Draft: 25/02/03
Exhibit 10.3.1
FORM OF FUNDING 1 SWAP SCHEDULE
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of [o]
between
(1) HALIFAX plc (PARTY A");
(2) PERMANENT FUNDING (No.1) LIMITED ("PARTY B"); and
(3) STATE STREET BANK AND TRUST COMPANY (the "SECURITY TRUSTEE", which
expression shall include its successors and assigns and which has agreed to
become a party to this Agreement solely for the purpose of taking the
benefit of Parts 5(b) and (k) and assuming the obligations under the final
paragraph of Part 5(f) of the Schedule to this Agreement).
This Agreement amends and restates the 1992 ISDA Master Agreement 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.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi), will not apply to Party
A and will not apply to Party B.
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will not
apply to Party A and will not apply to Party B.
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(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not apply
to Party A and will not apply to Party B.
(f) PAYMENTS ON EARLY TERMINATION. For the purposes of Section 6(e) of this
Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means Sterling.
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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 will each make the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
Agreement) to be made by it to the other party under this Agreement. In
making this representation, it may rely on (i) the accuracy of any
representations made by the other party pursuant to Section 3(f) of this
Agreement, (ii) the satisfaction of the agreement contained in Section
4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness
of any document provided by the other party pursuant to Section 4(a)(i) or
4(a)(iii) of this Agreement and (iii) the satisfaction of the agreement of
the other party contained in Section 4(d) of this Agreement, provided that
it shall not be a breach of this representation where reliance is placed on
clause (ii) and the other party does not deliver a form or document under
Section 4(a)(iii) by reason of material prejudice to its legal or
commercial position.
(b) PAYEE REPRESENTATIONS. For the purposes of Section 3(f) of the Agreement,
Party A makes the representation specified below (the "ADDITIONAL TAX
REPRESENTATION"):
(i) it is a party to each Transaction solely for the purposes of a trade
(or part of a trade) carried on by it in the United Kingdom through a
branch or agency; or
(ii) it is resident in the United Kingdom or in a jurisdiction with which
the United Kingdom has a double tax treaty which makes provision,
whether for relief or otherwise, in relation to interest.
(c) ADDITIONAL TERMINATION EVENT. The Additional Tax Representation proves to
have been incorrect or misleading in any material respect with respect to
one or more Transactions (each an "AFFECTED TRANSACTION" for the purposes
of this Additional Termination Event) when made or repeated or deemed to
have been made or repeated. The Affected Party shall be Party A only.
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Part 3. AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO BE DELIVERED
DELIVER DOCUMENT CERTIFICATE
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 On signing of Yes
Party B evidence of this Agreement
its signatory's
authority
Party B Certified copy of On signing of Yes
board resolution this Agreement
Party A Legal opinion On signing of No
in form and this Agreement
substance
satisfactory to
Party B
Party B Legal opinion On signing of No
from Xxxxx & this Agreement
Overy
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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:
00 Xxx Xxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Attention: Head of Capital Markets and Securitisation
Facsimile No.: 020 7574 8784
(ii) Security Trustee:
0 Xxxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx
X00 0XX
Attention: Corporate Trust
Facsimile No.: 020 7416 2548
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(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 shall be made without set-off or
counterclaim, except as expressly provided for in Section 6.
(ii) Section 6(e) shall be amended by the deletion of the following sentence:
"The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off."
(b) SECURITY INTEREST
Notwithstanding Section 7, Party A hereby agrees and consents to the assignment
by way of security by Party B of its interests under this Agreement (without
prejudice to, and after giving effect to, any contractual netting provision
contained in this Agreement) to the 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 shall 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), Xxxxxxx 0(x)(x), Xxxxxxx
0(x)(xxx)(0), (0), (0), (0)xxx (9) and Section 5(a)(viii) will not apply in
respect of Party B.
Section 5(a)(vii)(8) will not apply to Party B to the extent that it applies to
Section 5(a)(vii) (2), (5), (6), (7) and (9).
(d) DISAPPLICATION OF CERTAIN TERMINATION EVENTS
The "Tax Event" and "Tax Event Upon Merger" provisions of Section 5(b)(ii) and
5(b)(iii) will not apply to Party A or to Party B.
(e) ADDITIONAL EVENT OF DEFAULT
The following shall constitute an additional Event of Default with respect to
Party B:
"INTERCOMPANY LOAN ACCELERATION NOTICE. The Security Trustee serves an
Intercompany Loan Acceleration Notice on Party B (which shall be the Defaulting
Party)."
"INTERCOMPANY LOAN ACCELERATION NOTICE" shall 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 A1 by Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx
Companies Inc. ("S&P") and, as a result of such downgrading, the then
current rating of the [Notes] is downgraded or placed under review for
possible downgrade by S&P (an "S&P RATING EVENT"), then Party A will,
within 30 days of the occurrence of such 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 Party A's obligations under this
Agreement on terms satisfactory to the Security Trustee (whose consent
shall be given if S&P confirms that the provision of such collateral
would maintain the ratings of the [Notes] or restore the rating of the
[Notes] by S&P to the level it would have been at immediately prior to
such S&P Rating Event) provided that (x) Party A shall be deemed to
have satisfied the requirements of S&P if the amount of collateral
agreed to be provided in the form of cash and/or securities (the
"COLLATERAL AMOUNT") is determined on a basis which is no more onerous
than the criteria of S&P as at 30th September, 1999 which enables
entities rated lower than a specified level to participate in
structured finance transactions which, through collateralisation, are
rated at a higher level (as referred to, in part, in the article
entitled New Interest Rate Currency Swap Criteria Broadens Allowable
Counterparties in the January 1999 issue of S&P's Structured Finance
Publication) (the "S&P CRITERIA") and (y) the Collateral Amount shall
not be required to exceed such amount as would be required (in
accordance with the S&P Criteria) to maintain or restore the rating of
the [Notes] at or to, the level it would have been at immediately
prior to such S&P Rating Event;
(B) transfer all of its rights and obligations with respect of this
Agreement to a replacement third party satisfactory to the Security
Trustee (whose consent shall be given if S&P confirms that such
transfer would maintain the ratings of the [Notes] by S&P at, or
restore the rating of the [Notes] by S&P to, the level it would have
been at immediately prior to such 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 shall be given if S&P confirms that such guarantee
would maintain the rating of the [Notes] at, or restore the rating of
the [Notes] to, the level it would have been at immediately prior to
such 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 [Notes] following the taking of such action being
maintained at, or restored to, the level it would have been at
immediately prior to such S&P Rating Event.
If any of (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 (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:
(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, ceases 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:
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(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, such 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[/and
(4) pending compliance with (ii)(1), (ii)(2) or (ii)(3),](1) 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 amount as may be agreed with
Xxxxx'x.
If any of (ii)(1), (ii)(2) or (ii)(3) above are satisfied at any time, all
collateral (or the equivalent thereof, as appropriate) transferred by Party
A pursuant to (ii)(4) 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 as high as ["A3/Baa2"](2) (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) within 30 days of the occurrence of such subsequent Xxxxx'x Rating
Event on a [reasonable/best] efforts basis, and at its own cost,
attempt either to:
(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, such 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
______________
(1) Delete if use "best efforts" in (iii)(1) below.
(2) Use A3 if use "reasonable efforts" and Baa2 if use "best efforts" in
(iii)(1) below.
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(cc) take such other action agreed with Xxxxx'x; and
(2) within 10 days of the occurrence of such Subsequent Xxxxx'x Rating
Event, put in place at its own cost pending compliance with
(iii)(1)(aa), (iii)(1)(bb) or (iii)(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 amount as may be agreed with Xxxxx'x.
If any of (iii)(1)(aa), (bb) or (cc) are satisfied at any time, all
collateral (or the equivalent thereof, as appropriate) transferred by Party
A pursuant to (iii)(2) will be transferred to Party A and Party A will not
be required to transfer any additional collateral.
For the purposes of (ii) and (iii), "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 ["A2"], or such
other ratings as may be agreed with Xxxxx'x from time to time.
"XXXXX'X CRITERIA" means that the Collateral Amount shall equal the sum of (a)
the product of A multiplied by the xxxx-to-market value of the outstanding
Transactions as determined by Party A in good faith on each Local Business Day
and (b) the product of B multiplied by the current aggregate notional amounts of
the outstanding Transactions, where:
(w) "A" means [o%] and "B" means [o%] if the long-term, unsecured and
unsubordinated debt obligations or the short-term, unsecured and
unsubordinated debt obligations of Party A (or its successor) or, any
credit support provider of Party A , is downgraded below ["A1"] or
["Prime-1"] by Xxxxx'x;
(x) "A" means [o%] and "B" means [o%] if the long-term, unsecured and
unsubordinated debt obligations of Party A (or its successor) or, any
credit support provider of Party A), is downgraded below ["A2"] by Xxxxx'x;
(y) "A" shall be equal to or greater than [o%] (as determined by Xxxxx'x) and
"B" shall be equal to or greater than [o%] (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 (or
its successor) or any credit support provider of Party A, is downgraded
below ["Baa2"] or [Prime-2] by Xxxxx'x; and
[(z) "A" means 0% and "B" means 0% in all other cases.]
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 it
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 a third party valuation of the xxxx-to-market value
of the outstanding Transactions.
(iv) In the event that the long-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+ (or its equivalent) by Fitch Ratings Ltd ("FITCH") and as a result of
such downgrading, the then current rating of the [Notes] is downgraded or
placed under possible review for possible downgrade by Fitch (a "FITCH
RATING EVENT") then Party A will,
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on a reasonable efforts basis within 30 days of the occurrence of such
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 Party
A's obligations under this Agreement provided that (x) Party A shall
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 (defined below), and (y) the Collateral Amount
shall not be required to exceed such amount as would be required (in
accordance with the Fitch Criteria) to maintain the rating of the
[Notes] at the level at which they were immediately prior to such
Fitch Rating Event;
(B) transfer all of its rights and obligations with respect of this
Agreement to a replacement third party satisfactory to the Security
Trustee (whose consent shall be given if Fitch confirms that such
transfer would maintain the ratings of the [Notes] by Fitch at, or
restore the rating of the [Notes] by Fitch to, the level it would have
been at immediately prior to such 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 shall be given if Fitch confirms that such guarantee
would maintain the rating of the [Notes] at, or restore the rating of
the [Notes] to, the level it would have been at immediately prior to
such Fitch Rating Event); or
(D) take such other action as Party A may agree with Fitch as will result
in the rating of the [Notes] following the taking of such action being
maintained at, or restored to, the level it would have been at
immediately prior to such Fitch Rating Event.
"FITCH CRITERIA" means that the Collateral Amount shall equal the sum of
(a) the product of A multiplied by the xxxx-to-market value of the
outstanding Transactions as determined by Party A in good faith on a weekly
basis and (b) the product of B multiplied by the current aggregate notional
amounts of the outstanding Transactions, where "A" means [o]% and "B" means
[o]%.
(v) (A) If Party A does not take any of the measures described in
paragraph (i) above, such failure shall not be or give rise to an
Event of Default but shall constitute an Additional Termination Event
with respect to Party A which shall be deemed to have occurred on the
thirtieth day following the S&P Rating Event with Party A as the sole
Affected Party and all Transactions as Affected Transactions.
(B) If Party A does not take any of the measures described in (ii)(1),
(2), (3) or (4) above, such failure shall not be or give rise to an
Event of Default but shall constitute an Additional Termination Event
with respect to Party A and shall be deemed to have occurred on the
thirtieth day following the occurrence of such Initial Xxxxx'x Rating
Event with Party A as the sole Affected Party and all Transactions as
Affected Transactions.
(C) If Party A does not take the measures described in (iii)(2) above,
such failure shall give rise to an Event of Default with respect to
Party A and shall be deemed to have occurred on the thirtieth day
following such Subsequent Xxxxx'x Rating Event with Party A as the
Defaulting Party. Further, notwithstanding, Section 5(a)(ii) of this
29
Agreement, if 10 days after receiving notice of failure to use its
[reasonable/best] efforts either to transfer as described in
(iii)(1)(aa), find a co-obligator as described in (iii)(1)(bb) or take
such other action as described in (iii)(1)(cc), Party A still has not
used [reasonable/best] efforts to take one of the above courses of
action, this shall not constitute an Event of Default but shall be an
Additional Termination Event with Party A as the sole Affected Party
and all Transactions as Affected Transactions.
(D) If Party A does not take the measures described in paragraph (iv)
above, such failure shall not be or give rise to an Event of Default
but shall constitute an Additional Termination Event with respect to
Party A which shall be deemed to have occurred on the thirtieth day
following the Fitch Rating Event with Party A as the sole Affected
Party and all Transactions as Affected Transactions.
(E) 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(e) if Party B has found a
replacement counterparty willing to enter into a new transaction on
terms that reflect as closely as reasonably possible the economic,
legal and credit terms of the Terminated Transactions with Party A.
Each of Party B and the Security Trustee shall 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:
(i) "(g) NO AGENCY. It is entering into this Agreement and each Transaction as
principal and not as agent of any person."
(ii) The following additional representation shall be given by Party A only:
"(h) PARI PASSU. Its obligations under this Agreement rank pari passu with
all of its other unsecured, unsubordinated obligations except those
obligations preferred by operation of law."
(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
30
Each party will be deemed to represent to the other party on the date on which
it enters into a Transaction that (absent a written agreement between the
parties that expressly imposes affirmative obligations to the contrary for that
Transaction):
(a) NON RELIANCE. It is acting for its own account, and it has made its own
decisions to enter into that Transaction and as to whether that Transaction
is appropriate or proper for it based upon advice from such advisers as it
has deemed necessary. It is not relying on any communication (written or
oral) of the other party as investment advice or as a recommendation to
enter into that Transaction; it being understood that information and
explanations related to the terms and conditions of a Transaction shall not
be considered investment advice or a recommendation to enter into that
Transaction. It has not received from the other party any assurance or
guarantee as to the expected results of that Transaction.
(b) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the merits of and
understanding (through independent professional advice), and understands
and accepts, the terms, conditions and risks of that Transaction. It is
also capable of assuming, and assumes, the financial and other risks of
that Transaction.
(c) STATUS OF PARTIES. The other party is not acting as a fiduciary or an
adviser for it in respect of that Transaction."
(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 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
31
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 shall pay
to Party A as soon as practical after receipt of the same so much of
the cash benefit (as calculated below) relating thereto which it has
received as will leave Party B in substantially the same (but in any
event no worse) position as Party B would have been in if no such
deduction or withholding had been required;
(2) the "cash benefit" shall, in the case of credit, allowance or set-off,
be the additional amount of Tax which would have been payable by Party
B in the jurisdiction referred to in (1) above but for the obtaining
by it of the said Tax credit, allowance or set-off and, in the case of
a repayment, shall be the amount of the repayment together, in either
case, with any related interest 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 shall, upon request by Party A, supply Party A with a
reasonably detailed explanation of its calculation of the amount of
any such Tax credit, allowance, set-off or repayment and of the date
on which the same is received."
(k) NON-PETITION / LIMITED RECOURSE
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The parties hereto acknowledge that Party B will grant security over its assets,
including a first fixed charge over, inter alia, this Agreement in favour of
certain of its creditors on the terms contained in the Funding 1 Deed of Charge
and therefore the provisions of this Agreement and any Transaction hereunder
will be subject to the provisions of the Funding 1 Deed of Charge.
Party A agrees that it shall be bound by the provisions of the Funding 1 Deed of
Charge applicable to it.
(l) CONDITION PRECEDENT
Section 2(a)(iii) shall be amended by the deletion of the words "a Potential
Event of Default" in respect of obligations of Party A only.
(m) REPRESENTATIONS
Section 3(b) shall be amended by the deletion of the words "or Potential Event
of Default" in respect of the representation given by Party B only.
(n) ADDITIONAL DEFINITIONS
Words and expressions defined in the Amended and Restated Master Definitions and
Construction Schedule (the "MASTER SCHEDULE") signed for the purposes of
identification by Sidley Xxxxxx Xxxxx & Xxxx and Xxxxx & Xxxxx on [o] and any
other Master Definitions and Construction Schedule, each as amended, varied or
supplemented from time to time (together the "MASTER DEFINITIONS SCHEDULE")
shall, 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 shall apply to this Agreement.
(o) MODIFICATIONS TO CLOSE-OUT PROVISIONS
Upon the occurrence of an Event of Default or an Additional Termination
Event with respect to Party A, Party B will be entitled (but not obliged in
the event that it does not designate an Early Termination Date) to proceed
in accordance with Section 6 of the Agreement subject to the following:
(i) For the purposes of Section 6(d)(i), Party B's obligation with respect
to the extent of information to be provided with its calculations is
limited to information Party B has already received in writing and
provided Party B is able to release this information without breaching
the provisions of any law applicable to, or any contractual
restriction binding upon, Party B.
(ii) The following amendments shall be deemed to be made to the definition
of "Market Quotation":
(A) the word "firm" shall be added before the word "quotations" in
the second line; and
(B) the words "provided that the documentation relating thereto is
either the same as this Agreement and the existing confirmations
hereto (and the Reference Market-maker is rated not less than
"AA-" by S&P, "A1" by Xxxxx'x and "AA-" 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 such proposed
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documentation will not adversely impact the ratings of the Notes"
shall be added after "agree" in the sixteenth line; and
(C) the last sentence shall be deleted and replaced with the
following:
"If, on the last date set for delivery of quotations, exactly two
quotations are provided, the Market Quotation will be either (a)
the lower of the two quotations where there would be a sum
payable by Party A to Party B, or (b) the higher of the two
quotations where there would be a sum payable by Party B to Party
A. If only one quotation is provided on such date, Party B must
accept such quotation as the Market Quotation. 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 shall, 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 10 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 and
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.
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