its equivalent) by Xxxxx'x,
(such cessation being an "INITIAL XXXXX'X RATING EVENT"), then Party A
will, within 30 days of the occurrence of such Initial Xxxxx'x Rating
Event, at its own cost either:
(1) transfer all of its rights and obligations with respect to this
Agreement to either (x) a replacement third party with the
Required Ratings (as defined below)
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domiciled in the same legal jurisdiction as Party A or Party B, or
(y) a replacement third party as Party A may agree with Xxxxx'x;
(2) procure another person to become co-obligor or guarantor in
respect of the obligations of Party A under this Agreement, which
co-obligor or guarantor may be either (x) a person with the
Required Ratings (as defined below) domiciled in the same legal
jurisdiction as Party A or Party B, or (y) such other person as
Party A may agree with Xxxxx'x;
(3) take such other action as Party A may agree with Xxxxx'x; or
(4) put in place a xxxx-to-market collateral agreement in a form and
substance acceptable to Xxxxx'x (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 (as defined below) or such other
criteria relating to the amount of collateral as may be agreed
with Xxxxx'x.
If any of paragraphs (iii)(1), (iii)(2) or (iii)(3) above are satisfied
at any time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (iii)(4) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
(iv) In the event that:
(A) the long-term, unsecured and unsubordinated debt obligations of
Party A's Credit Support Provider cease to be rated as high as
["A3"] (or its equivalent) by Xxxxx'x; or
(B) the short-term, unsecured and unsubordinated debt obligations of
Party A's Credit Support Provider cease to be rated as high as
["Prime-2"] (or its equivalent) by Xxxxx'x,
(such cessation being a "SUBSEQUENT XXXXX'X RATING EVENT"), then Party A
will:
(1) on a reasonable efforts basis, as soon as reasonably practicable
after the occurrence of such Subsequent Xxxxx'x Rating Event, at
its own cost, either:
(aa) transfer all of its rights and obligations with respect to
this Agreement to either (x) a replacement third party with
the Required Ratings (as defined below) domiciled in the
same legal jurisdiction as Party A or Party B, or (y) a
replacement third party as Party A may agree with Xxxxx'x;
(bb) procure another person to become co-obligor or guarantor in
respect of the obligations of Party A under this Agreement,
which co-obligor or guarantor may be either (x) a person
with the Required Ratings (as defined below) domiciled in
the same legal jurisdiction as Party A or Party B, or (y)
such other person as Party A may agree with Xxxxx'x; or
(cc) take such other action as Party A may agree with Xxxxx'x;
and
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(2) within the later of 10 days of the occurrence of such Subsequent
Xxxxx'x Rating Event and 30 days of the occurrence of an Initial
Xxxxx'x Rating Event, put in place, at its own cost, pending
compliance with paragraph (iv)(1)(aa), (iv)(1)(bb) or (iv)(1)(cc)
above, a xxxx-to-market collateral agreement in a form and
substance acceptable to Xxxxx'x (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 (as defined below) or such other
criteria relating to the amount of collateral as may be agreed
with Xxxxx'x, provided that, if, at the time a Subsequent Xxxxx'x
Rating Event occurs, Party A has provided collateral pursuant to a
xxxx-to-market collateral arrangement put in place pursuant to
paragraph (iii)(4) above following an Initial Xxxxx'x Rating
Event, it will continue to post collateral notwithstanding the
occurrence of a Subsequent Xxxxx'x Rating Event.
If any of paragraphs (iv)(1)(aa), (bb) or (cc) above are satisfied at
any time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (iv)(2) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
For the purposes of paragraphs (iii) and (iv) of this Part 5(f),
"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 Xxxxx'x from time to time.
In relation to paragraphs (iii)(4) and (iv)(2) above, Party A will, upon
receipt of reasonable notice from Xxxxx'x demonstrate to Xxxxx'x the
calculation by Party A of the xxxx-to-market value of the outstanding
Transactions. In relation to paragraph (iv)(2) above, Party A will, at
its own cost, on receipt of reasonable notice from Xxxxx'x (which, for
the avoidance of doubt, will be no less than 30 days) arrange a third
party valuation of the xxxx-to-market value of the outstanding
Transactions.
"XXXXX'X CRITERIA" means that the Collateral Amount will not exceed the
sum of (a) the product of A and 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 and 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's Credit Support
Provider cease to be rated as high as ["A1"] or ["Prime-1"]
respectively by Xxxxx'x;
(2) "A" means [102%] and "B" means a percentage equal to or greater
than [3%] (as determined by Xxxxx'x) if the long-term, unsecured
and unsubordinated debt obligations or the short-term, unsecured
and unsubordinated debt obligations of Party A's Credit Support
Provider cease to be rated as high as ["A3"] or ["Prime-2"]
respectively by Xxxxx'x; and
(3) "A" means [0%] and "B" means [0%] in all other cases.
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(v) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A's Credit Support Provider cease to be rated at
least as high as ["F1"] (or its equivalent) by Fitch Ratings Ltd
("FITCH") and, as a result of such cessation, the then current rating of
the Series [1/2] Class [A/B/C] Fifth Issuer Notes is downgraded or
placed under review for possible downgrade by Fitch (an "INITIAL FITCH
RATING EVENT") then Party A will, on a reasonable efforts basis within
30 days of the occurrence of such Initial Fitch 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 to be posted on a weekly basis) in
support of its obligations under this Agreement provided that (x)
the Collateral Amount will be determined on a basis which
satisfies (but is no more onerous than) the Fitch Criteria (as
defined below), and (y) the Collateral Amount will not be required
to exceed such amount as would be required (in accordance with the
Fitch Criteria) to maintain or restore the rating of the Series
[1/2] Class [A/B/C] Fifth Issuer Notes at or to the level it would
have been at immediately prior to such Initial Fitch Rating Event;
(B) transfer all of its rights and obligations with respect to this
Agreement to a replacement third party satisfactory to the
Security Trustee (whose consent will be given if Fitch confirms
that such transfer would maintain the rating of the Series [1/2]
Class [A/B/C] Fifth Issuer Notes by Fitch at, or restore the
rating of the Series [1/2] Class [A/B/C] Fifth Issuer Notes by
Fitch to, the level it would have been at immediately prior to
such Initial Fitch Rating Event);
(C) obtain a guarantee of its rights and obligations with respect to
this Agreement from a third party satisfactory to the Security
Trustee (whose consent will be given if Fitch confirms that such
guarantee would maintain the rating of the Series [1/2] Class
[A/B/C] Fifth Issuer Notes at, or restore the rating of the Series
[1/2] Class [A/B/C] Fifth Issuer Notes to, the level it would have
been at immediately prior to such Initial Fitch Rating Event); or
(D) take such other action as Party A may agree with Fitch as will
result in the rating of the Series [1/2] Class [A/B/C] Fifth
Issuer Notes following the taking of such action being maintained
at, or restored to, the level it would have been at immediately
prior to such Initial Fitch Rating Event.
If any of paragraphs (v)(B), (v)(C) or (v)(D) above are satisfied at any
time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (v)(A) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
(vi) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A's Credit Support Provider cease to be rated at
least as high as ["F2"] (or its equivalent) by Fitch and, as a result of
such cessation, the then current rating of the Series [1/2] Class
[A/B/C] Fifth Issuer Notes is downgraded or placed under review for
possible downgrade by Fitch (a "SUBSEQUENT FITCH RATING EVENT") then
Party A will:
(A) on a reasonable efforts basis within 30 days of the occurrence of
such Subsequent Fitch Rating Event, at its own cost, attempt
either to:
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(1) transfer all of its rights and obligations with respect to
this Agreement to a replacement third party satisfactory to
the Security Trustee (whose consent will be given if Fitch
confirms that such transfer would maintain the rating of
the Series [1/2] Class [A/B/C] Fifth Issuer Notes by Fitch
at, or restore the rating of the Series [1/2] Class [A/B/C]
Fifth Issuer Notes by Fitch to, the level it would have
been at immediately prior to such Subsequent Fitch Rating
Event);
(2) obtain a guarantee of its rights and obligations with
respect to this Agreement from a third party satisfactory
to the Security Trustee (whose consent will be given if
Fitch confirms that such guarantee would maintain the
rating of the Series [1/2] Class [A/B/C] Fifth Issuer Notes
at, or restore the rating of the Series [1/2] Class [A/B/C]
Fifth Issuer Notes to, the level it would have been at
immediately prior to such Subsequent Fitch Rating Event);
or
(3) take such other action as Party A may agree with Fitch as
will result in the rating of the Series [1/2] Class [A/B/C]
Fifth Issuer Notes following the taking of such action
being maintained at, or restored to, the level it would
have been at immediately prior to such Subsequent Fitch
Rating Event; and
(B) within 10 days of the occurrence of such Subsequent Fitch Rating
Event, put in place, at its own cost, (or, if pursuant to
paragraph (v)(A) above, Party A has not posted collateral within
30 days of the occurrence of an Initial Fitch Rating Event, within
30 days of the occurrence of such Subsequent Fitch Rating Event)
pending compliance with paragraph (vi)(A)(1), (vi)(A)(2) or
(vi)(A)(3) above, an appropriate 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 to be posted on a weekly basis) in support of
its obligations under this Agreement provided that (x) Party A
will be deemed to have satisfied the requirements of Fitch if the
Collateral Amount is determined on a basis which satisfies (but is
no more onerous than) the Fitch Criteria (as defined below), and
(y) the Collateral Amount will not be required to exceed such
amount as would be required (in accordance with the Fitch
Criteria) to maintain or restore the rating of the Series [1/2]
Class [A/B/C] Fifth Issuer Notes or to the level it would have
been at immediately prior to such Subsequent Fitch Rating Event,
provided that, if, at the time a Subsequent Fitch Rating Event
occurs, Party A has provided collateral pursuant to a xxxx-to-
market collateral arrangement put in place pursuant to paragraph
(v)(A) above following an Initial Fitch Rating Event, it will
continue to post collateral notwithstanding the occurrence of a
Subsequent Fitch Rating Event.
If any of paragraphs (vi)(A)(1), (2) or (3) above are satisfied at any
time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (vi)(B) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
"FITCH CRITERIA" means that the Collateral Amount will 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
32
B multiplied by the current aggregate notional amounts of the
outstanding Transactions, where "A" means [102%] and "B" means [1.6%].
(vii) (A) If Party A does not take any of the measures described in
paragraph (i) above, such failure will not be or give rise to an
Event of Default but will constitute an Additional Termination
Event with respect to Party A which will be deemed to have
occurred on the thirtieth day following the Initial S&P Rating
Event with Party A as the sole Affected Party and all Transactions
as Affected Transactions.
(B) If, at the time a Subsequent S&P Rating Event occurs, Party A has
provided collateral pursuant to a xxxx-to-market collateral
arrangement put in place pursuant to paragraph (i)(A) above and
fails to continue to post collateral pending compliance with any
of paragraphs (ii)(A), (ii)(B) or (ii)(C) above, such failure will
not be or give rise to an Event of Default but will constitute an
Additional Termination Event with respect to Party A and will be
deemed to have occurred on the later of the tenth day following
such Subsequent S&P Rating Event and the thirtieth day following
the Initial S&P Rating Event with Party A as the sole Affected
Party and all Transactions as Affected Transactions. Further, it
will constitute an Additional Termination Event with respect to
Party A if, even if it is posting collateral as required by
paragraph (ii) above and notwithstanding Section 5(a)(ii), Party A
does not take any of the measures described in paragraphs (ii)(A),
(ii)(B) or (ii)(C) above. Such Additional Termination Event will
be deemed to have occurred on the thirtieth day following the
Subsequent S&P Rating Event with Party A as the sole Affected
Party and all Transactions as Affected Transactions.
(C) If Party A does not take any of the measures described in
paragraph (iii)(1), (2), (3) or (4) above, such failure will not
be or give rise to an Event of Default but will constitute an
Additional Termination Event with respect to Party A and will be
deemed to have occurred on the thirtieth day following the
occurrence of such Initial Xxxxx'x Rating Event with Party A as
the sole Affected Party and all Transactions as Affected
Transactions.
(D) If Party A does not take the measures described in paragraph
(iv)(2) above, such failure will give rise to an Event of Default
with respect to Party A and will be deemed to have occurred on the
thirtieth day following such Subsequent Xxxxx'x Rating Event (or,
if Party A has put in place a collateral agreement in accordance
with the requirements of paragraph (iii)(4) above, such Event of
Default will be deemed to have occurred on the tenth day following
such Subsequent Xxxxx'x Rating Event) with Party A as the
Defaulting Party. Further, it will constitute an Additional
Termination Event with respect to Party A if, even after
satisfying the requirements of paragraph (iv)(2) above and
notwithstanding Section 5(a)(ii), Party A has failed, having
applied reasonable efforts, to either transfer as described in
paragraph (iv)(1)(aa), find a co-obligor or guarantor as described
in paragraph (iv)(1)(bb) or take such other action as described in
paragraph (iv)(1)(cc). Such Additional Termination Event will be
deemed to have occurred on the thirtieth day after receiving
notice of failure to use reasonable efforts with Party A as the
sole Affected Party and all Transactions as Affected Transactions.
(E) If Party A does not take the measures described in paragraph (v)
above, such failure will not be or give rise to an Event of
Default but will constitute an
33
Additional Termination Event with respect to Party A which will
be deemed to have occurred on the thirtieth day following the
Initial Fitch Rating Event with Party A as the sole Affected
Party and all Transactions as Affected Transactions.
(F) If Party A does not take the measures described in paragraph
(vi)(B) above, such failure will give rise to an Event of Default
with respect to Party A and will be deemed to have occurred on the
tenth day following such Subsequent Fitch Rating Event with Party
A as the Defaulting Party (except that if Party A has not
transferred collateral pursuant to paragraph (v)(A) above, such
Event of Default will be deemed to have occurred on the thirtieth
day following the Subsequent Fitch Rating Event). Further, it
will constitute an Additional Termination Event with respect to
Party A if, even after satisfying the requirements of paragraph
(vi)(B) above and notwithstanding Section 5(a)(ii), Party A has
failed, within 10 days after receiving notice of failure to use
reasonable efforts (which notice will not be given until at least
30 days following the Subsequent Fitch Rating Event), to either
transfer as described in paragraph (vi)(A)(1), find a co-obligor
or guarantor as described in paragraph (vi)(A)(2) or take such
other action as described in paragraph (vi)(A)(3). Such
Additional Termination Event will be deemed to have occurred on
the tenth day after receiving notice of failure to use reasonable
efforts with Party A as the sole Affected Party and all
Transactions as Affected Transactions.
(G) Notwithstanding the foregoing and Section [6(b)] of the Agreement,
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 an Early Termination Date in respect of an
Additional Termination Event under this Part 5(f) 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 determined by Party B in its sole and absolute
discretion, the economic, legal and credit terms of the Terminated
Transactions with Party A, and Party B has acquired the Security
Trustee's prior written consent.
Each of Party B and the Security Trustee will use their reasonable endeavours
to co-operate with Party A in putting in place such credit support
documentation, including agreeing to such arrangements in such documentation as
may satisfy S&P, Xxxxx'x and/or Fitch, as applicable, with respect to the
operation and management of the collateral and entering into such documents as
may reasonably be requested by Party A in connection with the provision of such
collateral.
(g) TRANSFER POLICY
Section 7 of this Agreement will not apply to Party A, who will be required to
comply with, and will be bound by, the following:
Without prejudice to Section 6(b)(ii) as amended in this Schedule, Party A may
transfer all (but not part only) of its interests and obligations in and under
this Agreement to any of its Affiliates or, with the prior written consent of
Party B, such consent not to be unreasonably withheld, to any other entity
(each such Affiliate or entity a "TRANSFEREE") upon providing five Business
Days' prior written notice to the Note Trustee, provided that:
(i) the Transferee's short-term, unsecured and unsubordinated debt
obligations are then rated not less than ["A-1+"] by S&P, ["Prime-
1"] by Xxxxx'x and ["F1"] by Fitch and
34
its long-term, unsecured and unsubordinated debt obligations are
then rated not less than ["AA-"] by S&P, ["A1"] by Xxxxx'x and
["A+"] by Fitch (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
["A-1+"] by S&P, ["Prime-1"] by Xxxxx'x and ["F1"] by Fitch and
whose long-term, unsecured and unsubordinated debt obligations are
then rated not less than ["AA-"] by S&P, ["A1"] by Xxxxx'x and
["A+"] by Fitch (or its equivalent by any substitute rating
agency);
(ii) the Rating Agencies have confirmed that the transfer will not
result in the then current rating of the Series [1/2] Class
[A/B/C] Fifth Issuer Notes being downgraded;
(iii) the Transferee will not, as a result of such transfer, be required
on the next succeeding Scheduled Payment Date to withhold or
deduct on account of any Tax (except in respect of default
interest) amounts in excess of that which Party A would, on the
next succeeding Scheduled Payment Date have been required to so
withhold or deduct unless the Transferee would be required to make
additional payments pursuant to Section 2(d)(i)(4) corresponding
to such excess;
(iv) a Termination Event or Event of Default does not occur as a result
of such transfer;
(v) 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
(vi) the Transferee confirms in writing that it will accept all of the
interests and obligations in and under this Agreement which are to
be transferred to it in accordance with the terms of this
provision.
With respect to paragraph (iii) above, each party agrees to make such Payee Tax
Representations and Payer Tax Representations as may reasonably be requested by
the other party in order to reasonably satisfy such other party that such
withholding or deduction will not occur.
Following the transfer, all references to Party A will be deemed to be
references to the Transferee.
Save as otherwise provided for in this Agreement and notwithstanding Section 7,
Party A will 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 Security Trustee.
(h) ADDITIONAL REPRESENTATION
Section 3 is amended by the addition at the end thereof of the following
additional representations (provided that the representation in Section 3(h)
will be made by Party A only):
"(g) NO AGENCY. It is entering into this Agreement, including each
Transaction, as principal and not as agent of any person or entity.
(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."
35
(i) RECORDING OF CONVERSATIONS
Each party to this Agreement (i) consents to the recording of the telephone
conversations of trading, marketing and operations personnel of the parties in
connection with this Agreement or any potential Transaction, (ii) agrees to
obtain any necessary consent of, and give notice of such recording to, such
personnel of it and (iii) agrees that in any Proceedings it will not object to
the introduction of such recordings in evidence on the ground that consent was
not properly given.
(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:
"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
independent 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 will not be considered investment advice or
a recommendation to enter into that Transaction. No communication
(written or oral) received from the other party will be deemed to be an
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 (on its own behalf or 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 for 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
36
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;
(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, provided that X will not
be required to pay any additional amount to Party B to the extent
that it would not be required to be paid but for the failure of
Party B to comply with or perform any agreement contained in
Section 4(a)(iii).
(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; 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:
37
(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 (a "TAX CREDIT"), it will 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" will, in the case of a Tax credit, allowance or
set-off, be the additional amount of Tax which would have been
payable by Party B in the jurisdiction referred to in clause (1)
above but for the obtaining by it of the said Tax credit,
allowance or set-off and, in the case of a repayment, will be the
amount of the repayment together, in either case, with any related
interest, repayment supplement or similar payment obtained by
Party B; and
(3) it will use all reasonable endeavours to obtain any Tax Credit as
soon as is reasonably practicable provided that it will be the
sole judge of the amount of such Tax Credit and of the date on
which the same is received and will not be obliged to disclose to
Party A any information relating to its tax affairs or tax
computations save that Party B will, 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."
(l) SECURITY, ENFORCEMENT AND LIMITED RECOURSE
(i) Party A agrees with Party B and the Security Trustee to be bound by the
terms of the Fifth Issuer Deed of Charge and, in particular, confirms
that: (A) no sum will be payable by or on behalf of Party B to it except
in accordance with the provisions of the Fifth Issuer Deed of Charge;
and (B) 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 Fifth Issuer Deed of
Charge.
(ii) In relation to all sums due and payable by Party B to Party A, Party A
agrees that it will have recourse only to Fifth Issuer Available Funds,
but always subject to the order of priority of payments set out in the
Fifth Issuer Cash Management Agreement and the Fifth Issuer Deed of
Charge.
(m) CONDITION PRECEDENT
Section 2(a)(iii) will be amended by the deletion of the words "a Potential
Event of Default" in respect of obligations of Party A only.
(n) REPRESENTATIONS
Section 3(b) will be amended by the deletion of the words "or Potential Event
of Default" in respect of the representation given by Party B only.
38
(o) ADDITIONAL DEFINITIONS
Words and expressions defined in the Amended and Restated Master Definitions
and Construction Schedule (the "MASTER SCHEDULE") and the Fifth Issuer Master
Definitions and Construction Schedule (the "ISSUER SCHEDULE") (together the
"MASTER DEFINITIONS SCHEDULE") signed on or about the date of this Agreement
will, 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 will prevail. In the event of any inconsistency between the Master
Schedule and the Issuer Schedule, the Issuer Schedule will prevail. The rules
of interpretation set out in the Master Definitions Schedule will apply to this
Agreement.
(p) CHANGE OF ACCOUNT
Section 2(b) of this Agreement is hereby amended by the addition of the
following at the end thereof:
"; provided that such new account will be in the same legal and tax
jurisdiction as the original account and such new account, in the case of Party
B, is held with a financial institution with a short-term, unsecured,
unsubordinated and unguaranteed debt obligation rating of at least ["Prime-1"]
(in the case of Xxxxx'x), ["A-1+"] (in the case of S&P) and ["F1+"] (in the
case of Fitch) (or, if such financial institution is not rated by a Rating
Agency, at such equivalent rating that is acceptable to such Rating Agency)."
(q) MODIFICATIONS TO CLOSE-OUT PROVISIONS
Upon the occurrence of an Event of Default with respect to Party A or an
Additional Termination Event which entitles Party B to terminate any Affected
Transaction pursuant to Section 6(b) of the Agreement, 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 this 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 will be deemed to be made to the definition of
"Market Quotation":
(A) the word "firm" will be added before the word "quotations" in the
second line; and
(B) the words ", provided that such documentation would either be the
same as this Agreement and the existing confirmations hereto (and
the long-term, unsecured and unsubordinated debt obligations of
the Reference Market-maker are rated not less than ["A+"] by S&P
and ["A1"] by Xxxxx'x and the short-term, unsecured and
unsubordinated debt obligations of the Reference Market-maker are
rated not less than ["Prime-1"] by Xxxxx'x and ["F1"] by Fitch
(or, if such Reference Market-maker is not rated by a Rating
Agency, at such equivalent rating that is acceptable to such
Rating Agency)) or the Rating Agencies have confirmed in writing
that such proposed documentation will not adversely
39
impact the ratings of the Notes" will be added after "agree" in
the sixteenth line; and
(C) the last sentence will 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 the higher
of the two quotations. 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. If no quotation has been provided, it will be
deemed that the Market Quotation in respect of the Terminated
Transaction cannot be determined."
(iii) For the purpose of the definition of "Market Quotation", and without
limitation of 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 Part 5(q)(iii)(C) below;
(B) Party A will, for the purposes of Section 6(e), be permitted to
obtain on behalf of Party B quotations from Reference Market-
makers;
(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;
(D) Party B will be deemed to have discharged its obligations under
Part 5(q)(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 on behalf
of Party B quotations from Reference Market-makers. Party A
agrees to act in accordance with such request; and
(E) Party B will not be obliged to consult with Party A as to the day
and time of obtaining any quotations.
(r) CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
A person who is not a party to this Agreement will not have any right under the
Contracts (Rights of Third Parties) Xxx 0000 to enforce any of its terms but
this will not affect any right or remedy of a third party which exists or is
available apart from that Act.
40
DRAFT: 28.06.04
SERIES 1 CLASS C CONFIRMATION
From: UBS Limited, London Branch
000 Xxxxxxxxx Xxxxxx
Xxxxxx
XX0X 0XX
To: Permanent Financing (No. 5) PLC
Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxx
Xxxxxx
XX0X 0XX
Attention: The Secretary
To: Xxx Xxxx xx Xxx Xxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx
X00 0XX
Attention: Global Structured Finance - Corporate Trust
{circle} July, 2004
Dear Sirs,
CONFIRMATION - SERIES 1 CLASS M 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. This
letter constitutes a "CONFIRMATION" as referred to in the 1992 ISDA Master
Agreement (Multicurrency-Cross Border) (Series 1 Class M) entered into between
us, you and The Bank of New York (the "SECURITY TRUSTEE") dated as of{circle}
July, 2004, 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 and Derivatives Association, Inc. (the
"DEFINITIONS") are incorporated into this Confirmation. In the event of any
inconsistency between any of the following, the first listed will govern (i)
this Confirmation; (ii) the Master Definitions Schedule; and (iii) the
Definitions.
1. The terms of the particular Swap Transaction to which this Confirmation
relates are as follows:
Party A: UBS Limited, London Branch
Party B: Permanent Financing (No. 5) PLC
Trade Date: {circle} July, 2004
Effective Date: {circle} July, 2004
Termination Date: The earlier of the Quarterly Interest
Payment Date falling in June 2042 and the
date on which all of the Series 1 Class M
Fifth Issuer Notes are redeemed in full.
Dollar Currency Exchange Rate: {circle} USD per GBP
Business Days: London Business Day, New York Business Day
and TARGET Business Day.
Calculation Period: Has the meaning given to such term in the
Definitions.
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 C Fifth Issuer Notes on the first
day of such Calculation Period (after
taking into account any redemption on such
day).
Party A Payment Dates: Each Quarterly Interest Payment Date from
and including the Quarterly Interest
Payment Date falling in September 2004 up
to the Termination Date and the Termination
Date.
Party A Floating Rate: In respect of each Party A Calculation
Period, Three-Month USD-LIBOR determined in
respect of the first day of such Party A
Calculation Period.
Spread: {circle} per cent. for Party A Calculation
Periods commencing prior to the Quarterly
Interest Payment Date falling in [June
2011] and {circle} per cent. thereafter.
Party A Floating Rate Day
Count Fraction: Actual/360
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 Exchange Rate.
Party B Payment Dates: Each Quarterly Interest Payment Date from
and including the Quarterly Interest
Payment Date falling in September
2
2004 up to the Termination Date and the
Termination Date.
Party B Floating Rate: In respect of each Party B Calculation
Period, Sterling-LIBOR determined in
respect of the first day of such Party B
Calculation Period.
Spread: {circle} per cent. for Party B Calculation
Periods commencing prior to the Quarterly
Interest Payment Date falling in [June
2011] and {circle} per cent. thereafter.
Party B Floating Rate Day
Count Fraction: Actual/365 (Fixed)
Initial Exchange:
Initial Exchange Date: Effective Date
Party A Initial
Exchange Amount: GBP {circle}
Party B Initial
Exchange Amount: USD 27,000,000
Interim Exchange:
Interim Exchange Dates: Each Quarterly Interest Payment Date
(other than the Termination Date) on which
any of the Series 1 Class C Fifth 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 C Fifth 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 Exchange 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 C Fifth Issuer Notes on the Final
Exchange Date (before taking into account
any redemption on such day).
3
Party B Final Exchange Amount: The Sterling equivalent of the Party A
Final Exchange Amount converted by reference
to the Dollar Currency Exchange Rate.
2. Deferral of Floating Amounts:
If any payment of interest under the Series 1 Class C Fifth Issuer Notes
is deferred in accordance with the terms and conditions of the Series 1
Class C Fifth Issuer Notes, a corresponding part as determined by the
Calculation Agent of the Party A Floating Amount and a pro rata part as
determined by the Calculation Agent of the Party B Floating Amount which,
in each case, would otherwise be due in respect of the relevant Quarterly
Interest Payment Date will be deferred.
The amount so deferred on the Party A Floating Amount will be payable on
the next Party A Payment Date (together with an additional floating
amount which shall be accrued thereon as determined by the Calculation
Agent at the applicable Party A Floating Rate (excluding the Spread)) and
the Party A Floating Amount due on such date will be deemed to include
such amounts.
The amount so deferred on the Party B Floating Amount will be payable on
the next Party B Payment Date (together with an additional floating
amount which shall be accrued thereon as determined by the Calculation
Agent at the applicable Party B Floating Rate (excluding the Spread)) and
the Party B Floating Amount due on such date will be deemed to include
such amounts.
On any subsequent occasion if any payment of interest under the Series 1
Class C Fifth Issuer Notes is deferred (including any payment of a
previous shortfall of interest or any payment of interest on such
shortfall) in accordance with the terms and conditions of the Series 1
Class C Fifth Issuer Notes, all or a corresponding part as determined by
the Calculation Agent of the Party A Floating Amount and a pro rata part
as determined by the Calculation Agent of the Party B Floating Amount
will be deferred.
The amount so deferred on the Party A Floating Amount will be payable on
the next Party A Payment Date (together with an additional floating
amount which shall be accrued thereon as determined by the Calculation
Agent at the applicable Party A Floating Rate (excluding the Spread)) and
the Party A Floating Amount due on such date will be deemed to include
such amounts.
The amount so deferred on the Party B Floating Amount will be payable on
the next Party B Payment Date (together with an additional floating
amount which shall be accrued thereon as determined by the Calculation
Agent at the applicable Party B Floating Rate (excluding the Spread)) and
the Party B Floating Amount due on such date will be deemed to include
such amounts.
3. Account Details:
Payments to Party A
in Dollars:
Payments to Party A
in Sterling:
4
Payments to Party B
in Dollars: Bank: Citibank, N.A., New York
Credit Account: {circle}
New York Swift: XXXXXX00
FAO: Citibank, N.A., London
London Swift: CITIGB2L
Reference: GATS "Permanent Financing
(No. 5) PLC"
Payments to Party B
in Sterling: Bank: The Governor and Company of
the Bank of Scotland
Account Number: {circle}
Sort Code: 12-24-55
Account Name: Permanent Financing (No. 5)
PLC Transaction Account
It is agreed by the parties that payments made by Party A to the
Principal Paying Agent in accordance with the settlement instructions, as
detailed above, will be considered as absolute and conclusive discharge
of Party A's obligations to Party B in respect of such payment,
regardless of whether the Principal Paying Agent makes a payment in turn
to Party B. This will continue to be the case until Party B changes its
account in accordance with Section 2(b) of the Agreement.
4. Notification to Party A
For the purpose of making any determination or calculation hereunder, the
Calculation Agent may rely on any information, report, notice or
certificate delivered to it by the Fifth Issuer Cash Manager or Party B
and the Calculation Agent shall not be liable for any error,
incompleteness or omission regarding such information.
Party B or the Fifth Issuer Cash Manager acting on its behalf, will
notify Party A of the amount of principal payments to be made on the
Series 1 Class C Fifth Issuer Notes on each Quarterly Interest Payment
Date no later than one (1) Business Day prior to such Quarterly Interest
Payment Date.
5. Notice Details:
Party A: UBS Limited, London Branch
Address: 000 Xxxxxxxxx Xxxxxx
Xxxxxx
XX0X 0XX
5
Facsimile No.: {circle}
Attention: {circle}
Party B: Permanent Financing (No. 5) PLC
Address: Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxx
Xxxxxx
XX0X 0XX
Facsimile Number: 020 7566 0975
Attention: The Secretary
With a copy to: (i) the Security Trustee:
Name: The Bank of New York
Address: Xxx Xxxxxx Xxxxxx
Xxxxxx
X00 0XX
Facsimile Number: 020 7964 6061/6399
Attention: Global Structured Finance
(ii) HBOS Treasury Services plc
Address: 00 Xxx Xxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Facsimile Number: 020 7574 8784
Attention: Head of Capital Markets and Securitisation
Yours faithfully,
UBS LIMITED, LONDON BRANCH
By:
Name:
Title:
6
Confirmed as of the date first written:
PERMANENT FINANCING (NO. 5) PLC
By:
Name:
Title:
THE BANK OF NEW YORK
By:
Name:
Title:
7
