DRAFT: 14.07.04 EXHIBIT 10.3
FUNDING 1 SWAP
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of 14th June, 2002
between
(1) HALIFAX PLC ("PARTY A");
(2) PERMANENT FUNDING (No.1) LIMITED ("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(k) of this Schedule and assuming the obligations under the
final paragraph of Part 5(f) of this Schedule).
This Agreement amends and restates the 1992 ISDA Master Agreement (Funding 1
Swap) dated as of 14th June, 2002 between Party A, Party B and the Security
Trustee, as amended and supplemented from time to time.
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 Part 5(f)(vii) of this Schedule, the
following will constitute an Additional Termination Event:
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.
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Part 2. TAX 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 COVERED BY
TO DELIVER FORM/DOCUMENT/ DATE BY WHICH SECTION 3(D)
DOCUMENT CERTIFICATE TO BE DELIVERED REPRESENTATION
Party A and Appropriate evidence of On signing of Yes
Party B its signatory's authority this Agreement
Party B Certified copy of On signing of Yes
board resolution this Agreement
Party A Legal opinion in form On signing of No
and substance satisfactory this Agreement
to Party B
Party B Legal opinion On signing of No
from Xxxxx & Xxxxx 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
Address: Xxxxxxx Xxxx
Xxxxxxx
Xxxx Xxxxxxxxx
XX0 0XX
Attention: Mortgage Securitisation Manager
Facsimile No.:01422 391777
With a copy to: HBOS Treasury Services plc
00 Xxx Xxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Attention: Head of Capital Markets and Securitisation
Facsimile No.: 020 7574 8784
Address for notices or communications to Party B:
Address: Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxx
Xxxxxx
XX0X 0XX
Attention: The Secretary
Facsimile No.: 020 7566 0975
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
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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: None.
In respect of Party B: None.
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to
Party A, none.
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.
(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 Funding 1 Deed of Charge and
acknowledges notice of such 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.
(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" 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 will constitute an additional Event of Default with respect to
Party B:
An Intercompany Loan Acceleration Notice is served on Party B (which will be
the Defaulting Party).
"INTERCOMPANY LOAN ACCELERATION NOTICE" will have the meaning ascribed to that
term in the relevant Intercompany Loan Agreement.
(f) RATINGS EVENT
(i) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) or any Credit Support Provider
from time to time in respect of Party A 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 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:
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(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 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
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 ratings of the Issuer Notes by
S&P at, or restore the rating of the 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 Issuer Notes at, or
restore the rating of the 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 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) will be transferred
to Party A and Party A will not be required to transfer any additional
collateral.
(ii) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) or any Credit Support Provider
from time to time in respect of Party A 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 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 Issuer Notes by S&P
at, or restore the rating of the 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 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
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(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 Issuer Notes at, or
restore the rating of the 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 (or its successor) or any Credit Support Provider in
respect of Party A 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 (or its successor) or any Credit Support Provider in
respect of Party A 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) domiciled in the same legal
jurisdiction as Party A or Party B, or (y) a replacement third
party as agreed with Xxxxx'x;
(2) procure another person to become co-obligor in respect of the
obligations of Party A under this Agreement, which co-obligor 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 agreed with Xxxxx'x;
(3) take such other action as agreed 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
requirements 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)
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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 (or its successor) or any Credit Support Provider in
respect of Party A 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 (or its successor) or any Credit Support Provider in
respect of Party A 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 best 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 agreed with Xxxxx'x;
(bb) procure another person to become co-obligor in respect of
the obligations of Party A under this Agreement, which co-
obligor 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 agreed
with Xxxxx'x; or
(cc) take such other action agreed with Xxxxx'x; and
(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
requirements as may be agreed with Xxxxx'x, provided that, if, at
the time a Subsequent Xxxxx'x Rating Event occurs, Party A is
required to post collateral 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) are satisfied at any time,
all collateral (or the equivalent thereof, as appropriate) transferred by
Party A pursuant to paragraph (iv)(2) 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.
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"XXXXX'X CRITERIA" means that the Collateral Amount will equal:
(a) [102 per cent.] of the xxxx-to-market value of the outstanding
Transactions as determined by Party A in good faith on a weekly basis if
the long-term, unsecured and unsubordinated debt obligations of Party A
(or its successor) or any Credit Support Provider in respect of Party A
are downgraded below ["A1"];
(b) if the long-term, unsecured and unsubordinated debt obligations or short-
term, unsecured and unsubordinated debt obligations of Party A (or its
successor) or any Credit Support Provider in respect of Party A are
downgraded below ["A2"] or ["Prime-1"] by Xxxxx'x, the sum of:
(i) [102 per cent.] of the xxxx-to-market value of the outstanding
Transactions determined by Party A in good faith on a weekly
basis; and
(ii) the sum of:
(A) the aggregate of the amounts, determined in respect of each
class and series of Issuer Notes, equal to the Outstanding
Principal Balance of that class and series of Issuer Notes
at the time of determination multiplied by the weighted
average life of that class and series of Issuer Notes, as at
the date of determination (expressed in days) divided by 365
(such aggregate, the "BUFFER NOTIONAL") multiplied by the
product of [0.2 per cent.] and the Fixed Rate Ratio; and
(B) the Buffer Notional multiplied by the product of [0.1 per
cent.] and the sum of:
(aa) the Variable Rate Ratio; and
(bb) the Tracker Ratio; and
(c) if the long-term, unsecured and unsubordinated debt obligations or short-
term, unsecured and unsubordinated debt obligations of Party A (or its
successor) or any Credit Support Provider in respect of Party A are
downgraded below ["A3"] or ["Prime-2"] by Xxxxx'x, the sum of:
(i) [102 per cent.] of the xxxx-to-market value of the outstanding
Transactions determined by Party A in good faith on a weekly
basis; and
(ii) the sum of:
(A) the Buffer Notional multiplied by the product of [0.4 per
cent.] or such greater amount as determined by Xxxxx'x and
the Fixed Rate Ratio; and
(B) the Buffer Notional multiplied by the product of [0.2 per
cent.] and the sum of:
(aa) the Variable Rate Ratio; and
(a) the Tracker Ratio.
For the purposes of determining the Buffer Notional, Party A will calculate the
weighted average life of each series and class of Issuer Notes using (1) such
assumptions as will reflect the then current expectations of Party A and/or be
based upon such circumstances as Party A may, in good faith,
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determine applicable; and, notwithstanding for the avoidance of doubt (1)
above, assuming (2) that the relevant Issuer will not exercise its call option
to redeem such Issuer Notes in full on the Step-up Date, if any, in respect of
such Issuer Notes.
In relation to paragraphs (ii)(4) and (iii)(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 (iii)(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 an audit of the methodology used
by Party A in the calculation of the xxxx-to-market value of the outstanding
Transactions.
(v) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) or any Credit Support Provider
from time to time in respect of Party A 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 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 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 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 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 Issuer Notes by Fitch at,
or restore the rating of the 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 Issuer Notes at, or
restore the rating of the 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 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.
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(vi) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) or any Credit Support Provider
from time to time in respect of Party A 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 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:
(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
Issuer Notes by Fitch at, or restore the rating of the
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 Issuer Notes at, or restore the rating of the 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 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, 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 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 Issuer Notes at or to the level it would have been
at immediately prior to such Subsequent Fitch Rating Event, and
provided that, if, at the time a Subsequent Fitch Rating Event
occurs, Party A is required to post collateral 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) [100 per cent.] of the xxxx-to-market value of the outstanding
Transactions as determined by Party A in good faith on a weekly basis;
and
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(b) the product of:
(i) the aggregate of the amounts, determined in respect of each class
and series of Issuer Notes, equal to the Outstanding Principal
Balance of such class and series of Issuer Notes as at the date of
determination multiplied by the number of days remaining from the
date of the determination to the Expected Repayment Date (as
defined below) in respect of such class and series of Issuer Notes
divided by 365, and
(ii) [0.1 per cent.] multiplied by the Fixed Rate Ratio.
"EXPECTED REPAYMENT DATE" means in respect of each class and series of Issuer
Notes the earlier of the Step Up Date of such class and series of Issuer Notes
and the Final Maturity Date of such class and series of Issuer Notes.
(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
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, Party A has
failed, having applied best efforts, to either transfer as
described in paragraph (iv)(1)(aa), find a co-obligor 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
32
day following such Subsequent Xxxxx'x Rating Event 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 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. Further, it will constitute an Additional
Termination Event with respect to Party A if, even after satisfying
the requirements of paragraph (vi)(B) above, Party A has failed,
within 30 days following such Subsequent Fitch Rating Event, to
either transfer as described in paragraph (vi)(A)(1), find a co-
obligor 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 thirtieth
day following such Subsequent Fitch Rating Event with Party A as
the sole Affected Party and all Transactions as Affected
Transactions.
(G) 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 obtained the prior
written consent of the Security Trustee.
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) 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."
33
(h) RECORDING OF CONVERSATIONS
Each party to this Agreement acknowledges and agrees to the tape recording of
conversations between the parties to this Agreement whether by one or other or
both of the parties.
(i) 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."
(j) 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
34
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.
(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:
(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, 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 credit, allowance or
set-off, be the additional amount of Tax which would have been
payable by Party B in the jurisdiction referred
35
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, 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,
allowance, set-off or repayment as soon as is reasonably
practicable and it 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, allowance, set-off or repayment and
of the date on which the same is received."
(k) SECURITY, ENFORCEMENT AND LIMITED RECOURSE
Party A agrees with Party B and the Security Trustee to be bound by the terms
of the Funding 1 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 Funding 1 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 Funding 1 Deed of
Charge.
In relation to all sums due and payable by Party B to Party A, Party A agrees
that it will have recourse only to Funding 1 Revenue Receipts and Funding 1
Principal Receipts, 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.
(l) 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.
(m) 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.
(n) ADDITIONAL DEFINITIONS
Words and expressions defined in the Amended and Restated Master Definitions
and Construction Schedule (the "MASTER SCHEDULE") signed on or about the date
of this Agreement and any other Master Definitions and Construction Schedule,
each as amended, varied or supplemented from time to time (together the "MASTER
DEFINITIONS SCHEDULE") will, except so far as the context otherwise requires,
have the same meaning in this Agreement. The rules of interpretation set out
in the Master Definitions Schedule will apply to this Agreement.
(o) 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:
36
(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 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(o)(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(o)(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
37
(E) Party B will not be obliged to consult with Party A as to the day
and time of obtaining any quotations.
(p) TRANSFER POLICY
Subject to the constraints otherwise provided by Section 7 of this Agreement,
but 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 another entity (a "TRANSFEREE") with the prior written
consent of 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 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
["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 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.
38
DRAFT: 05.07.04
FUNDING 1 SWAP CONFIRMATION
From: Halifax plc
Xxxxxxx Xxxx
Xxxxxxx
Xxxx Xxxxxxxxx
XX0 0XX
To: Permanent Funding (No. 1) Limited
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 - FUNDING 1 SWAP
This confirmation hereby amends and replaces the confirmation entered into
between us, you and the Security Trustee on 14th June, 2002, as amended and
restated on 6th March, 2003, 25th November, 2003 and 12th March, 2004 (the
PREVIOUS CONFIRMATION).
This confirmation constitutes a "Confirmation" as referred to in the 1992 ISDA
Master Agreement (Multicurrency-Cross Border) dated as of 14th June, 2002 as
amended and restated by us, you and the Security Trustee on 6th March, 2003,
25th November, 2003, 12th March, 2004 and the date hereof and as amended and
supplemented from time to time (the AGREEMENT). As of the date hereof, all
rights and obligations of the parties to the Previous Confirmation shall cease
to exist and shall be replaced in their entirety by the rights and obligations
arising pursuant to this Confirmation.
The purpose of this letter (the CONFIRMATION) is to confirm the terms and
conditions of the Swap Transaction entered into between us on the Trade Date
specified below.
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 shall govern: (i) this Confirmation; (ii) the Master Definitions
Schedule; and (iii) the Definitions.
The following expressions shall, for the purpose of this Confirmation, have the
following meanings:
AVERAGE FIXED RATE LOAN BALANCE means, in respect of a Calculation Period, the
average daily aggregate Outstanding Principal Balance of the Fixed Rate Loans
during the relevant Calculation Period as notified by the Cash Manager in
accordance with the Cash Management Agreement.
AVERAGE LOAN BALANCE means, in respect of a Calculation Period, the sum of the
Average Fixed Rate Loan Balance, the Average Variable Rate Loan Balance and the
Average Tracker Rate Loan Balance.
AVERAGE TRACKER RATE LOAN BALANCE means, in respect of a Calculation Period,
the average daily aggregate Outstanding Principal Balance of the Tracker Rate
Loans during the relevant Calculation Period as notified by the Cash Manager in
accordance with the provisions of the Cash Management Agreement.
AVERAGE VARIABLE RATE LOAN BALANCE means, in respect of a Calculation Period,
the average daily aggregate Outstanding Principal Balance of the Variable Rate
Loans during the relevant Calculation Period as notified by the Cash Manager in
accordance with the provisions of the Cash Management Agreement.
BLENDED RATE means, in respect of a Calculation Period, a rate of interest
equal to the sum of (i) the Weighted Average Fixed Rate for such Calculation
Period multiplied by the Fixed Rate Ratio for such Calculation Period; (ii) the
Variable Rate Swap SVR for such Calculation Period multiplied by the Variable
Rate Ratio for such Calculation Period and (iii) the Tracker Swap Rate for such
Calculation Period multiplied by the Tracker Ratio for such Calculation Period.
BLENDED SPREAD means, in respect of a Calculation Period, a percentage equal to
the sum of (i) the Fixed Rate Spread multiplied by the Fixed Rate Ratio for
such Calculation Period; (ii) the Variable Rate Spread multiplied by the
Variable Rate Ratio for such Calculation Period and (iii) the Tracker Spread
multiplied by the Tracker Ratio for such Calculation Period.
CALCULATION DATE means the first day (or if not a London Business Day, the next
succeeding London Business Day) of each month and any other day on which
Funding 1 acquires a further interest in the Trust Property from and including
the Calculation Date immediately preceding the Effective Date.
CALCULATION PERIOD means, each period from and including the Closing Date to
but excluding the first Calculation Date and thereafter the period from and
including one Calculation Date to but excluding the next following Calculation
Date.
CALCULATION PERIOD FUNDING 1 AMOUNT means, in respect of a Calculation Period,
an amount in Sterling equal to the amount produced by applying the Blended Rate
for such Calculation Period to the Notional Amount, such amount to be
calculated by the Calculation Agent on the basis of the actual number of days
in such Calculation Period, divided by 365.
CALCULATION PERIOD SWAP PROVIDER AMOUNT means, in respect of a Calculation
Period, an amount in Sterling which is equal to the amount produced by applying
a rate equal to the Three Month LIBOR prevailing on the first day of such
Calculation Period plus the Blended Spread to the Notional Amount for such
Calculation Period, such amount to be calculated by the Calculation Agent on
the basis of the actual number of days in such Calculation Period, divided by
365.
FIRST ISSUER means Permanent Financing (No. 1) PLC.
FIXED RATE RATIO means, in respect of a Calculation Period, the Average Fixed
Rate Loan Balance divided by the Average Loan Balance.
2
FIXED RATE SPREAD means {circle} per cent. per annum.
FUNDING 1 AMOUNT means, in respect of an Interest Period, an amount equal to
the sum of each of the Calculation Period Funding 1 Amounts calculated in
respect of the Calculation Periods which end on a date falling within such
Interest Period.
INTERCOMPANY LOANS means, the First Issuer Intercompany Loan entered into
between Funding 1, the First Issuer and the Security Trustee, the Second Issuer
Intercompany Loan entered into between Funding 1, the Second Issuer, and the
Security Trustee and any New Intercompany Loan.
INTEREST PAYMENT DATE means each Funding 1 Interest Payment Date.
INTEREST PERIOD means the period from (and including) the Second Issuer Closing
Date to (but excluding) the Interest Payment Date falling in June 2003 and
thereafter from (and including) one Interest Payment Date to (but excluding)
the next succeeding Interest Payment Date.
NOTIONAL AMOUNT means in respect of a Calculation Period, an amount in Sterling
equal to:
(a) the Outstanding Principal Balance of the Intercompany Loans on the first
day of the relevant Calculation Period, less
(b) the balance of the Principal Deficiency Ledger attributable to the
Intercompany Loans on the first day of the relevant Calculation Period,
less
(c) the amount of the Principal Receipts in the Funding 1 GIC Account
attributable to the Intercompany Loans on the first day of the relevant
Calculation Period.
The Notional Amount shall be determined on the first day of the relevant
Calculation Period after any changes made on such date to the Outstanding
Principal Balance of the Intercompany Loans, the balance of the Principal
Deficiency Ledger attributable to the Intercompany Loans and the amount of
Principal Receipts in the Funding 1 GIC Account have become effective.
REFERENCE LENDERS means Abbey National plc, HSBC Bank plc, Lloyds TSB plc,
Nationwide Building Society, National Westminster Bank Plc, Northern Rock plc
and Woolwich plc (or their respective successors) and such additional or
replacement residential mortgage lenders as shall be determined by the
Calculation Agent and REFERENCE LENDER means any one of them.
SECOND ISSUER means Permanent Financing (No. 2) PLC.
SWAP PROVIDER AMOUNT means, in respect of an Interest Period, an amount equal
to the sum of each of the Calculation Period Swap Provider Amounts calculated
in respect of the Calculation Periods which end on a date falling within such
Interest Period.
THREE MONTH LIBOR means the weighted average of the rates of interest
(excluding spreads) applicable to any outstanding Intercompany Loan.
TRACKER RATIO means, in respect of a Calculation Period, the Average Tracker
Rate Loan Balance divided by the Average Loan Balance.
TRACKER SPREAD means {circle} per cent. per annum.
3
TRACKER SWAP RATE means, in respect of a Calculation Period, a rate of
interest, linked to the Bank of England repo rate, as determined by the Cash
Manager in accordance with the provisions of the Cash Management Agreement.
VARIABLE RATE RATIO means, in respect of a Calculation Period, the Average
Variable Rate Loan Balance divided by the Average Loan Balance.
VARIABLE RATE SPREAD means {circle} per cent. per annum.
VARIABLE RATE SWAP SVR means, in respect of a Calculation Period, the rate of
interest equal to the average of the standard variable rate or its equivalent
charged to existing borrowers on residential mortgage loans as published from
time to time after excluding the highest and lowest rate, of the Reference
Lenders, as determined by the Cash Manager in good faith and notified to the
Calculation Agent from time to time in accordance with the Cash Management
Agreement.
WEIGHTED AVERAGE FIXED RATE means, in respect of a Calculation Period, the
weighted average (by Outstanding Principal Balance) of the fixed rates of
interest charged to borrowers of Fixed Rate Loans during the relevant
Calculation Period as notified by the Cash Manager in accordance with the
provisions of the Cash Management Agreement.
1. This Confirmation supplements, forms part of, and is subject to, the
Agreement. All provisions contained in the Agreement govern this
Confirmation except as expressly modified below.
2. The terms of the Transaction to which this Confirmation relates are as
follows:
PARTY A: Halifax plc
PARTY B: Permanent Funding (No. 1) Limited
TRADE DATE: 14th June, 2002
TERMINATION DATE: The date on which the amount outstanding under the
Intercompany Loans is reduced to zero.
EFFECTIVE DATE: 14th June, 2002
BUSINESS DAY
CENTRES FOR ALL
PAYMENTS: London
CALCULATION OF
AMOUNTS: On each Interest Payment Date, the Calculation Agent
shall calculate the Swap Provider Amount and the
Funding 1 Amount for the then current Interest Period,
and forthwith notify Party A, Party B and the Cash
Manager of the amounts so determined and of the net
amount determined as set out below.
PAYMENTS: If in relation to any Interest Payment Date:
(i) the Swap Provider Amount for the relevant
Interest Period exceeds the Funding 1 Amount
for the relevant Interest Period, Party A shall
pay the amount of such excess to Party B on
such Interest Payment Date;
4
(ii) the Funding 1 Amount for the relevant Interest
Period exceeds the Swap Provider Amount for the
relevant Interest Period, Party B shall pay the
amount of such excess to Party A on such
Interest Payment Date;
(iii) the Swap Provider Amount for the relevant
Interest Period is equal to the Funding 1
Amount for the relevant Interest Period, no
amount shall be due and payable by either party
hereunder in relation to such Interest Payment
Date.
CALCULATION AGENT: Halifax plc acting in its capacity of Servicer
pursuant to the Servicing Agreement or of Cash
Manager pursuant to the Cash Management
Agreement, as the case may be.
3. MISCELLANEOUS:
Subject to Clause 25 of the Funding 1 Deed of Charge (Supplemental
Provisions Regarding the Security Trustee), any amendments to this
Confirmation or the Agreement will be made only with the prior written
consent of each party to the Agreement.
4. ACCOUNT DETAILS:
Payments to Party
A: Bank: Halifax plc
Domestic Banking
Trinity Road
Halifax
Sort Code: 11-99-06
Account Number: 00000000
Account Name: Halifax CHAPS Funding
Beneficiary Name: Securitisation E/04101-06
Payments to Party
B: Bank: The Governor and Company of the Bank
of Scotland
Account Number: 00000000
Sort Code: 12-24-55
Account Name: Permanent Funding (No. 1) Ltd -
Transaction Account
5. NOTICE DETAILS:
Party A: Halifax plc
Address: Xxxxxxx Xxxxx
Xxxxxxx
Xxxx Xxxxxxxxx XX0 0XX
5
Facsimile Number: x00 (0) 0000 000000
Attention: Head of Mortgage Securitisation
with a copy to:- HBOS Treasury Services plc,
Address: 00 Xxx Xxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Facsimile Number: 020 7574 8784
Attention: Head of Capital Markets and Securitisation
Party B: Permanent Funding (No. 1) Limited
Address: Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxx
Xxxxxx
XX0X 0XX
Facsimile Number: 020 7566 0975
Attention: The Secretary
With a copy to:- (i) HBOS Treasury Services plc
Address: 00 Xxx Xxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Facsimile Number: 020 7574 8784
Attention: Head of Capital Markets and Securitisation
(ii) 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 - Corporate Trust
6
Yours faithfully,
HALIFAX PLC
By:
Name:
Title:
Confirmed as of the date first written:
PERMANENT FUNDING (NO. 1) LIMITED
By:
Name:
Title:
THE BANK OF NEW YORK
By:
Name:
Title:
7
