DRAFT (1): 26.02.04
SERIES 3 CLASS [A/B/M/C]
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of {circle}, 2004
between
(1) BANQUE AIG, LONDON BRANCH ("PARTY A");
(2) PERMANENT FINANCING (NO. 4) PLC ("PARTY B"); and
(3) THE BANK OF NEW YORK (the "SECURITY TRUSTEE", which expression will
include its successors and assigns and which has agreed to become a party
to this Agreement solely for the purpose of taking the benefit of Parts
5(b) and 5(l) of this Schedule and assuming the obligations under the
final paragraph of Part 5(f) of this Schedule).
Part 1. TERMINATION PROVISIONS
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:-
Section 5(a)(v), none
Section 5(a)(vi), none
Section 5(a)(vii), none
Section 5(b)(iv), none
and in relation to Party B for the purpose of:-
Section 5(a)(v), none
Section 5(a)(vi), none
Section 5(a)(vii), none
Section 5(b)(iv), none
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14 of
this Agreement.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi), will not apply to
Party A and will not apply to Party B.
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(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will not
apply to Party A and will not apply to Party B.
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not apply
to Party A and will not apply to Party B.
(f) PAYMENTS ON EARLY TERMINATION. For the purposes of Section 6(e) of this
Agreement:-
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means Sterling.
(h) "ADDITIONAL TERMINATION EVENT" will apply. In addition to the Additional
Termination Events set forth in Parts 5(f)(iv), 5(f)(vi) and Part 5(r) of
this Schedule, the following will each constitute an Additional
Termination Event:
(i) The Additional Tax Representation (as defined in Part 2(b) of this
Schedule), proves to have been incorrect or misleading in any
material respect with respect to one or more Transactions (each an
"AFFECTED TRANSACTION" for the purpose of this Additional Termination
Event) when made or repeated or deemed to have been made or repeated.
For the purpose of the foregoing Termination Event, the Affected
Party will be Party A only.
(ii) A redemption or purchase of the Series {circle} Class {circle} Fourth
Issuer Notes occurs pursuant to Condition 5(F) (redemption or
purchase following a regulatory event) of the terms and conditions
thereof. For the purpose of the foregoing Termination Event: (A) for
the purpose of Section 6(b)(iv), both parties will be Affected
Parties; and (B) for the purpose of Section 6(e), the Affected Party
will be Party B only.
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Part 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
(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.
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 this Yes
Party B its signatory's authority Agreement
Party B Certified copy of On signing of this Yes
board resolution and Agreement
constitutional documents
Party A Legal opinion in form and On signing of this No
substance satisfactory to Agreement
Party B
Party B Legal opinions from On signing of this No
Xxxxx & Xxxxx Agreement
Party A The Credit Support On signing of this Yes
Document in respect of Party Agreement
A specified in Part 4(f) of
this Schedule
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Part 4. MISCELLANEOUS
(a) ADDRESSES FOR NOTICES.
Address for notices or communications to Party A:
Address: Banque AIG, London Branch
0xx Xxxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx X0X 0XX
Attention: Swaps Administration
Facsimile No.: 020 7659 7200
With a copy to: AIG Financial Products Corp.:
Address: 00 Xxxxxxx Xxxx
Xxxxxx
XX 00000-0000
XXX
Attention: Chief Financial Officer (with a copy to General Counsel)
Facsimile No.: x0 000 000 0000
Address for notices or communications to Party B:
Address: Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxx
Xxxxxx
XX0X 0XX
Attention: The Secretary
Facsimile No.: 020 7566 0975
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
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(ii) the Security Trustee:
Address: The Bank of Xxx Xxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx
X00 0XX
Attention: Global Structured Finance - Corporate Trust
Facsimile No.: 020 7964 6061/6399
(b) PROCESS AGENT. For the purpose of Section 13(c) of this Agreement:
Party A appoints as its Process Agent: None.
Party B appoints as its Process Agent: None.
(c) OFFICES. The provisions of Section 10(a) will apply to this Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:
In respect of Party A: Guarantee by American International Group, Inc.
dated on or about the date of this Agreement of the obligations of Party A
arising out of, inter alia, Transactions entered into under this
Agreement.
In respect of Party B: None.
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to
Party A, American International Group, Inc.
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 Fourth Issuer 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), (5), (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), (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 will constitute an additional Event of Default with respect to
Party B:
"NOTE ACCELERATION NOTICE. A Note Acceleration Notice is served on Party B in
relation to the Series 3 Class [A/B/M/C] Fourth Issuer Notes."
(f) RATINGS EVENT
(i) In the event that the long-term, unsecured and unsubordinated debt
obligations of the Credit Support Provider of Party A (or its successor)
cease to be rated at least as high as "AA-" by Standard & Poor's Rating
Services, a division of The XxXxxx-Xxxx Companies, Inc. ("S&P") and, as a
result of such cessation, the then current rating of the Series 3 Class
[A/B/M/C] Fourth 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 on terms satisfactory to the Security Trustee (whose
consent will be given if S&P confirms that the provision of such
collateral would maintain the rating of the Series 3 Class [A/B/M/C]
Fourth Issuer Notes by S&P at, or restore the rating of the Series 3
Class [A/B/M/C] Fourth Issuer Notes by S&P to, the level it would
have been at immediately prior to such Initial S&P Rating Event)
provided that (x) Party A will be deemed to have satisfied the
requirements of S&P if the amount of collateral agreed to be provided
in the form of cash and/or securities (the "COLLATERAL AMOUNT") is
determined on a basis which satisfies (but is no more onerous than)
the criteria of S&P published on 17th December, 2003, which enables
entities rated lower than a specified level to participate in
structured finance transactions which, through collateralisation are
rated at a higher level (the "S&P CRITERIA"), (y) the Collateral
Amount will not be required to exceed such amount as would be
required (in accordance with the S&P Criteria) to maintain or restore
the rating of the Series 3 Class [A/B/M/C] Fourth Issuer Notes at or
to the level they would have been at immediately prior to such
Initial S&P Rating Event [and (z) the enforceability of such
collateral arrangement must be supported by legal opinions with
respect to each relevant jurisdiction provided in a form reasonably
acceptable to S&P within 30 days of the occurrence of such Initial
S&P Rating Event];
(B) transfer all of its rights and obligations with respect to this
Agreement to a replacement third party satisfactory to the Security
Trustee (whose consent will be given if S&P confirms that such
transfer would maintain the rating of the Series 3 Class [A/B/M/C]
Fourth Issuer Notes by S&P at, or restore the rating of the Series 3
Class [A/B/M/C] Fourth Issuer Notes by S&P to, the level it would
have been at immediately prior to such Initial S&P Rating Event);
(C) obtain a guarantee of its rights and obligations with respect to this
Agreement from a third party satisfactory to the Security Trustee
(whose consent will be given if S&P confirms that such guarantee
would maintain the rating of the Series 3 Class [A/B/M/C] Fourth
Issuer Notes at, or restore the rating of the Series 3 Class
[A/B/M/C] Fourth Issuer Notes to, the level it would have been at
immediately prior to such Initial S&P Rating Event); or
(D) take such other action as Party A may agree with S&P as will result
in the rating of the Series 3 Class [A/B/M/C] Fourth Issuer Notes
following the taking of such action being maintained at, or restored
to, the level it would have been at immediately prior to such Initial
S&P Rating Event.
If any of paragraphs (i)(B), (i)(C) or (i)(D) above are satisfied at any
time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (i)(A) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
(ii) In the event that the long-term, unsecured and unsubordinated debt
obligations of the Credit Support Provider of Party A (or its successor)
cease to be rated at least as high as ["BBB-"] by S&P and, as a result of
such downgrade, the then current rating of the Series 3 Class [A/B/M/C]
Fourth Issuer Notes may in the reasonable opinion of S&P be downgraded or
placed under review for possible downgrade (such event, a
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"SUBSEQUENT S&P RATING EVENT"), then Party A will, within 30 days of the
occurrence of such Subsequent S&P Rating Event, at its own cost either:
(A) transfer all of its rights and obligations with respect to this
Agreement to a replacement third party satisfactory to the Security
Trustee (whose consent will be given if S&P confirms that such
transfer would maintain the rating of the Series 3 Class [A/B/M/C]
Fourth Issuer Notes by S&P at, or restore the rating of the Series 3
Class [A/B/M/C] Fourth Issuer Notes by S&P to, the level it would
have been at immediately prior to such Subsequent S&P Rating Event);
(B) take such other action as Party A may agree with S&P as will result
in the rating of the Series 3 Class [A/B/M/C] Fourth Issuer Notes
following the taking of such action being maintained at, or restored
to, the level it would have been at immediately prior to such
Subsequent S&P Rating Event[; or
(C) obtain a guarantee of its rights and obligations with respect to this
Agreement from a third party satisfactory to the Security Trustee
(whose consent will be given if S&P confirms that such guarantee
would maintain the rating of the Series 3 Class [A/B/M/C] Fourth
Issuer Notes at, or restore the rating of the Series 3 Class
[A/B/M/C] Fourth 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 the long-term, unsecured and unsubordinated debt
obligations of the Credit Support Provider of Party A (or its successor)
cease to be rated at least as high as the lower of (A) "A1" (or its
equivalent) by Xxxxx'x and (B) the highest rating of the Series 3 Class
[A/B/M/C] Fourth Issuer Notes then issued by Xxxxx'x immediately prior to
such cessation (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 or guarantor in respect
of the obligations of Party A under this Agreement, which co-obligor
or guarantor may be either (x) a person with the Required Ratings (as
defined below) domiciled in the same legal jurisdiction as Party A or
Party B, or (y) such other person as agreed with Xxxxx'x;
(3) take such other action as agreed with Xxxxx'x; or
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(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) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
(iv) In the event that the long-term, unsecured and unsubordinated debt
obligations of the Credit Support Provider of Party A (or its successor)
cease to be rated as high as "A3" (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 within 30 days of the occurrence of such
Subsequent Xxxxx'x Rating Event, 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 or guarantor in
respect of the obligations of Party A under this Agreement,
which co-obligor or guarantor may be either (x) a person with
the Required Ratings (as defined below) domiciled in the same
legal jurisdiction as Party A or Party B, or (y) such other
person as 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 has provided collateral pursuant
to a xxxx-to-market collateral arrangement put in place pursuant to
paragraph (iii)(4) above following an Initial Xxxxx'x Rating Event,
it will continue to post collateral notwithstanding the occurrence of
a Subsequent Xxxxx'x Rating Event.
If any of paragraphs (iv)(1)(aa), (bb) or (cc) above are satisfied at any
time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (iv)(2) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
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For the purposes of paragraphs (iii) and (iv) of this Part 5(f), "REQUIRED
RATINGS" means, in respect of the relevant entity, its long-term, unsecured and
unsubordinated debt obligations are rated at least as high as "A2", or such
other rating as may be agreed with Xxxxx'x from time to time.
"XXXXX'X CRITERIA" means that the Collateral Amount will equal the sum of (a)
the product of A multiplied by the xxxx-to-market value of the outstanding
Transactions as determined by Party A in good faith on each Local Business Day
and (b) the product of B multiplied by the current aggregate notional amounts of
the outstanding Transactions, where:
(w) "A" means 102% and "B" means 0% if the long-term, unsecured and
unsubordinated debt obligations of Party A's Credit Support Provider (or
its successor), are downgraded below "A1" by Xxxxx'x;
(x) "A" means 102% and "B" means 2.0% if the long-term, unsecured and
unsubordinated debt obligations of Party A's Credit Support Provider (or
its successor) are downgraded below "A2" by Xxxxx'x;
(y) "A" will be equal to or greater than 102% (as determined by Xxxxx'x) and
"B" will be equal to or greater than 3% (as determined by Xxxxx'x) if the
long-term, unsecured and unsubordinated debt obligations of Party A's
Credit Support Provider (or its successor), are downgraded below "Baa2" by
Xxxxx'x; and
(z) "A" means 0% and "B" means 0% in all other cases.
In relation to paragraphs (iii)(4) and (iv)(2) above, Party A will, upon
receipt of reasonable notice from Xxxxx'x demonstrate to Xxxxx'x the
calculation by Party A of the xxxx-to-market value of the outstanding
Transactions. In relation to paragraph (iv)(2) above, Party A will, at its
own cost, on receipt of reasonable notice from Xxxxx'x and within 30 days
of receipt of such notice arrange a third party valuation of the
xxxx-to-market value of the outstanding Transactions.
A failure by Party A to arrange such a valuation will not be or give rise
to an Event of Default under Section 5(a)(ii) of this Agreement but will
constitute an Additional Termination Event with Party A as the sole
Affected Party and all Transactions as Affected Transactions.
(v) In the event that the long-term, unsecured and unsubordinated debt
obligations of the Credit Support Provider of Party A (or its successor)
cease to be rated at least as high as "A+" (or its equivalent) by Fitch
Ratings Ltd ("FITCH") and, as a result of such cessation, the then current
rating of the Series 3 Class [A/B/M/C] Fourth Issuer Notes is downgraded
or placed under review for possible downgrade by Fitch (an "INITIAL FITCH
RATING EVENT") then Party A will, on a best 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
29
defined below), and (y) the Collateral Amount will not be required to
exceed such amount as would be required (in accordance with the Fitch
Criteria) to maintain or restore the rating of the Series 3 Class
[A/B/M/C] Fourth Issuer Notes at or to the level it would have been
at immediately prior to such Initial Fitch Rating Event;
(B) transfer all of its rights and obligations with respect to this
Agreement to a replacement third party satisfactory to the Security
Trustee (whose consent will be given if Fitch confirms that such
transfer would maintain the rating of the Series 3 Class [A/B/M/C]
Fourth Issuer Notes by Fitch at, or restore the rating of the Series
3 Class [A/B/M/C] Fourth Issuer Notes by Fitch to, the level it would
have been at immediately prior to such Initial Fitch Rating Event);
(C) obtain a guarantee of its rights and obligations with respect to this
Agreement from a third party satisfactory to the Security Trustee
(whose consent will be given if Fitch confirms that such guarantee
would maintain the rating of the Series 3 Class [A/B/M/C] Fourth
Issuer Notes at, or restore the rating of the Series 3 Class
[A/B/M/C] Fourth Issuer Notes to, the level it would have been at
immediately prior to such Initial Fitch Rating Event); or
(D) take such other action as Party A may agree with Fitch as will result
in the rating of the Series 3 Class [A/B/M/C] Fourth Issuer Notes
following the taking of such action being maintained at, or restored
to, the level it would have been at immediately prior to such Initial
Fitch Rating Event.
If any of paragraphs (v)(B), (v)(C) or (v)(D) above are satisfied at any
time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (v)(A) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
(vi) In the event that the long-term, unsecured and unsubordinated debt
obligations of the Credit Support Provider of Party A (or its successor)
cease to be rated at least as high as "BBB+" (or its equivalent) by Fitch
and, as a result of such cessation, the then current rating of the Series
3 Class [A/B/M/C] Fourth 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 best 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 Series 3
Class [A/B/M/C] Fourth Issuer Notes by Fitch at, or restore the
rating of the Series 3 Class [A/B/M/C] Fourth Issuer Notes by
Fitch to, the level it would have been at immediately prior to
such Subsequent Fitch Rating Event);
(2) obtain a guarantee of its rights and obligations with respect to
this Agreement from a third party satisfactory to the Security
Trustee (whose consent will be given if Fitch confirms that such
guarantee would maintain the rating of the Series 3 Class
[A/B/M/C] Fourth Issuer Notes at, or restore the rating of the
Series 3 Class [A/B/M/C]
30
Fourth Issuer Notes to, the level it would have been at
immediately prior to such Subsequent Fitch Rating Event); or
(3) take such other action as Party A may agree with Fitch as will
result in the rating of the Series 3 Class [A/B/M/C] Fourth
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 the later of 10 days of the occurrence of such Subsequent
Fitch Rating Event and 30 days of the occurrence of an Initial 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 Series 3 Class
[A/B/M/C] Fourth Issuer Notes 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
has provided collateral pursuant to a xxxx-to-market collateral
arrangement put in place pursuant to paragraph (v)(A) above following
an Initial Fitch Rating Event, it will continue to post collateral
notwithstanding the occurrence of a Subsequent Fitch Rating Event.
If any of paragraphs (vi)(A)(1), (2) or (3) above are satisfied at any
time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (vi)(B) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
"FITCH CRITERIA" means that the Collateral Amount will equal the sum of
(a) the product of A multiplied by the xxxx-to-market value of the
outstanding Transactions as determined by Party A in good faith on a
weekly basis and (b) the product of B multiplied by the current aggregate
notional amounts of the outstanding Transactions, where "A" means 100% and
"B" means 2.5%.
(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 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 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 [tenth] day
following such Subsequent S&P Rating Event with Party A as the sole
31
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 later
of the tenth day following such Subsequent Xxxxx'x Rating Event and
the thirtieth day following an Initial Xxxxx'x Rating Event with
Party A as the Defaulting Party. Further, it will constitute an
Additional Termination Event with respect to Party A if, even after
satisfying the requirements of paragraph (iv)(2) above and
notwithstanding Section 5(a)(ii), Party A has failed, within 30 days
following such Subsequent Xxxxx'x Rating Event, 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 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 later
of the tenth day following such Subsequent Fitch Rating Event and the
thirtieth day following an Initial 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 and notwithstanding
Section 5(a)(ii), 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.
32
(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 acquired the Security Trustee's prior written consent.
Each of Party B and the Security Trustee will use their reasonable endeavours to
co-operate with Party A in putting in place such credit support documentation,
including agreeing to such arrangements in such documentation as may satisfy
S&P, Xxxxx'x and/or Fitch, as applicable, with respect to the operation and
management of the collateral and entering into such documents as may reasonably
be requested by Party A in connection with the provision of such collateral.
(g) TRANSFER POLICY
Section 7 of this Agreement will not apply to Party A, who will be required to
comply with, and will be bound by, the following:
Without prejudice to Section 6(b)(ii) as amended in this Schedule, Party A may
transfer all (but not part only) of its interests and obligations in and under
this Agreement to any of its Affiliates or, with the prior written consent of
Party B, such consent not to be unreasonably withheld, to any other entity (each
such Affiliate or entity a "TRANSFEREE") upon providing five Business Days'
prior written notice to the Note Trustee, provided that:
(i) the Transferee's 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 long-term, unsecured and unsubordinated debt obligations are then
rated not less than "AA-" by S&P, "A1" by Xxxxx'x and "A+" by Fitch (or
its equivalent by any substitute rating agency);
(ii) the Ratings Agencies have confirmed that the transfer will not result in
the then current rating of the Series 3 Class [A/B/M/C] Fourth 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.
33
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 (or its Credit Support
Provider, as applicable) will be deemed to be references to the Transferee.
Save as otherwise provided for in this Agreement and notwithstanding Section 7,
Party A will not be permitted to transfer (by way of security or otherwise) this
Agreement nor any interest or obligation in or under this Agreement without the
prior written consent of the Security Trustee.
(h) ADDITIONAL REPRESENTATION
Section 3 is amended by the addition at the end thereof of the following
additional representations (provided that the representation in Section 3(h)
will be made by Party A only):
"(g) NO AGENCY. It is entering into this Agreement, including each
Transaction, as principal and not as agent of any person or entity.
(h) PARI PASSU. Its obligations under this Agreement rank pari passu with
all of its other unsecured, unsubordinated obligations except those
obligations preferred by operation of law."
(i) RECORDING OF CONVERSATIONS
Each party to this Agreement (i) consents to the recording of the telephone
conversations of trading, marketing and operations personnel of the parties in
connection with this Agreement or any potential Transaction, (ii) agrees to
obtain any necessary consent of, and give notice of such recording to, such
personnel of it and (iii) agrees that in any Proceedings it will not object to
the introduction of such recordings in evidence on the ground that consent was
not properly given.
(j) RELATIONSHIP BETWEEN THE PARTIES
The Agreement is amended by the insertion after Section 14 of an additional
Section 15, reading in its entirety as follows:
"15. RELATIONSHIP BETWEEN THE PARTIES
Each party will be deemed to represent to the other party on the date on which
it enters into a Transaction that (absent a written agreement between the
parties that expressly imposes affirmative obligations to the contrary for that
Transaction):
(a) NON RELIANCE. It is acting for its own account, and it has made its own
independent decisions to enter into that Transaction and as to whether
that Transaction is appropriate or proper for it based upon advice from
such advisers as it has deemed necessary. It is not relying on any
communication (written or oral) of the other party as investment advice or
as a recommendation to enter into that Transaction, it being understood
that information and explanations related to the terms and conditions of a
Transaction will not be considered investment advice or a recommendation
to enter into that Transaction. No communication (written or oral)
received from the other
34
party will be deemed to be an assurance or guarantee as to the expected
results of that Transaction.
(b) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional
advice), and understands and accepts, the terms, conditions and risks of
that Transaction. It is also capable of assuming, and assumes, the
financial and other risks of that Transaction.
(c) STATUS OF PARTIES. The other party is not acting as a fiduciary for or an
adviser for it in respect of that Transaction."
(k) TAX
The Agreement is amended by deleting Section 2(d) in its entirety and replacing
it with the following:
"(d) Deduction or Withholding for Tax
(i) Requirement to Withhold
All payments under this Agreement will be made without any deduction or
withholding for or on account of any Tax unless such deduction or
withholding is required (including, for the avoidance of doubt, if such
deduction or withholding is required in order for the payer to obtain
relief from Tax) by any applicable law, as modified by the practice of any
relevant governmental revenue authority, then in effect. If a party ("X")
is so required to deduct or withhold, then that party (the "DEDUCTING
PARTY"):
(1) will promptly notify the other party ("Y") of such requirement;
(2) will pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any Gross Up Amount (as defined below) paid
by the Deducting Party to Y under this Section 2(d)) promptly upon
the earlier of determining that such deduction or withholding is
required or receiving notice that such amount has been assessed
against Y;
(3) will promptly forward to Y an official receipt (or a certified copy),
or other documentation reasonably acceptable to Y, evidencing such
payment to such authorities; and
(4) if X is Party A, X will promptly pay in addition to the payment to
which Party B is otherwise entitled under this Agreement, such
additional amount (the "GROSS UP AMOUNT") as is necessary to ensure
that the net amount actually received by Party B will equal the full
amount which Party B would have received had no such deduction or
withholding been required.
(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
35
(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 (a "TAX
CREDIT"), it will pay to Party A as soon as practical after receipt
of the same so much of the cash benefit (as calculated below)
relating thereto which it has received as will leave Party B in
substantially the same (but in any event no worse) position as Party
B would have been in if no such deduction or withholding had been
required;
(2) the "cash benefit" will, in the case of a Tax credit, allowance or
set-off, be the additional amount of Tax which would have been
payable by Party B in the jurisdiction referred to in clause (1)
above but for the obtaining by it of the said Tax credit, allowance
or set-off and, in the case of a repayment, will be the amount of the
repayment together, in either case, with any related interest or
similar payment obtained by Party B;
(3) it will use all reasonable endeavours to obtain any Tax Credit as
soon as is reasonably practicable provided that it will be the sole
judge of the amount of such Tax Credit and of the date on which the
same is received and will not be obliged to disclose to Party A any
information relating to its tax affairs or tax computations save that
Party B will, upon request by Party A, supply Party A with a
reasonably detailed explanation of its calculation of the amount of
any such Tax Credit and of the date on which the same is received;
and
(4) it will ensure that any Tax Credit obtained is paid directly to Party
A, and not applied in whole or part to pay any other Issuer Secured
Creditor or any other party, both prior to and subsequent to any
enforcement of the security constituted by the Fourth Issuer Deed of
Charge."
36
(l) SECURITY, ENFORCEMENT AND LIMITED RECOURSE
(i) Party A agrees with Party B and the Security Trustee to be bound by the
terms of the Fourth Issuer Deed of Charge and, in particular, confirms
that: (A) no sum will be payable by or on behalf of Party B to it except
in accordance with the provisions of the Fourth Issuer Deed of Charge; and
(B) it will not take any steps for the winding up, dissolution or
reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee, liquidator, sequestrator or similar
officer of Party B or of any or all of its revenues and assets nor
participate in any ex parte proceedings nor seek to enforce any judgment
against Party B, subject to the provisions of the Fourth Issuer Deed of
Charge.
(ii) In relation to all sums due and payable by Party B to Party A, Party A
agrees that it will have recourse only to Fourth Issuer Available Funds,
but always subject to the order of priority of payments set out in the
Fourth Issuer Cash Management Agreement and the Fourth Issuer Deed of
Charge.
(m) CONDITION PRECEDENT
Section 2(a)(iii) will be amended by the deletion of the words "a Potential
Event of Default" in respect of obligations of Party A only.
(n) REPRESENTATIONS
Section 3(b) will be amended by the deletion of the words "or Potential Event of
Default" in respect of the representation given by Party B only.
(o) ADDITIONAL DEFINITIONS
Words and expressions defined in the Amended and Restated Master Definitions and
Construction Schedule (the "MASTER SCHEDULE") and the Fourth Issuer Master
Definitions and Construction Schedule (the "ISSUER SCHEDULE") (together the
"MASTER DEFINITIONS SCHEDULE") signed on or about {circle}, 2004 will, except so
far as the context otherwise requires, have the same meaning in this Agreement.
In the event of any inconsistency between the definitions in this Agreement and
in the Master Definitions Schedule the definitions in this Agreement will
prevail. In the event of any inconsistency between the Master Schedule and the
Issuer Schedule, the Issuer Schedule will prevail. The rules of interpretation
set out in the Master Definitions Schedule will apply to this Agreement.
(p) CHANGE OF ACCOUNT
Section 2(b) of this Agreement is hereby amended by the addition of the
following at the end thereof:
"; provided that such new account will be in the same legal and tax jurisdiction
as the original account and such new account, in the case of Party B, is held
with a financial institution with a short-term, unsecured, unsubordinated and
unguaranteed debt obligation rating of at least "Prime-1" (in the case of
Xxxxx'x), "A-1+" (in the case of S&P) and "F1+" (in the case of Fitch) (or, if
such financial institution is not rated by a Rating Agency, at such equivalent
rating that is acceptable to such Rating Agency)."
37
(q) MODIFICATIONS TO CLOSE-OUT PROVISIONS
Upon the occurrence of an Event of Default with respect to Party A or an
Additional Termination Event which entitles Party B to terminate any Affected
Transaction pursuant to Section 6(b) of the Agreement, Party B will be entitled
(but not obliged in the event that it does not designate an Early Termination
Date) to proceed in accordance with Section 6 of this Agreement, subject to the
following:
(i) For the purposes of Section 6(d)(i), Party B's obligation with respect to
the extent of information to be provided with its calculations is limited
to information Party B has already received in writing and provided Party
B is able to release this information without breaching the provisions of
any law applicable to, or any contractual restriction binding upon, Party
B.
(ii) The following amendments will be deemed to be made to the definition of
"Market Quotation":
(A) the word "firm" will be added before the word "quotations" in the
second line; and
(B) the words ", provided that such documentation would either be the
same as this Agreement and the existing confirmations hereto (and the
long-term, unsecured and unsubordinated debt obligations of the
Reference Market-maker are rated not less than "AA-" 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 "A+" 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 either (a) the
lower of the two quotations where there would be a sum payable by
Party A to Party B, or (b) the higher of the two quotations where
there would be a sum payable by Party B to Party A. If only one
quotation is provided on such date, Party B may, in its discretion,
accept such quotation as the Market Quotation and, if Party B does
not accept such quotation (or if no quotation has been provided), it
will be deemed that the Market Quotation in respect of the Terminated
Transaction cannot be determined. 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;
38
(B) Party A will, for the purposes of Section 6(e), be permitted to
obtain on behalf of Party B quotations from Reference Market-makers;
(C) If no quotations have been obtained within 6 Local Business Days
after the occurrence of the Early Termination Date or such longer
period as Party B may specify in writing to Party A, then it will be
deemed that the Market Quotation in respect of the Terminated
Transaction cannot be determined;
(D) Party B will be deemed to have discharged its obligations under Part
5(q)(iii)(A) above if it promptly requests, in writing, Party A (such
request to be made within two Local Business Days after the
occurrence of the Early Termination Date) to obtain on behalf of
Party B quotations from Reference Market-makers. Party A agrees to
act in accordance with such request; and
(E) Party B will not be obliged to consult with Party A as to the day and
time of obtaining any quotations.
(r) TERMINATION RIGHTS OF CREDIT SUPPORT PROVIDER
The following will constitute an Additional Termination Event:
If, due to (x) any action taken by a taxing authority, or brought in a court of
competent jurisdiction, on or after the date on which a Transaction is entered
into (regardless of whether such action is taken or brought with respect to the
Credit Support Provider of Party A (or its successor or assignee) or a party to
this Agreement) or (y) a Change in Tax Law, the Credit Support Provider of Party
A (or its successor or assignee) would, on the next succeeding Scheduled Payment
Date, provided that a payment under the Credit Support Document in respect of
Party A were then due, be required to pay to Party B an additional amount in
respect of an Indemnifiable Tax under Section 8(a) of such Credit Support
Document (other than in respect of default interest).
For the purposes of this Part 5(r):
(i) the definition of "law" shall be amended by the insertion of the words
"either generally or with respect to a party to the Credit Support
Document in respect of Party A" after the phrase "any relevant
governmental authority" and the addition of the words "Change in Tax Law"
before the word "lawful" on the second line; and
(ii) "Indemnifiable Tax" shall have the meaning given to it in Section 8(a)(iv)
of the Credit Support Document in respect of Party A.
For the purposes of the foregoing Additional Termination Event, Party A will be
the sole Affected Party and all Transactions will be Affected Transactions,
provided that, for the purposes of Section 6(b)(iv) only, Party B will be deemed
to be the sole Affected Party. Notwithstanding the foregoing, if the Security
Trustee gives notice to Party A and its Credit Support Provider that it wishes
the relevant Transactions to remain in effect, such Additional Termination Event
will be deemed not to have occurred.
(s) CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
Except as contemplated by the provisions of Part 5(r) above, a person who is not
a party to this
39
Agreement will not have any right under the Contracts (Rights of Third Parties)
Xxx 0000 to enforce any of its terms but this will not affect any right or
remedy of a third party which exists or is available apart from that Act.
40
DRAFT (1): 26.02.04
SERIES 3 CLASS M CONFIRMATION
From: Banque AIG, London Branch
0xx Xxxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx
X0X 0XX
To: Permanent Financing (No. 4) PLC
Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxx
Xxxxxx
XX0X 0XX
Attention: The Secretary
To: Xxx Xxxx xx Xxx Xxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx
X00 0XX
Attention: Global Structured Finance - Corporate Trust
{circle}, 2004
Dear Sirs,
CONFIRMATION - SERIES 3 CLASS M DOLLAR TO STERLING CURRENCY SWAP
The purpose of this letter is to confirm the terms and conditions of the Swap
Transaction entered into between us on the Trade Date specified below. This
letter constitutes a "CONFIRMATION" as referred to in the 1992 ISDA Master
Agreement (Multicurrency-Cross Border) (Series 3 Class M) entered into between
us, you and The Bank of New York (the "SECURITY TRUSTEE") dated as of {circle},
2004, as amended and supplemented from time to time (the "AGREEMENT").
The definitions and provisions contained in the 2000 ISDA Definitions as
published by the International Swaps and Derivatives Association, Inc. (the
"DEFINITIONS") are incorporated into this Confirmation. In the event of any
inconsistency between any of the following, the first listed will govern (i)
this Confirmation; (ii) the Master Definitions Schedule; and (iii) the
Definitions.
1. The terms of the particular Swap Transaction to which this Confirmation
relates are as follows:
Party A: Banque AIG, London Branch
Party B: Permanent Financing (No. 4) PLC
Trade Date: {circle}, 2004
Effective Date: {circle}, 2004
Termination Date: The earlier of the Quarterly Interest
Payment Date falling in {circle} and the
date on which all of the Series 3 Class
M Fourth Issuer Notes are redeemed in
full.
Dollar Currency Exchange Rate: {circle} USD per GBP
Business Days: London Business Day, New York Business
Day and TARGET Business Day.
Calculation Period: Has the meaning given to such term in
the Definitions.
Calculation Agent: Party A
Party A Floating Amounts:
Party A Currency Amount: In respect of each Party A Calculation
Period, an amount in Dollars equal to
the principal amount outstanding of the
Series 3 Class M Fourth Issuer Notes on
the first day of such Calculation Period
(after taking into account any
redemption on such day).
Party A Payment Dates: Each Quarterly Interest Payment Date
from and including the Quarterly
Interest Payment Date falling in
{circle} 2004 up to the Termination Date
and the Termination Date.
Party A Floating Rate: In respect of each Party A Calculation
Period, Three-Month USD-LIBOR determined
in respect of the first day of such
Party A Calculation Period.
Spread: {circle} per cent. for Party A
Calculation Periods commencing prior to
the Quarterly Interest Payment Date
falling in {circle} and {circle} per
cent. thereafter.
Party A Floating Rate Day
Count Fraction: Actual/360
Party B Floating Amounts:
Party B Currency Amount: In respect of each Party B Calculation
Period, an amount in Sterling equivalent
to the Party A Currency Amount for the
Party A Calculation Period commencing on
the first day of such Party B
Calculation Period converted by
reference to the Dollar Currency
Exchange Rate.
2
Party B Payment Dates: Each Quarterly Interest Payment Date
from and including the Quarterly
Interest Payment Date falling in
{circle} 2004 up to the Termination Date
and the Termination Date.
Party B Floating Rate: In respect of each Party B Calculation
Period, Sterling-LIBOR determined in
respect of the first day of such Party B
Calculation Period.
Spread: {circle} per cent. for Party A
Calculation Periods commencing prior to
the Quarterly Interest Payment Date
falling in {circle} and {circle} per
cent. thereafter.
Party B Floating Rate Day
Count Fraction: Actual/365 (Fixed)
Initial Exchange:
Initial Exchange Date: Effective Date
Party A Initial
Exchange Amount: GBP {circle}
Party B Initial
Exchange Amount: USD {circle}
Interim Exchange:
Interim Exchange Dates: Each Quarterly Interest Payment Date
(other than the Termination Date) on
which any of the Series 3 Class M Fourth
Issuer Notes are redeemed in whole or in
part.
Party A Interim
Exchange Amount: In respect of each Interim Exchange
Date, an amount in Dollars equal to the
amount of the Series 3 Class M Fourth
Issuer Notes redeemed on such Interim
Exchange Date.
Party B Interim
Exchange Amount: In respect of each Interim Exchange
Date, the Sterling equivalent of the
Party A Interim Exchange Amount for such
Interim Exchange Date converted by
reference to the Dollar Currency
Exchange Rate.
Final Exchange:
Final Exchange Date: Termination Date
Party A Final Exchange Amount: An amount in Dollars equal to the
principal amount outstanding of the
Series 3 Class M Fourth Issuer Notes on
the Final Exchange Date (before taking
into account
3
any redemption on such day).
Party B Final Exchange Amount: The Sterling equivalent of the Party A
Final Exchange Amount converted by
reference to the Dollar Currency
Exchange Rate.
2. Deferral of Floating Amounts:
If any payment of interest under the Series 3 Class M Fourth Issuer Notes
is deferred in accordance with the terms and conditions of the Series 3
Class M Fourth Issuer Notes, a corresponding part of the Party A Floating
Amount and a pro rata part of the Party B Floating Amount which, in each
case, would otherwise be due in respect of the relevant Quarterly Interest
Payment Date will be deferred.
The amount so deferred on the Party A Floating Amount will be payable on
the next Party A Payment Date (together with an additional floating amount
accrued thereon at the applicable Party A Floating Rate) and the Party A
Floating Amount due on such date will be deemed to include such amounts.
The amount so deferred on the Party B Floating Amount will be payable on
the next Party B Payment Date (together with an additional floating amount
accrued thereon accrued at the applicable Party B Floating Rate) and the
Party B Floating Amount due on such will be deemed to include such amounts.
On any subsequent occasion if any payment of interest under the Series 3
Class M Fourth Issuer Notes is deferred (including any payment of a
previous shortfall of interest or any payment of interest on such
shortfall) in accordance with the terms and conditions of the Series 3
Class M Fourth Issuer Notes, all or a corresponding part of the Party A
Floating Amount and a pro rata part of the Party B Floating Amount will be
deferred.
The amount so deferred on the Party A Floating Amount will be payable on
the next Party A Payment Date (together with an additional floating amount
accrued thereon at the applicable Party A Floating Rate) and the Party A
Floating Amount due on such date will be deemed to include such amounts.
The amount so deferred on the Party B Floating Amount will be payable on
the next Party B Payment Date (together with an additional floating amount
accrued thereon at the applicable Party B Floating Rate) and the Party B
Floating Amount due on such date will be deemed to include such amounts.
3. Account Details:
Payments to Party A
in Dollars: Bank: {circle}
Account Number: {circle}
SWIFT: {circle}
ABA No.: {circle}
Favour: {circle}
4
Payments to Party A
in Sterling: Bank: {circle}
SWIFT: {circle}
Account Number: {circle}
Favour: {circle}
Payments to Party B
in Dollars: Bank: Citibank, N.A., New York
Credit Account: {circle}
New York Swift: XXXXXX00
FAO: Citibank, N.A., London
London Swift: CITIGB2L
Reference: GATS "Permanent Financing
(No. 4) PLC"
Payments to Party B
in Sterling: Bank: The Governor and Company
of the Bank of Scotland
Account Number: {circle}
Sort Code: 12-24-55
Account Name: Permanent Financing (No. 4) PLC
Transaction Account
It is agreed by the parties that payments made by Party A to the Principal
Paying Agent in accordance with the settlement instructions, as detailed
above, will be considered as absolute and conclusive discharge of Party A's
obligations to Party B in respect of such payment, regardless of whether
the Principal Paying Agent makes a payment in turn to Party B. This will
continue to be the case until Party B changes its account in accordance
with Section 2(b) of the Agreement.
4. Notification to Party A
For the purpose of making any determination or calculation hereunder, the
Calculation Agent may rely on any information, report, notice or
certificate delivered to it by the Fourth Issuer Cash Manager or Party B
and the Calculation Agent will not be liable for any error, incompleteness
or omission regarding such information.
5
Party B or the Fourth Issuer Cash Manager acting on its behalf, will notify
Party A of the amount of principal payments to be made on the Series 3
Class M Fourth Issuer Notes on each Quarterly Interest Payment Date no
later than one (1) Business Day prior to such Quarterly Interest Payment
Date.
5. Notice Details:
Party A: Banque AIG, London Branch
Address: {circle}
Facsimile No.: {circle}
Attention: {circle}
Party B: Permanent Financing (No. 4) PLC
Address: Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxx
Xxxxxx
XX0X 0XX
Facsimile Number: 020 7566 0975
Attention: The Secretary
With a copy to: (i) the Security Trustee:
Name: The Bank of New York
Address: Xxx Xxxxxx Xxxxxx
Xxxxxx
X00 0XX
Facsimile Number: 020 7964 6061/6399
Attention: Global Structured Finance
(ii) HBOS Treasury Services plc
Address: 00 Xxx Xxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Facsimile Number: 020 7574 8784
Attention: Head of Capital Markets and Securitisation
6
Yours faithfully,
BANQUE AIG, LONDON BRANCH
By:
Name:
Title:
Confirmed as of the date first written:
PERMANENT FINANCING (NO. 4) PLC
By:
Name:
Title:
THE BANK OF NEW YORK
By:
Name:
Title:
7
