EXHIBIT 1.1
SAB&W DRAFT
27/10/03
$[4,588,000,000]
PERMANENT FINANCING (NO. 3) PLC
$[100,000,000] Series 1 Class A Issuer Notes due 2004
$38,000,000 Series 1 Class B Issuer Notes due 2042
$38,000,000 Series 1 Class C Issuer Notes due 2042
$[1,700,000,000] Series 2 Class A Issuer Notes due [2010]
$59,000,000 Series 2 Class B Issuer Notes due 2042
$59,000,000 Series 2 Class C Issuer Notes due 2042
$[1,500,000,000] Series 3 Class A Issuer Notes due 2033
$52,000,000 Series 3 Class B Issuer Notes due 2042
$52,000,000 Series 3 Class C Issuer Notes due 2042
Underwriting Agreement
November [ ], 2003
Citigroup Global Markets Limited
Credit Suisse First Boston (Europe) Limited and
UBS Securities LLC
as Class A Representatives of the
several Class A Underwriters listed
in Schedule I hereto and
Citigroup Global Markets Limited and
Credit Suisse First Boston (Europe) Limited
as Class B/C Joint Lead Underwriters
Ladies and Gentlemen:
Permanent Financing (No. 3) PLC, a public limited company incorporated
under the laws of England and Wales (the "Issuer"), proposes to issue and sell
to (i) the several Class A Underwriters listed in Schedule I hereto (the "Class
A Underwriters"), for whom Citigroup Global Markets Limited, Credit Suisse
First Boston (Europe) Limited and UBS Securities LLC are acting as
representatives (the "Class A Representatives"), $[100,000,000] Series 1 Class
A Issuer Notes due 2004 (the "Series 1 Class A Issuer Notes"), $[1,700,000,000]
Series 2 Class A Issuer Notes due [2010] (the "Series 2 Class A Issuer Notes")
and $[1,500,000,000] Series 3 Class A Issuer Notes due 2033 (the "Series 3
Class A Issuer Notes") as set forth in Schedule I hereto and (ii) Citigroup
Global Markets Limited and Credit Suisse First Boston (Europe) Limited are
acting as joint lead underwriters (the "Class B/C Joint Lead Underwriters" and,
together with the Class A Underwriters, the "Underwriters"; and the Class B/C
Joint Lead Underwriters, together with the Class A Representatives, the
"Representatives"), $38,000,000 Series 1 Class B Issuer Notes due 2042 (the
"Series 1 Class B Issuer Notes"), $38,000,000 Series 1 Class C Issuer Notes due
2042 (the "Series 1 Class C Issuer Notes" and, together with the Series 1 Class
A Issuer Notes and the Series 1 Class B Issuer Notes, the "Series 1 Issuer
Notes"), $59,000,000 Series 2 Class B Issuer Notes due 2042 (the
"Series 2 Class B Issuer Notes"), $59,000,000 Series 2 Class C Issuer Notes due
2042 (the "Series 2 Class C Issuer Notes" and, together with the Series 2 Class
A Issuer Notes and the Series 2 Class B Issuer Notes, the "Series 2 Issuer
Notes"), $52,000,000 Series 3 Class B Issuer Notes due 2042 (the "Series 3
Class B Issuer Notes") and $52,000,000 Series 3 Class C Issuer Notes due 2042
(the "Series 3 Class C Issuer Notes" and, together with the Series 3 Class A
Issuer Notes and the Series 3 Class B Issuer Notes, the "Series 3 Issuer
Notes"; and the Series 3 Issuer Notes together with the Series 1 Issuer Notes
and the Series 2 Issuer Notes, the "Offered Notes") as set forth in Schedule I
hereto. The Series 1 Class A Issuer Notes, the Series 2 Class A Issuer Notes
and the Series 3 Class A Issuer Notes shall be hereinafter referred to as the
"Class A Offered Notes" and the Series 1 Class B Issuer Notes, the Series 1
Class C Issuer Notes, the Series 2 Class B Issuer Notes, the Series 2 Class C
Issuer Notes, the Series 3 Class B Issuer Notes and the Series 3 Class C Issuer
Notes shall be hereinafter referred to as the "Class B/C Offered Notes".
The Offered Notes will be denominated in U.S. dollars and in
denominations of $10,000 and $1,000 or integral multiples thereof. The Offered
Notes will be issued on or about November 25, 2003, at 1:00 P.M. (London time)
or at such other time and/or date as the Issuer and the Representatives on
behalf of the applicable Underwriters may agree (the "Closing Date"). The issue
of the Offered Notes is referred to in this Agreement as the "Issue".
Simultaneously with the Issue, the Issuer intends to issue
{euro}700,000,000 Series 4 Class A1 Issuer Notes due 2033 (the "Series 4 Class
A1 Issuer Notes"), {pound-sterling}750,000,000 Series 4 Class A2 Issuer Notes
due 2033 (the "Series 4 Class A2 Issuer Notes" and, together with the Series 4
Class A1 Issuer Notes, the "Series 4 Class A Issuer Notes"), {euro}62,000,000
Series 4 Class B Issuer Notes due 2042 (the "Series 4 Class B Issuer Notes"),
{euro}62,000,000 Series 4 Class C Issuer Notes due 2042 (the "Series 4 Class C
Issuer Notes" and, together with the Series 4 Class A Issuer Notes and the
Series 4 Class B Issuer Notes, the "Series 4 Issuer Notes"),
{pound-sterling}400,000,000 Series 5 Class A Issuer Notes due 2042 (the "Series
5 Class A Issuer Notes"), {euro}20,000,000 Series 5 Class B Issuer Notes due
2042 (the "Series 5 Class B Issuer Notes") and {euro}20,000,000 Series 5 Class
C Issuer Notes due 2042 (the "Series 5 Class C Issuer Notes" and, together with
the Series 4 Issuer Notes, the Series 5 Class A Issuer Notes and the Series 5
Class B Issuer Notes, the "Reg S Notes"). By a subscription agreement dated as
of November [ ], 2003 (the "Subscription Agreement") among the Issuer, Halifax
plc ("Halifax"), Permanent Funding (No. 1) Limited ("Funding 1"), Permanent
Mortgages Trustee Limited (the "Mortgages Trustee") and the respective managers
named therein (the "Managers"), such Managers have agreed to subscribe and pay
for the Reg S Notes upon the terms and subject to the conditions therein
contained. The Offered Notes, together with the Reg S Notes, are referred to
herein as the "Notes."
The Notes will be constituted by, issued subject to and have the benefit
of, a trust deed (the "Issuer Trust Deed") to be entered into on or before the
Closing Date between the Issuer and The Bank of New York as trustee for the
Noteholders (the "Note Trustee").
The Notes (together with the Issuer's obligations to its other creditors)
will be secured by the benefit of security interests created under a deed of
charge and assignment by way of security (the "Issuer Deed of Charge") to be
entered into on or before the Closing Date by the Issuer, the Note Trustee,
Citibank, N.A. (the "Principal Paying Agent", the "US Paying Agent", the
"Registrar", the "Transfer Agent" and the "Agent Bank"), Credit Suisse First
Boston International as dollar currency swap provider to the Issuer in respect
of the Series 1 Issuer Notes (the "Series 1 Issuer Dollar Currency Swap
Provider"), Credit Suisse First Boston International as dollar currency swap
provider to the Issuer in respect of
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the Series 2 Issuer Notes (the "Series 2 Issuer Dollar Currency Swap
Provider"), Banque AIG as dollar currency swap provider to the Issuer in
respect of the Series 3 Issuer Notes (the "Series 3 Issuer Dollar Currency Swap
Provider"), JPMorgan Chase Bank as euro currency swap provider to the Issuer in
respect of the Series 4 Issuer Notes (other than the Series 4 Class A2 Issuer
Notes) (the "Series 4 Issuer Euro Currency Swap Provider") and Banque AIG as
euro currency swap provider to the Issuer in respect of the Series 5 Class B
Issuer Notes and the Series 5 Class C Issuer Notes (the "Series 5 Issuer Euro
Currency Swap Provider" and, together with the Series 4 Issuer Euro Currency
Swap Provider, the "Issuer Euro Currency Swap Providers"; and the Series 1
Issuer Dollar Currency Swap Provider, the Series 2 Issuer Dollar Currency Swap
Provider and the Series 3 Issuer Dollar Currency Swap Provider, the "Issuer
Dollar Currency Swap Providers"), Halifax in its capacity as cash manager to
the Issuer (the "Issuer Cash Manager"), HBOS Treasury Services plc as
interest rate swap provider to the Issuer in respect of the Series 5 Class A
Issuer Notes (the "Issuer Interest Rate Swap Provider"), Halifax as Funding 1
swap provider (the "Funding 1 Swap Provider" and, together with the Issuer
Interest Rate Swap Provider, the Issuer Dollar Currency Swap Providers and the
Issuer Euro Currency Swap Providers, the "Swap Providers"), Bank of Scotland in
its capacity as account bank to the Issuer (the "Issuer Account Bank") and
Structured Finance Management Limited in its capacity as corporate services
provider to the Issuer (the "Issuer Corporate Services Provider").
Payments of principal of, and interest on, the Offered Notes will be made
by or on behalf of the Issuer to the US Paying Agent and by the US Paying Agent
to holders of the Offered Notes on behalf of the Issuer under a paying agent
and agent bank agreement to be entered into on or before the Closing Date (the
"Issuer Paying Agent and Agent Bank Agreement") between the Issuer, the Note
Trustee, the Agent Bank, the paying agents named therein, the Transfer Agent
and the Registrar.
Each class of the Offered Notes will be in fully registered permanent
global form. The Registrar will maintain a register (the "Register") in respect
of the Offered Notes in accordance with the Issuer Paying Agent and Agent Bank
Agreement. The global issuer notes representing the Offered Notes (the "Global
Issuer Notes") will be deposited on behalf of the beneficial owners of the
Offered Notes with Citibank N.A., as custodian for, and registered in the name
of Cede & Co. as nominee of, The Depository Trust Company ("DTC").
The Issuer will use an amount equal to the gross proceeds of the Issue as
well as the gross proceeds of the Reg S Notes issue to make a loan to Funding 1
pursuant to an intercompany loan agreement to be entered into on or before the
Closing Date between the Issuer, Funding 1, the Agent Bank and The Bank of New
York as security trustee (the "Security Trustee") (the "Issuer Intercompany
Loan Agreement" and the loan made thereunder the "Issuer Intercompany Loan").
On the Closing Date, Funding 1 will pay the proceeds of the Issuer
Intercompany Loan to Halifax (or to its order) as consideration in part for an
increase in the Funding 1 share of the Portfolio (as defined below), resulting
in a corresponding decrease in Halifax's share of the Portfolio.
On June 14, 2002 and on several subsequent dates (each an "Assignment
Date"), Halifax assigned first residential mortgage loans (the "Existing
Loans") and an interest in their related insurances and their related security
(together, the "Existing Related Security" and, together with the Existing
Loans, any accrued interest on the Existing Loans and other amounts derived
from the Existing Loans, the "Existing Portfolio") to the Mortgages Trustee
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pursuant to the mortgage sale agreement dated June 14, 2002 among Halifax, the
Mortgages Trustee, Funding 1 and the Security Trustee (the "Mortgage Sale
Agreement" as the same may be amended, restated, supplemented, or otherwise
modified from time to time). On October 3, 2003, Halifax assigned additional
first residential mortgage loans (the "Additional Loans") and an interest in
their related insurances and their related security (together, the "Additional
Related Security" and, together with the Additional Loans and other amounts
derived from the Additional Loans, the "Additional Portfolio"; the Additional
Related Security together with the Existing Related Security, the "Related
Security"; and the Additional Portfolio together with the Existing Portfolio,
the "Portfolio") pursuant to the terms of the Mortgage Sale Agreement. Each of
the Mortgages Trustee, Funding 1 and the Security Trustee has appointed Halifax
as servicer (the "Servicer") to service the Portfolio pursuant to a Servicing
Agreement dated June 14, 2002 (the "Servicing Agreement" as the same may be
amended, restated, supplemented, or otherwise modified from time to time). The
Mortgage Sale Agreement and certain other documents incorporate by reference
definitions appearing in a Master Definitions Schedule which was signed on June
14, 2002 by way of identification for and on behalf of Allen & Overy and Sidley
Austin Brown & Wood (the "Master Definitions Schedule" as the same may be
amended, restated, supplemented, or otherwise modified from time to time).
The Mortgages Trustee holds the Portfolio on a bare trust in undivided
shares for the benefit of Funding 1 and Halifax in its capacity as the Seller
(the "Seller") pursuant to the mortgages trust deed dated June 13, 2002 among
the Seller, Funding 1 and the Mortgages Trustee (the "Mortgages Trust Deed" as
the same may be amended, restated, supplemented, or otherwise modified from
time to time). The Mortgages Trustee entered into a guaranteed investment
contract with Bank of Scotland (in such capacity, the "Mortgages Trustee GIC
Provider") dated June 14, 2002 in respect of its principal bank account (the
"Mortgages Trustee Guaranteed Investment Contract" as the same may be amended,
restated, supplemented, or otherwise modified from time to time).
Funding 1's obligations to the Issuer under the Issuer Intercompany Loan
Agreement and to Funding 1's other creditors will be secured with the benefit
of security interests created by a deed of charge and assignment dated June 14,
2002, which includes any deed of accession entered into in connection therewith
or supplemental thereto (the "Funding 1 Deed of Charge" as the same may be
amended, restated, supplemented, or otherwise modified from time to time)
entered into by the Seller, Funding 1, Permanent Financing (No. 1) PLC (the
"First Issuer"), Halifax in its capacity as swap provider (the "Funding 1 Swap
Provider"), Bank of Scotland in its capacity as GIC provider (the "Funding 1
GIC Provider"), the Security Trustee, Halifax in its capacity as cash manager
to the Mortgages Trustee and Funding 1 (the "Cash Manager"), Bank of Scotland
in its capacity as account bank to the Mortgages Trustee, Bank of Scotland in
its capacity as account bank to Funding 1 (in such capacities, each an "Account
Bank"), Halifax in its capacity as issuer start-up loan provider to Funding 1
(the "Issuer Start-up Loan Provider") and Structured Finance Management Limited
in its capacity as corporate services provider to Funding 1 (the "Funding 1
Corporate Services Provider") and acceded to pursuant to a deed of accession
dated March 6, 2003 by Permanent Financing (No. 2) PLC and the Start-up Loan
Provider. On or before the Closing Date, the Issuer and the Start- up Loan
Provider will, pursuant to a deed of accession (the "Second Deed of Accession")
accede to the terms of the Funding 1 Deed of Charge and thereby become secured
creditors of Funding 1.
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In connection with the purchase of the initial mortgage trust portfolio
and the issue of certain notes by the First Issuer, Funding 1, in addition to
the documents described above, entered into on June 14, 2002 (the "Initial
Closing Date"), (1) a cash management agreement with the Cash Manager, the
Mortgages Trustee and the Security Trustee (the "Cash Management Agreement" as
the same may be amended, restated, supplemented, or otherwise modified from
time to time); (2) a bank account agreement with the Account Bank and the
Mortgages Trustee (the "Bank Account Agreement" as the same may be amended,
restated, supplemented, or otherwise modified from time to time); (3) a start-
up loan agreement (the "First Start-up Loan Agreement" as the same may be
amended, restated, supplemented, or otherwise modified from time to time) with
the Start-up Loan Provider; (4) a guaranteed investment contract with
the Funding 1 GIC Provider (the "Funding 1 Guaranteed Investment Contract" as
the same may be amended, restated, supplemented, or otherwise modified from
time to time); (5) the Funding 1 corporate services agreement between Permanent
Holdings Limited ("Holdings"), Funding 1, Permanent PECOH Limited in its
capacity as the post-enforcement call option holder (the "Post-Enforcement Call
Option Holder"), SFM Corporate Services Limited (the "Share Trustee"), the
Seller, the Security Trustee and the Funding 1 Corporate Services Provider (the
"Funding 1 Corporate Services Agreement" as the same may be amended, restated,
supplemented, or otherwise modified from time to time); and (6) the Funding 1
liquidity facility agreement between Funding 1, JPMorgan Chase Bank (the
"Funding 1 Liquidity Facility Provider"), the Cash Manager and the Security
Trustee (the "Funding 1 Liquidity Facility Agreement" as the same may be
amended, restated, supplemented, or otherwise modified from time to time) each
of which will remain in effect, as applicable, in respect of the issue of the
Notes.
In connection with the issue of the Notes, the Issuer will also execute
and deliver, on or before the Closing Date, (1) the Global Issuer Notes
relating to each class of the Notes; (2) the Issuer corporate services
agreement to be entered into on the Closing Date between Holdings, the Share
Trustee, the Issuer, the Seller, the Security Trustee and the Issuer Corporate
Services Provider (the "Issuer Corporate Services Agreement"); (3) a cash
management agreement among the Issuer, the Issuer Cash Manager and the Security
Trustee (the "Issuer Cash Management Agreement"); (4) a bank account agreement
(the "Issuer Bank Account Agreement") among the Issuer Account Bank, the Issuer
Cash Manager, the Security Trustee and the Issuer; (5) a post-enforcement call
option agreement (the "Issuer Post- Enforcement Call Option Agreement") among
the Issuer, the Note Trustee, the Registrar, the Transfer Agent and the
Post-Enforcement Call Option Holder; (6) the ISDA Master Agreement including
the schedule thereto and a confirmation thereunder in respect of the interest
rate swap among the Issuer, the Issuer Interest Rate Swap Provider and the
Security Trustee (the "Issuer Interest Rate Swap Agreement"); (7) ISDA Master
Agreements including the schedules thereto and confirmations thereunder in
respect of Dollar/Sterling currency swaps among the Issuer, the relevant Issuer
Dollar Currency Swap Provider and the Security Trustee (each an "Issuer Dollar
Currency Swap Agreement"); and (8) ISDA Master Agreements including the
schedules thereto and confirmations thereunder in respect of Euro/Sterling
currency swaps among the Issuer, the relevant Issuer Euro Currency Swap
Provider and the Security Trustee (each an "Issuer Euro Currency Swap
Agreement" and together with each Issuer Dollar Currency Swap Agreement and the
Issuer Interest Rate Swap Agreement, the "Swap Agreements").
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As required, the Issuer, Funding 1, the Mortgages Trustee and/or Halifax
have entered or will enter into any other relevant documents to be signed and
delivered on or before the Closing Date (such documents, together with the
Mortgage Sale Agreement (including the amendment to such Mortgage Sale
Agreement to be entered on or about the Closing Date), the Mortgages Trust Deed
(including the amendment to such Mortgages Trust Deed to be entered on or about
the Closing Date), the corporate services agreement entered into between the
Mortgages Trustee, the Security Trustee and SFM Offshore Limited (the
"Mortgages Trustee Corporate Services Agreement"), the Servicing Agreement
(including the amendment to such Servicing Agreement to be entered into on or
about the Closing Date), the Funding 1 Liquidity Facility Agreement (including
the amendment to such Funding 1 Liquidity Facility Agreement to be entered into
on or about the Closing Date), the amendment to the Master Definitions Schedule
to be entered into on or about the Closing Date, the Mortgages Trustee
Guaranteed Investment Contract, the Issuer Intercompany Loan Agreement, the
Funding 1 Guaranteed Investment Contract, the Funding 1 Corporate Services
Agreement, the third start-up loan agreement entered into between Funding 1 and
the Start-up Loan Provider (the ``Third Start-up Loan Agreement''), the Cash
Management Agreement, the Bank Account Agreement, the Third Start-up Loan
Agreement, the Funding 1 Deed of Charge, the Second Deed of Accession to the
Funding 1 Deed of Charge, the Issuer Deed of Charge, the Issuer Trust Deed, the
Issuer Cash Management Agreement, the Issuer Paying Agent and Agent Bank
Agreement, the Issuer Bank Account Agreement, the Issuer Corporate Services
Agreement, the Swap Agreements, this Agreement and the Subscription Agreement,
each as they have been or may be amended, restated, varied or supplemented from
time to time, are collectively referred to herein as the "Legal Agreements").
The Issuer hereby confirms its agreement with the Underwriters concerning
the purchase and sale of the Offered Notes, as follows:
To the extent not defined herein, capitalized terms used herein have the
meanings assigned to such terms in the Registration Statement and the
Prospectus.
1. Purchase of the Offered Notes by the Underwriters.
(a) The Offered Notes will be issued at a price equal to the aggregate
of 100 per cent. of the aggregate principal amount of each of the Series 1
Class A Issuer Notes, the Series 1 Class B Issuer Notes, the Series 1 Class C
Issuer Notes, the Series 2 Class A Issuer Notes, the Series 2 Class B Issuer
Notes, the Series 2 Class C Issuer Notes, the Series 3 Class A Issuer Notes,
the Series 3 Class B Issuer Notes and the Series 3 Class C Issuer Notes (the
"Issue Price"). The Issuer agrees to sell the Class A Offered Notes to the
several Class A Underwriters and the Class B/C Offered Notes to the Class B/C
Joint Lead Underwriters as provided in this Agreement, and each Underwriter, on
the basis of the representations, warranties and agreements set forth herein
and subject to the conditions set forth herein, agrees, severally and not
jointly, to purchase from the Issuer the respective principal amount of each
class of the Offered Notes set forth opposite such Underwriter's name in
Schedule I hereto at the Issue Price. The Issuer will not be obligated to
deliver any of the Offered Notes except upon payment for all the Offered Notes
to be purchased as provided herein.
(b) The Issuer understands that the Underwriters intend to make a
public offering of their respective portions of the Offered Notes as soon after
the effectiveness of this Agreement as in the judgment of each of the
Representatives is advisable, and initially to offer the Offered Notes on the
terms set forth in the Prospectus. The Issuer acknowledges and agrees that the
Underwriters may offer and sell Offered Notes to or through any affiliate
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of an Underwriter and that any such affiliate may offer and sell the Offered
Notes purchased by it to or through any Underwriter.
(c) Upon receipt of payment for the Offered Notes, delivery of such
Offered Notes will be made at the offices of Allen & Overy at 1:00 P.M., London
time, on the Closing Date, or at such other time on the Closing Date as the
Issuer and the Representatives on behalf of the Underwriters may agree.
(d) In consideration of the obligations undertaken herein by the
Underwriters, the Issuer agrees to pay to the relevant Underwriters a selling
commission (the "Selling Commission") of [ ] per cent. of the aggregate
principal amount of the Series 1 Class A Issuer Notes, [ ] per cent. of the
aggregate principal amount of the Series 1 Class B Issuer Notes, [ ] per
cent. of the aggregate principal amount of the Series 1 Class C Issuer Notes,
[ ] per cent. of the aggregate principal amount of the Series 2 Class A
Issuer Notes, [ ] per cent. of the aggregate principal amount of the Series
2 Class B Issuer Notes, [ ] per cent. of the aggregate principal amount of
the Series 2 Class C Issuer Notes, [ ] per cent. of the aggregate principal
amount of the Series 3 Class A Issuer Notes, [ ] per cent. of the aggregate
principal amount of the Series 3 Class B Issuer Notes and [ ] per cent. of
the aggregate principal amount of the Series 3 Class C Issuer Notes,
respectively, and a combined management and underwriting commission (the
"Management and Underwriting Commission") of [ ] per cent. of the aggregate
principal amount of the Series 1 Class A Issuer Notes, [ ] per cent. of the
aggregate principal amount of the Series 1 Class B Issuer Notes, [ ] per
cent. of the aggregate principal amount of the Series 1 Class C Issuer Notes,
[ ] per cent. of the aggregate principal amount of the Series 2 Class A
Issuer Notes, [ ] per cent. of the aggregate principal amount of the Series
2 Class B Issuer Notes, [ ] per cent. of the aggregate principal amount of
the Series 2 Class C Issuer Notes and [ ] per cent. of the aggregate
principal amount of the Series 3 Class A Issuer Notes, [ ] per cent. of the
aggregate principal amount of the Series 3 Class B Issuer Notes and [ ] per
cent. of the aggregate principal amount of the Series 3 Class C Issuer Notes.
(e) The Issuer undertakes and covenants that on the Closing Date it
(or a third party on its behalf) will pay to the Class A Representatives the
aggregate Selling Commission in respect of the Class A Offered Notes and the
aggregate Management and Underwriting Commission in respect of the Class A
Offered Notes calculated in accordance with paragraph (d) above. The Issuer
undertakes and covenants that on the Closing Date it (or a third party on its
behalf) will pay to the Class B/C Joint Lead Underwriters the aggregate Selling
Commission in respect of the Class B/C Offered Notes and the aggregate
Management and Underwriting Commission in respect of the Class B/C Offered
Notes calculated in accordance with paragraph (d) above.
(f) Against delivery of the Offered Notes (in the form of one or more
Global Issuer Notes) to Citibank N.A. in London, as custodian for, and
registered in the name of Cede & Co. as nominee of, DTC, for the account of (a)
the Class A Underwriters (with respect to the Class A Offered Notes) or (b) the
Class B/C Joint Lead Underwriters (with respect to the Class B/C Offered
Notes), (i) the Class A Underwriters (with respect to the Class A Offered
Notes) will pay to the Class A Representatives the gross underwriting proceeds
for the Offered Notes and (ii) the Class A Representatives (with respect to the
Class A Offered Notes) and the Class B/C Joint Lead Underwriters (with respect
to the Class B/C Offered Notes) will pay to the Issuer the gross underwriting
proceeds for the Offered Notes with any transfer taxes payable
7
in connection with the sale of the Offered Notes duly paid by the Issuer. Such
payment shall be made by the Class A Representatives (with respect to the Class
A Offered Notes) and the Class B/C Joint Lead Underwriters (with respect to the
Class B/C Offered Notes) in U.S. Dollars in immediately available funds (i) to
the account of the Series 1 Issuer Dollar Currency Swap Provider, Account
number [ ], (ii) to the account of the Series 2 Issuer Dollar Currency Swap
Provider, Account number [ ], and (iii) to the account of the Series 3 Issuer
Dollar Currency Swap Provider, Account number [ ] and, in each case, shall be
evidenced by a confirmation from the applicable Representatives that they have
so made that payment to the Issuer. The Global Issuer Notes shall be made
available for inspection by the Representatives not later than 1:00 P.M.,
London time, on the London Business Day prior to the Closing Date.
(g) It is understood that the several Class A Underwriters propose to
offer the Class A Offered Notes and the Class B/C Joint Lead Underwriters
propose to offer the Class B/C Offered Notes for sale to the public in the
United States as set forth in the Prospectus. The several Class A Underwriters
and the Class B/C Joint Lead Underwriters (as applicable) will offer and sell
the Offered Notes (as applicable) in the United States only through their
sellling agents which are registered broker-dealers in the United States.
(h) Each Class A Underwriter (with respect to the Class A Offered
Notes only) and each Class B/C Joint Lead Underwriter (with respect to the
Class B/C Offered Notes only) represents and agrees that:
(1) in relation to any Offered Notes which have a maturity of
one year or more and which are to be admitted to the
official list maintained by the UK Listing Authority, it has
not offered or sold, and will not offer or sell, any Offered
Notes to any persons in the United Kingdom prior to
admission of the Offered Notes to listing in accordance with
Part VI of the Financial Services and Markets Act 2000 (the
"FSMA"), except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public
in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, as amended, or the
FSMA;
(2) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it
in relation to the Offered Notes in, from or otherwise
involving the United Kingdom; and
(3) it has only communicated or caused to be communicated and
will only communicate or cause to be communicated an
invitation or inducement to engage in investment activities
(within the meaning of Section 21 of the FSMA) received by
it in connection with the issue of the Offered Notes in
circumstances in which Section 21(1) of the FSMA does not
apply to the Issuer.
(i) Each Class A Underwriter (with respect to the Class A Offered
Notes) and each Class B/C Joint Lead Underwriter (with respect to the Class B/C
Offered Notes) (i) acknowledges that the Offered Notes may not be placed,
offered or distributed to Italian investors at any time and (ii) represents and
agrees that it has not placed, offered or distributed, and will not place,
offer or distribute, the Offered Notes to Italian investors as part of its
initial distribution.
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(j) Each Class A Underwriter (with respect to the Class A Offered
Notes) and each Class B/C Joint Lead Underwriter (with respect to the Class B/C
Offered Notes) (i) acknowledges that the Offered Notes may not be placed,
offered or distributed to investors in the Netherlands at any time and (ii)
represents and agrees that it has not placed, offered or distributed, and will
not place, offer or distribute, the Offered Notes to investors in the
Netherlands as part of its initial distribution.
2. (I) Representations and Warranties of the Issuer. The Issuer
represents and warrants to and agrees with, the Underwriters, and each of them
that:
(a) Registration Statement and Prospectus. The Issuer has prepared
and filed with the Commission a Registration Statement on Form S-11 (No. 333-
109144), including a preliminary prospectus relating to the Offered Notes.
The Registration Statement as amended at the time when it became effective, or,
if a post-effective amendment is filed with respect thereto, as amended by such
post-effective amendment at the time of its effectiveness, including all
exhibits thereto, is referred to in this Agreement as the "Registration
Statement". The Issuer may have filed one or more amendments thereto, including
a related preliminary prospectus, each of which has been furnished to the
Underwriters (each such preliminary prospectus, a "Preliminary Prospectus").
The Registration Statement has been declared effective by the Commission under
the Securities Act on November [ ], 2003 (the "Effective Date") and no order
suspending the effectiveness of the Registration Statement has been issued by
the Commission and no proceeding for that purpose has been instituted or, to
the best knowledge of the Issuer, threatened by the Commission. The Issuer
also has filed with, or proposes to file with, the Commission a final
prospectus pursuant to Rule 424(b) under the Securities Act and deemed by
virtue of Rule 430A under the Securities Act to be part of the Registration
Statement at the time it was declared effective. Such final prospectus, in the
form first filed pursuant to Rule 424(b) under the Securities Act, is referred
to in this Agreement as the "Prospectus". The Issuer has included in such
Registration Statement, as amended at the Effective Date, all information
(other than information with respect to the Notes and the Issue permitted to be
omitted from the Registration Statement when it becomes effective pursuant to
Rule 430A ("Rule 430A Information")) required by the Securities Act and the
rules thereunder to be included in such Registration Statement and the
Prospectus. As filed, such amendment and form of final prospectus, or such
final prospectus, shall contain all Rule 430A Information, together with all
other such required information, and, except to the extent that the
Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to the Underwriters prior to the
date and time that this Agreement is executed and delivered by the parties
hereto (the "date of this Agreement"), or, to the extent not completed at the
date of this Agreement, shall contain only specific additional information and
other changes (beyond that contained in the latest Preliminary Prospectus) as
the Issuer has advised the Representatives, prior to the date of this
Agreement, will be included or made therein. On the Effective Date, the
Registration Statement, as amended, complied, and when the Prospectus is first
filed (if required) in accordance with Rule 424(b) and on the Closing Date, the
Prospectus (and any amendments or supplements thereto), will comply in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the respective rules thereunder; on the Effective Date and
at the date of this Agreement, the Registration Statement did not and will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and on the Effective Date, the Prospectus and any amendments or
supplements thereto, if not filed pursuant to Rule 424(b)
9
did not, and on the day of any filing pursuant to Rule 424(b) and on the
Closing Date will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
on the Effective Date and on the Closing Date, the Issuer Trust Deed did or
will comply in all material respects with the applicable requirements of the
Trust Indenture Act and the rules thereunder (provided that the Issuer makes no
representation and warranty with respect to any statements or omissions made:
(i) in that part of the Registration Statement which constitutes the Statement
of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of
the Note Trustee or (ii) in reliance upon and in conformity with information
relating to any Underwriter furnished to the Issuer in writing by or on behalf
of any Underwriter through the Representatives expressly for use in the
Registration Statement or the Prospectus or any amendment or supplement
thereto); and the conditions to the use by the Issuer of a registration
statement on Form S-11 under the Securities Act, as set forth in the General
Instructions to Form S- 11, have been satisfied with respect to the
Registration Statement and the Prospectus.
(b) No Material Adverse Change. Other than as set forth or
contemplated in the Prospectus, there has not been any material adverse change
or any development involving a prospective material adverse change, in or
affecting the business, prospects, management, financial position,
shareholders' equity or results of operations of the Issuer.
(c) Incorporation and Good Standing. The Issuer has been duly
incorporated and is a validly existing organization in good standing under the
laws of its jurisdiction of organization, is duly qualified to do business in
England and Wales and has full right, power and authority necessary to conduct
its business as described in the Prospectus, except where the failure to be so
qualified or have such power or authority would not, individually or in the
aggregate, have a material adverse effect on the transactions contemplated
herein or in the Legal Agreements (an "Issuer Material Adverse Effect"). The
Issuer has not taken any corporate action nor (to the best of its knowledge and
belief) have any other steps been taken or legal proceedings been started or
threatened against it for its winding-up, dissolution or reorganization or for
the appointment of a receiver, administrator, administrative receiver or
similar officer of it or of any or all of its assets or revenues.
(d) The Notes. The Offered Notes have been duly authorized by the
Issuer and, when duly executed, authenticated, issued and delivered as provided
in the Issuer Trust Deed and the Paying Agent and Agent Bank Agreement and paid
for as provided herein, will be duly and validly issued and outstanding and
will constitute valid and legally binding obligations of the Issuer enforceable
against the Issuer in accordance with their terms, except as enforceability may
be limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles relating
to enforceability (collectively, the "Enforceability Exceptions") and upon
effectiveness of the Registration Statement, the Issuer Trust Deed will have
been duly qualified under the Trust Indenture Act.
(e) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Issuer.
(f) Legal Agreements. Each of the Legal Agreements to which the
Issuer is a party will be duly authorized by the Issuer on or prior to the
Closing Date and when duly executed and delivered in accordance with its terms
by each of the parties thereto, will
10
constitute a valid and legally binding agreement of the Issuer enforceable
against the Issuer in accordance with its terms, subject to the Enforceability
Exceptions.
(g) Descriptions of Legal Agreements. Each Legal Agreement conforms
in all material respects to the description thereof contained in the
Registration Statement and the Prospectus.
(h) No Violation or Default. The Issuer is not (i) in violation of
its Memorandum and Articles of Association; (ii) in default in any material
respect, and no event has occurred that, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant or condition contained in its Memorandum and Articles of
Association or in any agreement or instrument to which the Issuer is a party or
by which the Issuer is bound or to which any of the property or assets of the
Issuer is subject; or (iii) in violation of any applicable law or statute or
any judgment, order or regulation of any court or governmental agency or body
having jurisdiction over the Issuer, or any of its properties ("Issuer
Governmental Authority"), except, in the case of clauses (ii) and (iii) above,
for any such default or violation that would not, individually or in the
aggregate, have an Issuer Material Adverse Effect.
(i) No Conflicts with Existing Instruments. The execution, delivery
and performance by the Issuer of each of the Legal Agreements, the issuance and
sale of the Offered Notes on the terms set forth in this Agreement and
compliance by the Issuer with the terms thereof will not (i) conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Issuer (other than those created
in, or imposed by, the Legal Agreements themselves) pursuant to, any indenture,
mortgage, trust deed, loan agreement or other agreement or instrument to which
the Issuer is a party or by which the Issuer is bound or to which any of the
property or assets of the Issuer is subject, (ii) result in any violation of
the provisions of the Memorandum and Articles of Association of the Issuer or
(iii) result in the violation of any applicable law or statute or any judgment,
order or regulation of any Issuer Governmental Authority, except, in the case
of clauses (i) and (iii) above, for any such conflict, breach or violation that
would not, individually or in the aggregate, have an Issuer Material Adverse
Effect.
(j) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any Issuer Governmental Authority is
required for the execution, delivery and performance by the Issuer of each of
the Legal Agreements, the issuance and sale of the Offered Notes and compliance
by the Issuer with the terms thereof and the consummation of the transactions
contemplated by the Legal Agreements, except for (i) the registration of the
Offered Notes under the Securities Act, and such consents, approvals,
authorizations, orders and registrations or qualifications as may be required
under applicable state securities, Blue Sky or similar laws in connection with
the purchase and distribution of the Class A Offered Notes by the Class A
Underwriters and of the Class B/C Offered Notes by the Class B/C Joint Lead
Underwriters and (ii) those which have been, or will prior to the Closing Date
be taken, fulfilled or done, and which are, or will on the Closing Date be, in
full force and effect, other than registration required under Section 395 of
the Companies Act 1985.
(k) Legal Proceedings. Except as described in the Prospectus, there
are no legal, governmental or regulatory investigations, actions, suits or
proceedings pending to which the Issuer is a party or to which any property of
the Issuer is the subject that, individually or in
11
the aggregate, if determined adversely to the Issuer, could reasonably be
expected to have an Issuer Material Adverse Effect; to the best knowledge of
the Issuer, no such investigations, actions, suits or proceedings are
threatened by any Issuer Governmental Authority or threatened by others.
(l) Financial Statements.
(i) The auditor's report by KPMG, as independent auditor to the
Issuer, set out in each of the Preliminary Prospectus and the Prospectus,
presents fairly the financial position of the Issuer as at the date at
which such report has been prepared;
(ii) since the date of each such report there has been no change
(nor any development or event involving a prospective change of which the
Issuer is, or might reasonably be expected to be, aware) which is
materially adverse to the condition (financial or other), prospects,
results of operations or general affairs of the Issuer; and
(iii) KPMG are independent public accountants with respect to the
Issuer within the meaning of the standards established by the American
Institute of Certified Public Accountants.
(m) Investment Company Act. The Issuer is not and, after giving
effect to the offering and sale of the Offered Notes and the application of the
proceeds thereof as described in the Prospectus, will not be an "investment
company" or an entity "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder (collectively, "Investment Company
Act").
(n) Representations in Legal Agreements. The representations and
warranties of the Issuer contained in the Legal Agreements are true and correct
in all material respects.
(o) Taxation. Save as described in the legal opinions referred to in
Section 4(g) of this Agreement, no stamp or other similar duty is assessable or
payable in the United Kingdom, and no withholding or deduction for any taxes,
duties, assessments or governmental charges of whatever nature is imposed or
made for or on account of any income, registration, transfer or turnover taxes,
customs or other duties or taxes of any kind in connection with the
authorization, execution or delivery of the Legal Agreements or with the
authorization, issue, sale or delivery of the Notes and (except as disclosed in
the Prospectus) the performance of the Issuer's, Funding 1's and/or, as the
case may be, the Mortgages Trustee's obligations under the Legal Agreements and
the Notes. This warranty does not apply to any United Kingdom corporation tax
which may be levied, collected, withheld or assessed in connection with the
authorization, execution or delivery of the Legal Agreements or with the
authorization, issue, sale or delivery of the Notes.
(p) Events of Default. No event has occurred or circumstance arisen
which, had the Notes already been issued, would (whether or not with the giving
of notice and/or the passage of time and/or the fulfillment of any other
requirement) constitute an Event of Default as set out in the Conditions of the
Notes.
(q) No Subsidiaries. The Issuer has no subsidiaries or subsidiary
undertakings within the meanings of Sections 258 and 736 of the Companies Act
1985.
12
(r) No Activities. The Issuer has not engaged in any activities
since its incorporation other than (i) those incidental to any registration or
re-registration as a public limited company under the Companies Acts 1985 and
1989 and various changes to its name, directors, secretary, registered office,
Memorandum and Articles of Association; (ii) the authorization and execution of
the Legal Agreements to which it is a party; (iii) the activities referred to
or contemplated in the Legal Agreements to which it is a party or in the
Prospectus and (iv) the authorization and issue by it of the Notes. The Issuer
has not (other than as set out in the Prospectus) prepared any accounts and has
neither paid any dividends nor made any distributions since the date of its
incorporation.
(s) Listing Rules. Prior to the delivery of the Prospectus to the
Registrar of Companies in England and Wales, the Prospectus (i) has been
approved by or on behalf of the competent authority as listing particulars
(each as defined in the FSMA) and (ii) complies with the listing rules, as set
out under Part VI of the FSMA.
(t) No Prior Security. Save as set out in any of the Legal
Agreements, there exists no mortgage, lien, pledge or other charge on or over
the assets of the Issuer and, other than the Legal Agreements, the Issuer has
not entered into any indenture or trust deed.
(u) Security for the Notes. Without prejudice to the Reservations as
to matters of English law only in the Allen & Overy legal opinion as to the
enforcement of security (and, for the avoidance of doubt, excluding from such
Reservations the factual assumptions on which they are made (including the
assumptions as to the solvency of the Issuer)), which Reservations the Issuer
represents are not material in the context of the Transaction (except to the
extent disclosed in the Prospectus), but subject to Reservations 4 and 6 of
that opinion, the Issuer has created the following security interests in the
Issuer Deed of Charge: (i) an assignment by way of first fixed security of the
Issuer's right, title, interest and benefit in the Issuer Intercompany Loan
Agreement, the Swap Agreements, the Funding 1 Deed of Charge, the Issuer Trust
Deed, the Paying Agent and Agent Bank Agreement, the Issuer Cash Management
Agreement, the Corporate Services Agreement, the Issuer Bank Account Agreement,
the Post-Enforcement Call Option Agreement and any other of the Legal
Agreements to which the Issuer is a party; (ii) an assignment by way of first
ranking fixed charge (which may take effect as a floating charge) over the
Issuer Bank Accounts; (iii) a first ranking fixed charge (which may take effect
as a floating charge) over the Issuer's right, title, interest and benefit to
any authorized investments made with moneys standing to the credit of any of
the Issuer Bank Accounts; and (iv) a first floating charge over the whole of
the assets and undertaking of the Issuer which are not otherwise effectively
subject to any fixed charge or assignment by way of security.
(v) Capitalization. The authorized capital of the Issuer is as set
out in the Prospectus.
(w) United States Income Tax. The Issuer has not engaged in any
activities in the United States (directly or through agents), derived any
income from United States sources as determined under the U.S. Internal Revenue
Code of 1986, as amended (the "Code"), and has not held nor currently holds any
property which would cause it to be engaged or deemed to be engaged in a trade
or business within the United States as determined under the Code.
13
(II) Representations and Warranties of Funding 1 and the Mortgages
Trustee. Each of Funding 1 and the Mortgages Trustee severally represents and
warrants (in respect of itself only) to, and agrees with the Underwriters, and
each of them that:
(a) Registration Statement and Prospectus. Together with the Issuer,
Funding 1 and the Mortgages Trustee have filed with the Commission the
Registration Statement, including the related Preliminary Prospectus, for
registration under the Securities Act of the offering and sale of the Offered
Notes. They may have filed one or more amendments thereto, including a related
Preliminary Prospectus, each of which has been furnished to the
Representatives. The Registration Statement has been declared effective by the
Commission under the Securities Act; and no order suspending the effectiveness
of the Registration Statement has been issued by the Commission and no
proceeding for that purpose has been instituted or, to the best knowledge of
Funding 1 and the Mortgages Trustee, threatened by the Commission; on the
Effective Date, the Registration Statement, as amended, complied, and when the
Prospectus is first filed (if required) in accordance with Rule 424(b) and on
the Closing Date, the Prospectus (and any amendments or supplements thereto),
will comply in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the Trust Indenture Act and the respective
rules thereunder; on the Effective Date and at the date of this Agreement, the
Registration Statement did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; on the Effective Date,
the Prospectus and any amendments or supplements thereto, if not filed pursuant
to Rule 424(b), did not, and on the day of any filing pursuant to Rule 424(b)
and on the Closing Date will not, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and on the Effective Date and on the Closing Date, the Issuer Trust
Deed did or will comply in all material respects with the applicable
requirements of the Trust Indenture Act and the rules thereunder; provided that
Funding 1 and the Mortgages Trustee make no representation and warranty with
respect to any statements or omissions made: (i) in that part of the
Registration Statement which constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Note Trustee or
(ii) in reliance upon and in conformity with information relating to any
Underwriter furnished to the Issuer in writing by or on behalf of any
Underwriter through the Representatives expressly for use in the Registration
Statement and the Prospectus and any amendment or supplement thereto.
(b) No Material Adverse Change. Other than as set forth or
contemplated in the Prospectus, there has not been any material adverse change,
or any development involving a prospective material adverse change, in or
affecting the business, prospects, management, financial position,
shareholders' equity or results of operations of Funding 1 or the Mortgages
Trustee.
(c) Incorporation and Good Standing. Each of Funding 1 and the
Mortgages Trustee has been duly incorporated and is a validly existing
organization in good standing under the laws of its jurisdiction of
organization, is duly qualified to do business in England and Wales (with
respect to Funding 1) and Jersey (with respect to the Mortgages Trustee) and
has full right, power and authority necessary to conduct its business as
described in the Prospectus, except where the failure to be so qualified or
have such power or authority would not, individually or in the aggregate, have
a material adverse effect on the transactions contemplated herein or in the
Legal Agreements (a "Funding 1 Material Adverse Effect" or a
14
"Mortgages Trustee Material Adverse Effect", as the case may be). Neither has
taken any corporate action nor (to the best of its knowledge and belief) have
any other steps been taken or legal proceedings been started or threatened
against it for its winding-up, dissolution or reorganization or for the
appointment of a receiver, administrator, administrative receiver or similar
officer of it or of any or all of its assets or revenues.
(d) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by each of Funding 1 and the Mortgages Trustee.
(e) Legal Agreements. Each of the Legal Agreements to which Funding 1
or the Mortgages Trustee is a party will be duly authorized by each of Funding
1 and the Mortgage Trustee on or prior to the Closing Date and when duly
executed and delivered in accordance with its terms by each of the parties
thereto, will constitute a valid and legally binding agreement of Funding 1 or
the Mortgages Trustee, as the case may be, enforceable against Funding 1 or the
Mortgages Trustee, as the case may be, in accordance with its terms, subject to
the Enforceability Exceptions.
(f) Descriptions of Legal Agreements. Each Legal Agreement to which
Funding 1 or the Mortgages Trustee is a party conforms in all material respects
to the description thereof contained in the Registration Statement and the
Prospectus.
(g) No Violation or Default. Neither Funding 1 nor the Mortgages
Trustee is (i) in violation of its Memorandum and Articles of Association or
similar organizational documents; (ii) in default in any material respect, and
no event has occurred that, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in its Memorandum and Articles of Association
or in any agreement or instrument to which Funding 1 or the Mortgages Trustee,
as the case may be, is a party or by which Funding 1 or the Mortgages Trustee,
as the case may be, is bound or to which any of the property or assets of
Funding 1 or the Mortgages Trustee, as the case may be, is subject; or (iii) in
violation of any applicable law or statute or any judgment, order or regulation
of any court or governmental agency or body having jurisdiction over Funding 1
or the Mortgages Trustee, as the case may be, or any of its properties
("Funding 1 Governmental Authority" or "Mortgages Trustee Governmental
Authority", as the case may be), except, in the case of clauses (ii) and (iii)
above, for any such default or violation that would not, individually or in the
aggregate, have a Funding 1 Material Adverse Effect or a Mortgages Trustee
Material Adverse Effect, as the case may be.
(h) No Conflicts with Existing Instruments. The execution, delivery
and performance by each of Funding 1 and the Mortgages Trustee of each of the
Legal Agreements to which each of Funding 1 and the Mortgages Trustee is a
party and compliance by each of Funding 1 and the Mortgages Trustee with the
terms thereof will not (i) conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of Funding 1 or the Mortgages Trustee (other than those created in, or
imposed by, the Legal Agreements themselves), as the case may be, pursuant to,
any indenture, mortgage, trust deed, loan agreement or other agreement or
instrument to which Funding 1 or the Mortgages Trustee, as the case may be, is
a party or by which Funding 1 or the Mortgages Trustee, as the case may be, is
bound or to which any of the property or assets of Funding 1 or the Mortgages
Trustee, as the case may be, is subject, (ii) result in any violation of the
provisions of the Memorandum and Articles of Association of Funding 1 or the
Mortgages Trustee, as the case may be, or (iii) result in the violation of any
applicable law or statute or any judgment, order or regulation of any Funding 1
15
Governmental Authority or Mortgages Trustee Governmental Authority, as the case
may be, except, in the case of clauses (i) and (iii) above, for any such
conflict, breach or violation that would not, individually or in the aggregate,
have a Funding 1 Material Adverse Effect or a Mortgages Trustee Material
Adverse Effect, as the case may be.
(i) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any Funding 1 Governmental Authority
or Mortgages Trustee Governmental Authority, as the case may be, is required
for the execution, delivery and performance by Funding 1 or the Mortgages
Trustee of each of the Legal Agreements and compliance by Funding 1 or the
Mortgages Trustee, as the case may be, with the terms thereof and of the Notes
and the consummation of the transactions contemplated by the Legal Agreements,
except for (i) the registration of the Offered Notes under the Securities Act,
and such consents, approvals, authorizations, orders and registrations or
qualifications as may be required under applicable state securities Blue Sky or
similar laws in connection with the purchase and distribution of the Class A
Offered Notes by the Class A Underwriters and of the Class B/C Offered Notes by
the Class B/C Joint Lead Underwriters and (ii) those which have been, or will
prior to the Closing Date be taken, fulfilled or done, and which are, or will
on the Closing Date be, in full force and effect, other than registration under
Section 395 of the Companies Act 1985.
(j) Legal Proceedings. Except as described in the Prospectus, there
are no legal, governmental or regulatory investigations, actions, suits or
proceedings pending to which the either Funding 1 or the Mortgages Trustee is a
party or to which any property of either Funding 1 or the Mortgages Trustee is
the subject that, individually or in the aggregate, if determined adversely to
either Funding 1 or the Mortgages Trustee, as the case may be, could reasonably
be expected to have a Funding 1 Material Adverse Effect or a Mortgages Trustee
Material Adverse Effect, as the case may be; to the best knowledge of Funding 1
or the Mortgages Trustee, as the case may be, no such investigations, actions,
suits or proceedings are threatened by any Funding 1 Governmental Authority or
Mortgages Trustee Governmental Authority, as the case may be, or threatened by
others.
(k) Financial Statements.
(i) The auditor's report by KPMG, as independent auditor to
Funding 1, set out in each of the Preliminary Prospectus and the
Prospectus presents fairly the financial position of Funding 1 as at the
date at which such report has been prepared;
(ii) since the date of each such report there has been no change
(nor any development or event involving a prospective change of which
Funding 1 is, or might reasonably be expected to be, aware) which is
materially adverse to the condition (financial or other), prospects,
results of operations or general affairs of Funding 1; and
(iii) KPMG are independent public accountants with respect to
Funding 1 within the meaning of the standards established by the American
Institute of Certified Public Accountants.
(l) Investment Company Act. Neither Funding 1 nor the Mortgages
Trustee is and, after giving effect to the offering and sale of the Offered
Notes and the application of the proceeds thereof as described in the
Prospectus, will be an "investment company" or an entity
16
"controlled" by an "investment company" within the meaning of the Investment
Company Act.
(m) Representations in Legal Agreements. The representations and
warranties of each of Funding 1 and the Mortgages Trustee contained in the
Legal Agreements are true and correct in all material respects.
(n) Events of Default. With respect to Funding 1, no event has
occurred or circumstance arisen which, had the Issuer Intercompany Loan
Agreement already been entered into, would (whether or not with the giving of
notice and/or the passage of time and/or the fulfillment of any other
requirement) constitute an Event of Default as set out in the Issuer
Intercompany Loan Agreement.
(o) No Subsidiaries. Neither Funding 1 nor the Mortgages Trustee has
any subsidiaries or subsidiary undertakings within the meanings of Sections 258
and 736 of the Companies Act 1985.
(p) No Activities. Neither Funding 1 nor the Mortgages Trustee has
engaged in any activities since its incorporation other than (i) those
incidental to any registration or re-registration as private limited companies
under the laws of England and Wales (with respect to Funding 1) and Jersey
(with respect to the Mortgages Trustee) and (if any) various changes to its
name, directors, secretary, registered office, Memorandum and Articles of
Association; (ii) the authorization and execution of the Legal Agreements to
which it is a party; (iii) the activities referred to or contemplated in the
Legal Agreements to which it is a party or in the Prospectus; (iv) the
activities undertaken in connection with the establishment of the Mortgages
Trust pursuant to the Mortgages Trust Deed, the issue of notes by Permanent
Financing (No. 1) PLC, the issue of notes by Permanent Financing (No. 2) PLC
and the issue of the Notes by the Issuer; and (v) the filing of notification
by the Mortgages Trustee and Funding 1 under the Data Protection Act 1984 and
1988 (the "DPA") and the application by the Mortgages Trustee and Funding 1 for
a standard license under the Consumer Credit Act 1974. Neither Funding 1 nor
the Mortgages Trustee has (other than as set out in the Prospectus, in the
prospectus relating to the notes issued by Permanent Financing (No. 1) PLC) or
in the prospectus relating to the notes issued by Permanent Financing (No. 2)
PLC), prepared any accounts and has neither paid any dividends nor made any
distributions since the date of its incorporation.
(q) No Prior Security. Save as set out in any of the Legal
Agreements, there exists no mortgage, lien, pledge or other charge on or over
the assets of Funding 1 and, other than the Legal Agreements, Funding 1 has not
entered into any indenture or trust deed.
(r) Security for the Intercompany Loan. Without prejudice to the
Reservations as to matters of English law only in the Allen & Overy legal
opinion as to the enforcement of security (and, for the avoidance of doubt,
excluding from such Reservations the factual assumptions on which they are made
(including the assumptions as to the solvency of Funding 1)), which
Reservations Funding 1 represents are not material in the context of the
Transaction (except to the extent disclosed in the Prospectus), but subject to
Reservations 4 and 6 of that opinion, Funding 1 has created the following
security interests in the Funding 1 Deed of Charge: (i) a first ranking fixed
charge (which may take effect as a floating charge) over Funding 1's share of
the Trust Property (as defined in the Mortgages Trust Deed); (ii) an assignment
by way of first fixed security of all of Funding 1's right, title, interest and
benefit in the Mortgage Sale Agreement, the Mortgages Trust Deed, the Servicing
Agreement, the
17
Issuer Intercompany Loan Agreement, the Start-up Loan Agreement, the Funding 1
Guaranteed Investment Contract, the Corporate Services Agreement, the Cash
Management Agreement, the Bank Account Agreement and any other of the Legal
Agreements to which Funding is a party; (iii) an assignment by way of first
ranking fixed security (which may take effect as a floating charge) over
Funding 1's right, title, interest and benefit in the Funding 1 Bank Accounts;
(iv) a first ranking fixed charge (which may take effect as a floating charge)
of Funding 1's right, title, interest and benefit in all Authorized Investments
purchased with moneys standing to the credit of the Funding 1 Bank Accounts;
and (v) a first floating charge over all the assets and the undertaking of
Funding 1 which are not effectively subject to a fixed charge or assignment by
way of security.
(s) Capitalization. The authorized capital of each of Funding 1 and
the Mortgages Trustee is as set out in the Prospectus.
(t) United States Income Tax. Neither Funding 1 nor the Mortgages
Trustee has engaged in any activities in the United States (directly or through
agents), derived any income from United States sources as determined under the
Code, and has held nor currently holds any property which would cause it to be
engaged or deemed to be engaged in a trade or business within the United States
as determined under the Code.
(u) Beneficial Owner. The Mortgages Trustee holds and will continue
to hold the equitable title to the Portfolio (excluding Loans and Related
Security which have been redeemed or which, in accordance with the Mortgage
Sale Agreement, have been re-assigned to the Seller since the relevant
Assignment Date) on a bare trust for the benefit of Funding 1 and Halifax in
undivided shares absolutely.
(III) Representations and Warranties of Halifax. Halifax
represents and warrants to, and agrees with the Underwriters, and each of them
that:
(a) Registration Statement and Prospectus. On the Effective Date, the
Registration Statement, as amended, complied and when the Prospectus is first
filed (if required) in accordance with Rule 424(b) and on the Closing Date, the
Prospectus (and any amendments or supplements thereto), will comply in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the Trust Indenture Act and the respective rules thereunder;
on the Effective Date and at the date of this Agreement, the Registration
Statement did not and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), did not, and on the day of
any filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus and
any amendments or supplements thereto will not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that Halifax makes no representation and
warranty with respect to any statements or omissions made: (i) in that part of
the Registration Statement which constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Note Trustee or
(ii) in reliance upon and in conformity with information relating to any
Underwriter furnished to the Issuer in writing by or on behalf of any
Underwriter through the Representatives expressly for use in the Registration
Statement and the Prospectus and any amendment or supplement thereto.
18
(b) Organization and Good Standing. Halifax has been duly organized
and is a validly existing organization in good standing under the laws of its
jurisdiction of organization, is duly qualified to do business in England and
Wales and has full right, power and authority necessary to conduct its business
as described in the Prospectus, except where the failure to be so qualified or
have such power or authority would not, individually or in the aggregate, have
a material adverse effect on the transactions contemplated herein or in the
Legal Agreements (a "Halifax Material Adverse Effect"). Halifax has not taken
any corporate action nor (to the best of its knowledge and belief) have any
other steps been taken or legal proceedings been started or threatened against
it for its winding-up, dissolution or reorganization or for the appointment of
a receiver, administrator, administrative receiver or similar officer of it or
of any or all of its assets or revenues.
(c) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by Halifax.
(d) Legal Agreements. Each of the other Legal Agreements to which
Halifax is a party will be duly authorized by Halifax on or prior to the
Closing Date and on the Closing Date will constitute valid and legally binding
obligations of Halifax enforceable against Halifax in accordance with their
terms, subject to the Enforceability Exceptions.
(e) No Conflicts with Existing Instruments. The sale of the
Additional Portfolio and rights did not and will not, and the execution,
delivery and performance by Halifax of this Agreement and the other Legal
Agreements to which Halifax is a party and compliance by Halifax with the terms
hereof and thereof will not, and each previous assignment of the Existing Loans
and Existing Related Security did not upon the relevant Assignment Date, (i)
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of Halifax (other than
those created in, or imposed by, the Legal Agreements themselves) pursuant to,
any indenture, mortgage, trust deed, loan agreement or other agreement or
instrument to which Halifax is a party or by which Halifax is bound or to which
any of the property or assets of Halifax is subject, (ii) result in any
violation of the provisions of the Memorandum and Articles of Association of
Halifax or (iii) result in the violation of any applicable law or statute or
any judgment, order or regulation of any court or governmental agency or body
having jurisdiction over Halifax or any of its properties ("Halifax
Governmental Authority"), except, in the case of clauses (i) and (iii) above,
for any such conflict, breach or violation that would not, individually or in
the aggregate, have a Halifax Material Adverse Effect.
(f) All Consents Obtained. All consents, approvals and
authorizations, orders, registrations and qualifications of all Halifax
Governmental Authorities required by Halifax for or in connection with the
execution, delivery and performance by Halifax of this Agreement and the other
Legal Agreements to which it is, or will be, on or prior to the Closing Date, a
party, have been obtained and are in full force and effect, including, without
limitation, the receipt of a standard license under the Consumer Credit Act
1974 and registration under the DPA.
(g) Legal Proceedings. There are no legal, governmental or regulatory
investigations, actions, suits or proceedings pending to which Halifax is a
party or to which any property of Halifax is the subject that, individually or
in the aggregate, if determined adversely to Halifax, could reasonably be
expected to have a material and adverse affect on (i) Halifax's performance of
its obligations under, or the validity of, this Agreement or (ii)
19
Halifax's title to the Related Security or the value of any security therefor
or Halifax's right to assign any such Related Security to the Mortgages
Trustee, and to the best knowledge of Halifax and save as already disclosed in
the Prospectus, no such investigations, actions, suits or proceedings are
threatened by any Halifax Governmental Authority or threatened by others.
(h) Beneficial Owner. The Mortgages Trustee holds and will continue
to hold the equitable title to the Portfolio (excluding Loans and Related
Security which have been redeemed or which, in accordance with the Mortgage
Sale Agreement, have been re-assigned to the Seller since the relevant
Assignment Date) on a bare trust for the benefit of Funding 1 and Halifax in
undivided shares absolutely.
(i) Legal Agreements. The representations and warranties given by
Halifax in the Mortgage Sale Agreement to which is it is a party are true and
accurate in all material respects as when stated to be made.
3. Further Agreements of the Issuer, Funding 1, the Mortgages Trustee
and Halifax. The Issuer and, where expressly provided, Funding 1, the
Mortgages Trustee and Halifax severally covenants to, and agrees each for
itself with, the Underwriters and each of them that:
(a) Registration Statement -- Effectiveness. The Issuer, Funding 1,
the Mortgages Trustee and Halifax will use their best efforts to cause the
Registration Statement, if not effective at the date of this Agreement, and any
amendment thereof, to become effective.
(b) Filing of Prospectus. The Issuer will file the final Prospectus
with the Commission within the time periods specified by Rule 424(b) under the
Securities Act; and the Issuer will furnish copies of the Prospectus to the
Underwriters in London prior to 10:00 A.M., London time, on the business day
next succeeding the date of this Agreement (or such other time as agreed
between the Issuer and the Representatives) in such quantities as the
Representatives may reasonably request.
(c) Delivery of Copies. The Issuer will deliver (i) to the
Representatives, one copy of the Registration Statement as originally filed and
each amendment thereto (including any post-effective amendment to the
Registration Statement), in each case including all exhibits and consents filed
therewith; and (ii) to each Underwriter (A) a conformed copy of the
Registration Statement as originally filed and each amendment thereto, in each
case including all exhibits and consents filed therewith and (B) during the
Prospectus Delivery Period, as many copies of the Prospectus (including all
amendments and supplements thereto) as the Representatives may reasonably
request. As used herein, the term "Prospectus Delivery Period" means such
period of time after the first date of the public offering of the Offered Notes
as in the opinion of counsel for the Underwriters a prospectus relating to the
Offered Notes is required by law to be delivered in connection with sales of
the Offered Notes by any Underwriter or dealer.
(d) Amendments or Supplements. Before filing any amendment or
supplement to the Registration Statement or the Prospectus, whether before or
after the time that the Registration Statement becomes effective, the Issuer,
Funding 1 and the Mortgages Trustee will furnish to the Representatives and
counsel for the Underwriters a copy of the proposed
20
amendment or supplement for review and will not file any such proposed
amendment or supplement to which the Representatives reasonably object.
(e) Commission Filings. The Issuer, Funding 1 and the Mortgages
Trustee will file, in a timely manner, with the Commission during the
Prospectus Delivery Period, all documents (and any amendments to previously
filed documents) required to be filed by them pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act within the time periods required by the
Exchange Act and the rules and regulations thereunder, provided that none of
the Issuer, Funding 1 or the Mortgages Trustee will file any such document or
amendment unless the Issuer, Funding 1 and the Mortgages Trustee have furnished
the Representatives with copies for their review prior to filing and none of
them will file any such proposed document or amendment until the Underwriters
have been consulted and given a reasonable opportunity to comment on such
document or amendment.
(f) Notice to the Representatives. The Issuer will, and if the Issuer
fails to do so, Halifax shall, advise the Representatives promptly, and confirm
such advice in writing, (i) when the Registration Statement, if not effective
at the date of this Agreement, shall have become effective; (ii) when any post-
effective amendment to the Registration Statement becomes effective; (iii) when
any supplement to the Prospectus or any amendment to the Prospectus has been
filed; (iv) when, prior to termination of the offering of the Notes, any
amendment to the Registration Statement shall have been filed or become
effective; (v) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or the
receipt of any comments from the Commission relating to the Registration
Statement or any other request by the Commission for any additional
information; (vi) of the issuance by the Commission of any order suspending the
effectiveness of the Registration Statement or preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or the initiation or
threatening of any proceeding for that purpose or of any challenge to the
accuracy or adequacy of any document incorporated by reference in the
Prospectus; (vii) of any downgrading in the rating of any debt securities of
Halifax by Moody's Investors Service ("Moody's") or Standard & Poor's Rating
Services, a division of the McGraw-Hill Companies, Inc. ("Standard & Poor's"),
or if any such organization shall have informed Halifax or HBOS plc or made any
public announcement that any such organization has under surveillance or review
its rating of any debt securities of Halifax (other than an announcement with
positive implications of a possible upgrading, and no implication of a possible
downgrading of such rating) as soon as such announcement is made or Halifax is
informed; and (viii) of the receipt by the Issuer of any notice with respect to
any suspension of the qualification of the Offered Notes for offer and sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and the Issuer will use its reasonable best efforts to prevent the
issuance of any such order suspending the effectiveness of the Registration
Statement, preventing or suspending the use of any Preliminary Prospectus or
the Prospectus or suspending any such qualification of the Offered Notes and,
if issued, will obtain as soon as possible the withdrawal thereof.
(g) Ongoing Compliance of the Prospectus. If during the Prospectus
Delivery Period (i) any event shall occur as a result of which it is necessary
to amend or supplement the Prospectus such that the Prospectus will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, not
misleading or (ii) it is necessary to amend or supplement the Prospectus to
comply with US law, the Issuer will promptly notify the Underwriters thereof
and forthwith prepare and,
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subject to paragraph (d) above, file with the Commission and furnish to the
Underwriters, such amendments or supplements to the Prospectus as may be
necessary so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances existing when the
Prospectus is delivered to a purchaser, be misleading or so that the Prospectus
will comply with US law. In addition, the Issuer shall use its best efforts to
prevent the issuance of any stop order and if, during the Prospectus Delivery
Period, the Commission shall issue a stop order suspending the effectiveness of
the Registration Statement, the Issuer shall make every reasonable effort to
obtain the lifting of that order at the earliest possible time.
(h) Blue Sky Compliance. The Issuer will cooperate with the Class A
Underwriters (with respect to the Class A Offered Notes) and the Class B/C
Joint Lead Underwriters (with respect to the Class B/C Offered Notes) to
qualify the Offered Notes for offer and sale under the securities or Blue Sky
laws of such jurisdictions as the applicable Representatives shall reasonably
request and will continue such qualifications in effect so long as may be
reasonably required for distribution of the Offered Notes and to file such
statements and reports as may be required by the laws of each jurisdiction in
which the Offered Notes have been qualified as above; provided that the Issuer
shall not be required to (i) qualify as a foreign corporation or other entity
or as a dealer in securities in any such jurisdiction where it would not
otherwise be required to so qualify, (ii) file any general consent to service
of process in such jurisdiction or take any other action that would subject it
to service of process in suits in any jurisdiction, other than those arising
out of the offering or sale of the Offered Notes in such jurisdiction or (iii)
subject itself to taxation in any such jurisdiction if it is not so subject.
(i) Earning Statement. The Issuer will make generally available to
its security holders as soon as practicable an earning statement that satisfies
the provisions of Section 11(a) of the Securities Act and Rule 158 of the
Commission promulgated thereunder covering a period of at least twelve months
beginning with the first fiscal quarter of the Issuer occurring after the
"effective date" (as defined in Rule 158) of the Registration Statement.
(j) Copies of Reports. So long as the Class A Offered Notes are
outstanding, to furnish each Class A Underwriter (i) copies of each amendment
to any of the Legal Agreements, and (ii) copies of all reports or other
communications (financial or other) furnished to holders of the Class A Offered
Notes, and copies of any reports and financial statements furnished to or filed
with the Commission, any governmental or regulatory authority or any national
securities exchange. So long as the Class B/C Offered Notes are outstanding,
to furnish each Class B/C Joint Lead Underwriter (i) copies of each amendment
to any of the Legal Agreements, and (ii) copies of all reports or other
communications (financial or other) furnished to holders of the Class B/C
Offered Notes, and copies of any reports and financial statements furnished to
or filed with the Commission, any governmental or regulatory authority or any
national securities exchange.
(k) Use of Proceeds. The Issuer will apply the net proceeds from the
sale of the Offered Notes as described in the Registration Statement and the
Prospectus.
(l) Rating Agencies. To the extent, if any, that the ratings provided
with respect to the Offered Notes by the Rating Agencies are conditional upon
the furnishing of documents or the taking of any other action by the Issuer,
the Issuer shall use its best efforts to furnish such documents and take any
other such action.
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(m) Notify Change. Each of the Issuer, the Mortgages Trustee,
Funding 1 and Halifax, as the case may be, will notify the Underwriters
promptly of any change affecting any of their respective representations,
warranties, covenants, agreements or indemnities in this Agreement at any time
prior to payment of the net underwriting proceeds for the Notes being made to
the Issuer on the Closing Date and will take such steps as may be reasonably
requested by the Representatives to remedy and/or publicize the same.
(n) Official Announcements. Between the date of this Agreement and
the Closing Date (both dates inclusive) none of Halifax, the Issuer, Funding 1
or the Mortgages Trustee will, without the prior approval of the
Representatives on behalf of the Underwriters (such approval not to be
unreasonably withheld or delayed), make any official announcement which would
have a material adverse effect on the marketability of the Notes (other than an
official announcement which may be required by law or regulation); provided
that reasonable notice of the substance of any such official announcement which
may be required by law or regulation and which may have a material adverse
effect on the marketability of the Offered Notes shall be given to the
Representatives as soon as practicable.
(o) Stamp Duty.
(i) The Issuer will pay any stamp duty, issue, registration,
documentary or other taxes of a similar nature and duties that it is
required to pay under the Legal Agreements to which it is a party payable
in the United Kingdom, Belgium, Luxembourg or the United States,
including interest and penalties in connection with the creation, issue,
distribution and offering of the Notes or in connection with the
execution, delivery or enforcement of any of the Legal Agreements to
which it is a party together with any value added, turnover or similar
tax payable in respect of that amount (and references in this Agreement
to such amount shall be deemed to include any such taxes so payable in
addition to it);
(ii) Funding 1 will pay any stamp duty, issue, registration,
documentary or other taxes of a similar nature and duties that it is
required to pay under the Legal Agreements to which it is a party payable
in the United Kingdom or the United States, including interest and
penalties in connection with the execution, delivery or enforcement of
any of the Legal Agreements to which it is a party (other than in respect
of the execution, delivery or enforcement of the Mortgages Trust Deed and
any Legal Agreement to which the Issuer is a party) together with any
value added, turnover or similar tax payable in respect of that amount
(and references in this Agreement to such amount shall be deemed to
include any such taxes so payable in addition to it); and
(iii) The Mortgages Trustee will pay any stamp duty, issue,
registration, documentary or other taxes of a similar nature and duties
that it is required to pay under the Legal Agreements to which it is a
party payable in the United Kingdom, Jersey, Channel Islands or the
United States, including interest and penalties in connection with the
execution, delivery or enforcement of the Mortgages Trust Deed (including
any amendment thereto) and the Mortgage Sale Agreement (including any
amendment thereto) (together with any value added, turnover or similar
tax payable in respect of that amount (and references in this Agreement
to such amount shall be deemed to include any such taxes so payable in
addition to it)) but will be promptly reimbursed an amount equal to any
such payments by the Beneficiaries in accordance with the terms of the
Mortgages Trust Deed.
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(iv) For the avoidance of doubt, if Funding 1 or the Mortgages
Trustee discharges its obligations to pay any stamp duty, issue,
registration, documentary or other taxes of a similar nature and duties
payable in the United Kingdom or the United States, including interest
and penalties in each case as described above (together, the "relevant
taxes"), at any time while amounts are outstanding in respect of the
notes issued by the Issuer and/or any new Issuer, then Funding 1 and/or
(as applicable) the Mortgages Trustee will not be obliged to pay such
relevant taxes multiple times (in respect of the same obligation), in
order to meet its obligations under (1) the underwriting agreements and
subscription agreements relating to the Issuer and/or any new Issuer and
(2) paragraphs (ii) and/or (iii) (as applicable) above.
(p) United States Income Tax. Neither the Issuer, Funding 1 nor the
Mortgages Trustee will engage in any activities in the United States (directly
or through agents), nor derive any income from United States sources as
determined under the Code nor hold any property if doing so would cause it to
be engaged or deemed to be engaged in a trade or business within the United
States as determined under the Code.
(q) Payment of Fees, Charges, Costs and Duties.
(i) Without prejudice to the generality of Section 10, the
Issuer will pay all and any fees, charges, costs and duties and any stamp
and other similar taxes or duties that it is required to pay under the
Legal Agreements to which it is a party, including interest and
penalties, arising from or in connection with the creation of the
security for the Notes and the obligations of the Issuer under the Issuer
Trust Deed and for the other amounts to be secured as contemplated by the
Issuer Deed of Charge, the Second Deed of Accession and the perfection of
such security at any time;
(ii) Without prejudice to the generality of Section 10, Funding 1
will pay all and any fees, charges, costs and duties and any stamp and
other similar taxes or duties that it is required to pay under the Legal
Agreements to which it is a party, including interest and penalties,
arising from or in connection with the creation of the security for the
Issuer Intercompany Loan and for the other amounts to be secured as
contemplated by the Funding 1 Deed of Charge and the perfection of such
security at any time; and
(iii) Without prejudice to the generality of Section 10, the
Mortgages Trustee will pay all and any fees, charges, costs and duties
and any stamp and other similar taxes or duties that it is required to
pay under the Legal Agreements to which it is a party, including interest
and penalties, arising from or in connection with the purchase of the
Related Security (and related property and rights) excluding H.M. Land
Registry fees (it being agreed that registration or recording at H.M.
Land Registry of the transfer of the Related Security to the Mortgages
Trustee will not be applied for except in the circumstances specified in
the Servicing Agreement); but on the basis that the Mortgages Trustee
will be reimbursed such fees, charges, costs and duties and any stamp and
other similar taxes or duties (including interest and penalties) by the
Beneficiaries pursuant to the terms of the Mortgages Trust Deed;
(r) Perform all required actions. On or prior to the Closing Date,
each of Halifax, the Issuer, Funding 1 and the Mortgages Trustee will do all
things reasonably within
24
each of their respective powers and required of each of them on such date under
the terms of the Legal Agreements to which each is a party.
(s) Review of Related Security. Halifax will deliver to the
Representatives on the date of this Agreement a letter (relating to its review
of the Related Security) dated the date of this Agreement in the agreed form
addressed to Halifax and the Underwriters from KPMG.
(t) Conditions Precedent. The Issuer will use all reasonable
endeavors to procure satisfaction on or before the Closing Date of the
conditions referred to in Section 4 of this Agreement.
(u) Servicing Agreement. The Issuer, Funding 1 and the Mortgages
Trustee will use all reasonable endeavors to procure that Halifax complies with
its obligations under the Servicing Agreement.
(v) Charges and Security Interests.
(i) The Issuer will procure that each of the charges and other
security interests created by or contained in the Issuer Deed of Charge
is registered within all applicable time limits in all appropriate
registers; and
(ii) Funding 1 will procure that each of the charges and other
security interests created by or contained in the Funding 1 Deed of
Charge is registered within all applicable time limits in all appropriate
registers.
(w) Ratings. None of Halifax, the Issuer, Funding 1 or the Mortgages
Trustee will take, or cause to be taken, any action and none of them will
permit any action to be taken which it knows or has reason to believe would
result in the Notes not being assigned on the Closing Date an "F1+" rating for
the Series 1 Class A Issuer Notes, an "AA" rating for the Series 1 Class B
Issuer Notes, a "BBB" rating for the Series 1 Class C Issuer Notes, an "AAA"
rating for the Series 2 Class A Issuer Notes, an "AA" rating for the Series 2
Class B Issuer Notes, a "BBB" rating for the Series 2 Class C Issuer Notes, an
"AAA" rating for the Series 3 Class A Issuer Notes, an "AA" rating for the
Series 3 Class B Issuer Notes and a "BBB" rating for the Series 3 Class C
Issuer Notes by Fitch Ratings Ltd. ("Fitch"); a "P-1" rating for the Series 1
Class A Issuer Notes, an "Aa3" rating for the Series 1 Class B Issuer Notes, a
"Baa2" rating for the Series 1 Class C Issuer Notes, an "Aaa" rating for the
Series 2 Class A Issuer Notes, an "Aa3" rating for the Series 2 Class B Issuer
Notes, a "Baa2" rating for the Series 2 Class C Issuer Notes, an "Aaa" rating
for the Series 3 Class A Issuer Notes, an "Aa3" rating for the Series 3 Class B
Issuer Notes and a "Baa2" rating for the Series 3 Class C Issuer Notes by
Moody's; and an "A-1+" rating for the Series 1 Class A Issuer Notes, an "AA"
rating for the Series 1 Class B Issuer Notes, a "BBB" rating for the Series 1
Class C Issuer Notes, an "AAA" rating for the Series 2 Class A Issuer Notes, an
"AA" rating for the Series 2 Class B Issuer Notes, a "BBB" rating for the
Series 2 Class C Issuer Notes, an "AAA" rating for the Series 3 Class A Issuer
Notes, an "AA" rating for the Series 3 Class B Issuer Notes and a "BBB" rating
for the Series 3 Class C Issuer Notes by Standard & Poor's.
(x) Legal Agreements. Prior to closing on the Closing Date none of
Halifax, the Issuer, Funding 1 or the Mortgages Trustee will amend the
terms of the executed Legal Agreements, nor execute any of the other Legal
Agreements other than in the agreed form, without the consent of the
Representatives (such consent not to be unreasonably withheld or delayed).
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4. Conditions of Underwriters' Obligations. The obligation of each
Class A Underwriter to purchase Class A Offered Notes and the obligation of
each Class B/C Joint Lead Underwriter to purchase Class B/C Offered Notes on
the Closing Date as provided herein is subject to the performance by the
Issuer, Funding 1, the Mortgages Trustee and Halifax of their respective
obligations hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. The Registration
Statement (or, if a post-effective amendment to the Registration Statement is
required to be filed under the Securities Act, such post-effective amendment)
shall have become effective, and the Representatives shall have received notice
thereof, before the determination of the public offering price of the Offered
Notes; no order suspending the effectiveness of the Registration Statement
shall be in effect, and no proceeding for such purpose shall be pending before
or threatened by the Commission; the Prospectus shall have been timely filed
with the Commission under the Securities Act and in accordance with Section
3(b) hereof; and all requests by the Commission for additional information
shall have been complied with.
(b) Representations and Warranties. The representations and
warranties of the Issuer, Funding 1, the Mortgages Trustee and Halifax
contained herein shall be true and correct on the date hereof and on and as of
the Closing Date; the statements of the Issuer, Funding 1, the Mortgages
Trustee and Halifax and their respective officers made in any certificates
delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date; and each of the Issuer, Funding 1, the Mortgages Trustee and
Halifax shall have complied with all agreements and all conditions to be
performed or satisfied on its respective part hereunder at or prior to the
Closing Date.
(c) No Downgrading. Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have been publicly announced in the rating
accorded any debt securities or preference shares of, or guaranteed by, Halifax
by any of Standard & Poor's, Moody's or Fitch and (ii) no such organization
shall have publicly announced that it has under surveillance or review (other
than an announcement with positive implications of a possible upgrading), its
rating of any debt securities or preference shares of, or guaranteed by,
Halifax.
(d) No Material Adverse Change. Subsequent to the execution and
delivery of this Agreement, no event of a type that (i) renders untrue or
incorrect any of the representations and warranties contained in Section 2
hereof as though the said representations and warranties had been given on the
Closing Date with reference to the facts and circumstances prevailing at that
date or (ii) causes the failure of the Issuer, Funding 1, the Mortgages Trustee
or Halifax to perform each and every covenant to be performed by it pursuant to
the Legal Agreements, the Loans and the Related Security on or prior to the
Closing Date or (iii) involves a material adverse change or any development
involving a material adverse change in the financial or trading condition of
any of the Issuer, Funding 1, the Mortgages Trustee or Halifax shall have
occurred or shall exist, which event or condition is not described in the
Prospectus (excluding any amendment or supplement thereto) and the effect of
any of which in the judgment of the Representatives makes it impracticable to
proceed with the offering, sale or delivery of the Notes on the terms and in
the manner contemplated by this Agreement and the Prospectus or which in the
view of the Representatives has caused a material deterioration in the price
and/or value of the Notes.
(e) Officer's Certificate. The Representatives shall have received on
and as of the Closing Date:
26
(i) a certificate of an executive officer of each of the
Issuer, Funding 1, the Mortgages Trustee and Halifax reasonably
satisfactory to the Representatives confirming that such officer has
carefully reviewed the Prospectus and, to the best knowledge of such
officer, the representations set forth in Section 2(I)(a), 2(II)(a) and
2(III)(a) hereof is true and correct;
(ii) a certificate of an executive officer of each of the Issuer,
Funding 1, the Mortgages Trustee and Halifax reasonably satisfactory to
the Representatives to the effect set forth in paragraphs (a), (b) and
(c) above and that there has been no adverse change, nor any development
involving a prospective adverse change, in or affecting the operations,
properties, financial condition or prospects of the Issuer, Funding 1,
the Mortgages Trustee or Halifax which is material in the context of the
issue of the Notes;
(iii) a certificate of an executive officer of the Issuer
reasonably satisfactory to the Representatives confirming the solvency of
the Issuer;
(iv) a certificate of an executive officer of Funding 1
reasonably satisfactory to the Representatives confirming the solvency of
Funding 1;
(v) a certificate of an executive officer of the Mortgages
Trustee reasonably satisfactory to the Representatives confirming the
solvency of the Mortgages Trustee; and
(vi) a certificate of an executive officer of Halifax reasonably
satisfactory to the Representatives confirming the solvency of Halifax;
(vii) a certificate, reasonably satisfactory to the
Representatives, of an executive officer of each of the Issuer Euro
Currency Swap Providers, each of the Issuer Dollar Currency Swap
Providers and the Issuer Interest Rate Swap Provider in relation to
wording in the Prospectus provided by them; and
(viii)a certificate, reasonably satisfactory to the
Representatives of an executive officer of JPMorgan Chase Bank as Funding
1 Liquidity Facility Provider in relation to wording in the Prospectus
provided by it.
(f) Comfort Letters. On the date of this Agreement, KPMG shall have
furnished to the Representatives, at the request of the Issuer, letters,
including, without limitation, a pool report in respect of agreed upon
procedures in connection with the Halifax mortgage files (with no material
exceptions to the results stated therein), dated the respective dates of
delivery thereof and addressed to the Underwriters, in form and substance
reasonably satisfactory to the Representatives.
(g) Legal Opinions. On or prior to the Closing Date, there having
been delivered to the Issuer, the Underwriters, the Note Trustee and the
Security Trustee copies of opinions and disclosure letters, in form and
substance reasonably satisfactory to the Representatives, the Note Trustee, the
Security Trustee and the Rating Agencies, dated the Closing Date, of:
(i) Allen & Overy, legal advisers as to English law and as to US
law to Halifax, Funding 1 and the Issuer, addressed to Halifax, the
Mortgages Trustee, Funding 1, the Issuer, the Underwriters, the Note
Trustee and the Security Trustee;
27
(ii) Mourant du Feu & Jeune, legal advisers as to Jersey law to
the Mortgages Trustee, addressed to the Mortgages Trustee, the
Underwriters, the Note Trustee and the Security Trustee;
(iii) Sidley Austin Brown & Wood, legal advisers as to English law
and as to US law to the Underwriters, addressed to the Underwriters;
(iv) In-house legal counsel of each Swap Provider (other than
Halifax), addressed to the Underwriters, the Issuer and Halifax; and
(v) In-house legal counsel of the Funding 1 Liquidity Facility
Provider addressed to the Underwriters, Funding 1, the Issuer and
Halifax.
(h) Rating Agency Letters. Each Underwriter shall have received
copies of letters from each Rating Agency stating that the Offered Notes are
rated as set forth in Schedule II hereto by the Rating Agencies either without
conditions or subject only to the execution and delivery on or before the
Closing Date of the Legal Agreements and legal opinions in all material
respects in the form in which they shall then have been executed and delivered
on or prior to the Closing Date.
(i) Execution of Legal Agreements and Global Issuer Notes. The
execution and delivery by all parties thereto of the Legal Agreements and the
Global Issuer Notes representing each class of the Offered Notes on or prior to
the Closing Date.
(j) Admission to Trading. The Offered Notes having been admitted to
the Official List maintained by UK Listing Authority and the London Stock
Exchange plc (the "Stock Exchange") having agreed to admission of the Offered
Notes to trading on or about the Closing Date.
(k) Certified Constitutional Documents. On or prior to the Closing
Date, there having been delivered to the Representatives on behalf of the
Underwriters a copy, certified by a duly authorized director or the company
secretary of, as applicable, the Issuer, Funding 1, the Mortgages Trustee and
Halifax of: (i) the Memorandum and Articles of Association of each of the
Issuer, Funding 1, the Mortgages Trustee and Halifax; (ii) the resolution of
the Board of Directors (or committee as appropriate) of each of the Issuer,
Funding 1, the Mortgages Trustee and Halifax authorizing the execution of this
Agreement and the other Legal Agreements and the entry into and performance of
the transactions contemplated thereby; and (iii) in respect of the Issuer, the
resolution of the Board of Directors of the Issuer authorising the issue of the
Notes and the entry into and performance of the transactions contemplated
thereby.
(l) Circumstances for Termination. On or prior to the Closing Date,
in the opinion of the Representatives, none of the circumstances described in
Section 7 having arisen.
(m) Other Issues. The Reg S Notes having been or being issued and
subscribed and paid for pursuant to the Subscription Agreement prior to or
contemporaneously with the issue, subscription and payment for the Offered
Notes hereunder.
(n) Mortgage Sale Agreement. All of the steps required by Clause 4
of the Mortgage Sale Agreement for the purposes of the assignment of a
Portfolio (as defined
28
therein) by the Mortgages Trustee from Halifax on October 3, 2003 and related
rights to be acquired from Halifax pursuant thereto having been taken.
(o) No Legal Impediment to Issuance. No action shall have been taken
and no statute, rule, regulation or order shall have been enacted, adopted or
issued by any Halifax Governmental Authority that would, as of the Closing
Date, prevent the issuance or sale of the Notes; and no injunction or order of
any federal, state or foreign court shall have been issued that would, as of
the Closing Date, prevent the issuance or sale of the Notes.
(p) Good Standing. The Representatives shall have received on and as
of the Closing Date satisfactory evidence of the good standing of the Mortgages
Trustee in its jurisdiction of organization from the appropriate Governmental
Authorities of such jurisdictions.
(q) Certificate of Note Trustee. The Note Trustee having furnished to
the Representatives a certificate stating that that part of the Registration
Statement which shall constitute the Statement of Eligibility and Qualification
(Form T-1) under the Trust Indenture Act of the Note Trustee did not or will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading.
(r) Additional Documents. On or prior to the Closing Date, the
Issuer, Funding 1, the Mortgages Trustee and Halifax shall have furnished to
the Representatives such further certificates and documents as any
Representative may reasonably request.
All opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory in all material respects to counsel for the Underwriters.
If any of the conditions specified in this Section 4 have not been
fulfilled in all material respects when and as provided in this Agreement, or
if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be reasonably satisfactory in all material respects in form
and substance to the Representatives, this Agreement and all obligations of the
Underwriters hereunder may be cancelled at, or at any time prior to, the
Closing Date by the Representatives. Notice of such cancellation shall be
given to the Issuer, Funding 1, the Mortgages Trustee and Halifax in writing or
by telephone or facsimile confirmed in writing.
The Representatives, on behalf of the Underwriters, may, in their
discretion, waive compliance with the whole or any part of this Section 4.
5. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Issuer (in respect
of itself only), Funding 1 (in respect of itself only), the Mortgages Trustee
(in respect of itself only) and Halifax (in respect of itself, the Issuer,
Funding 1 and the Mortgages Trustee) agree to indemnify and hold harmless each
Underwriter, its affiliates and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, and their respective representatives, directors,
officers, employees
29
and agents, from and against any and all losses, claims, damages and
liabilities (including, without limitation, legal fees and other expenses
reasonably incurred in connection with investigating and defending any suit,
action or proceeding or any claim asserted), joint or several, caused by any
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (or any amendment or supplement
thereto) or any Preliminary Prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and
in conformity with information with respect to which each Underwriter has
agreed to indemnify the Issuer, Funding 1, the Mortgages Trustee and Halifax
pursuant to Section 5(b); provided further, that with respect to any such
untrue statement in or omission from any Preliminary Prospectus or Prospectus,
the indemnity agreement contained in this paragraph (a) shall not inure to the
benefit of any Underwriter to the extent that the sale to the person asserting
any such loss, claim, damage or liability was an initial resale by such
Underwriter and any such loss, claim, damage or liability of or with respect to
such Underwriter results from the fact that both (i) a copy of the Prospectus,
as amended or supplemented (for purposes of this Section 5, the "Final
Prospectus") was not sent or given to such person at or prior to the written
confirmation of the sale of such Offered Notes to such person and (ii) the
untrue statement in or omission from such Preliminary Prospectus was corrected
in the Final Prospectus and such corrected Final Prospectus was delivered to
such Underwriter in time so that such delivery of such Final Prospectus can
take place at or prior to the delivery of the written confirmation of such sale
unless, in either case, such failure to deliver the Final Prospectus was a
result of non-compliance by the Issuer, Funding 1, the Mortgages Trustee or
Halifax with the provisions of Section 3 hereof; provided further that the
references to the Registration Statement, the Preliminary Prospectus and the
Prospectus in the first part of this sentence up to but excluding the first
proviso (1) shall exclude the sections therein having the headings, "The issuer
swap providers" or "The Funding 1 liquidity facility provider", (2) shall
exclude the Information Provided by the Managers (as defined in the
Subscription Agreement) in the section having the heading "Subscription and
sale", and (3) shall exclude the Information Provided by the Underwriters (as
defined in Section 5(b) below) in the section having the heading
"Underwriting".
No Underwriter or controlling person of any Underwriter shall have any
duty or obligation, whether as fiduciary for any Indemnified Person (as defined
in Section 5(c)) or otherwise, to recover any such payment or to account to any
other person for any amounts paid to it under this Section 5(a).
The foregoing shall be subject to the following:
(i) Any right which at any time the Mortgages Trustee has under
the existing or future laws of Jersey whether by virtue of the droit de
discussion or otherwise to require that recourse be had to the assets of
any other person before any claim is enforced against such person in
respect of the obligations hereby assumed by such person is hereby
abandoned and waived.
(ii) The Mortgages Trustee undertakes that if at any time any
person indemnified sues the Mortgages Trustee in respect of any such
obligations and the person in respect of whose obligations the indemnity
is given is not sued also, the Mortgages Trustee shall not claim that
such person be made a party to the proceedings
30
and agrees to be bound by this indemnity whether or not it is made a
party to legal proceedings for the recovery of the amount due or owing to
the person indemnified, as aforesaid, by the person in respect of whose
obligations the indemnity is given and whether the formalities required
by any law of Jersey whether existing or future in regard to the rights
or obligations of sureties shall or shall not have been observed.
(iii) Any right which the Mortgages Trustee may have under the
existing or future laws of Jersey whether by virtue of the droit de
division or otherwise to require that any liability under this indemnity
be divided or apportioned with any other person or reduced in any manner
whatsoever is hereby abandoned and waived.
(b) Indemnification of the Issuer, Funding 1, the Mortgages Trustee
and Halifax. Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Issuer, Funding 1 and the Mortgages Trustee, each of
their directors, each of their officers who signed the Registration Statement,
Halifax and each person, if any, who controls the Issuer, Funding 1, Halifax or
the Mortgages Trustee within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or
liabilities caused by any untrue statement or omission of a material fact or
alleged untrue statement or omission of a material fact made in reliance upon
and in conformity with any information furnished to the Issuer, Funding 1, the
Mortgages Trustee or Halifax in writing by such Underwriter through the
Representatives expressly for use in the Registration Statement and the
Prospectus (or any amendment or supplement thereto) or any Preliminary
Prospectus. The Issuer, Funding 1, the Mortgages Trustee and Halifax
acknowledge that the statements set forth under the heading "Underwriting" that
specify, (i) the list of Underwriters and their respective participation in the
sale of the Offered Notes, (ii) the sentences related to concessions and
reallowances and (iii) the paragraph related to short sales, stabilization,
short covering transactions and penalty bids in any Preliminary Prospectus and
the Prospectus constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in any Preliminary Prospectus
or the Prospectus (such statements being the "Information Provided by the
Underwriters").
(c) Notice and Procedures. If any suit, action, proceeding (including
any governmental or regulatory investigation), claim or demand shall be brought
or asserted against any person in respect of which indemnification may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"Indemnified Person") shall promptly notify the person against whom such
indemnification may be sought (the "Indemnifying Person") in writing; provided
that the failure to notify the Indemnifying Person shall not relieve it from
any liability that it may have under this Section 5 except to the extent that
it has been materially prejudiced (through the forfeiture of substantive rights
or defences) by such failure; and provided, further, that the failure to notify
the Indemnifying Person shall not relieve it from any liability that it may
have to an Indemnified Person otherwise than under this Section 5. If any such
proceeding shall be brought or asserted against an Indemnified Person and it
shall have notified the Indemnifying Person thereof, the Indemnifying Person
shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others entitled to indemnification
pursuant to this Section 5 that the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
31
Person and the Indemnified Person shall have mutually agreed to the contrary;
(ii) the Indemnifying Person has failed within a reasonable time to retain
counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal
defences available to it that are different from or in addition to those
available to the Indemnifying Person; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood and agreed that the Indemnifying
Person shall not, in connection with any proceeding or related proceeding in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Indemnified Persons,
and that all such fees and expenses shall be reimbursed as they are incurred.
Any such separate firm for any Underwriter, its affiliates and any control
persons of such Underwriter shall be designated in writing by the
Representatives and any such separate firms for the Issuer, Funding 1, the
Mortgages Trustee, each of their directors or officers who signed the
Registration Statement, Halifax and any control persons of the Issuer, Funding
1 and the Mortgages Trustee shall be designated in writing by the Issuer,
Funding 1, the Mortgages Trustee or Halifax, as the case may be. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested that an Indemnifying
Person reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by the Indemnifying
Person of such request and (ii) the Indemnifying Person shall not have either
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement or objected to such request in writing prior to the
date of such settlement. No Indemnifying Person shall, without the written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding and (y) does not include any statement as to
or any admission of fault, culpability or a failure to act by or on behalf of
any Indemnified Person.
(d) Contribution. If the indemnification provided for in paragraphs
(a) and (b) above is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, severally agrees to contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Issuer, Funding 1, the Mortgages Trustee and
Halifax on the one hand and the Underwriters on the other from the offering of
the Offered Notes or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) but also the relative
fault of the Issuer, Funding 1, the Mortgages Trustee and Halifax on the one
hand and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable
32
considerations. The relative benefits received by the Issuer, Funding 1, the
Mortgages Trustee and Halifax on the one hand and the Underwriters on the other
shall be deemed to be in the same respective proportions as the net proceeds
(before deducting expenses) received by the Issuer from the sale of the Offered
Notes and the total underwriting discounts and commissions received by the
Underwriters in connection therewith, in each case as set forth in the table on
the cover of the Prospectus, bear to the aggregate offering price of the
Offered Notes. The relative fault of the Issuer, Funding 1, the Mortgages
Trustee and Halifax on the one hand and the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Issuer, Funding 1,
the Mortgages Trustee, Halifax or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) Limitation on Liability. The Issuer, Funding 1, the Mortgages
Trustee, Halifax and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an Indemnified Person as a result of the losses, claims, damages
and liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
incurred by such Indemnified Person in connection with any such action or
claim. Notwithstanding the provisions of this Section 5, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total underwriting discounts and commissions received by such
Underwriter with respect to the offering of the Offered Notes exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 5 are several
in proportion to their respective purchase obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section
5 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Person at law or in equity.
6. Effectiveness of Agreement. This Agreement shall become effective
upon the execution and delivery hereof by the parties hereto.
7. Termination. This Agreement may be terminated by the
Representatives by notice to the Issuer, Funding 1, the Mortgages Trustee and
Halifax, if after the execution and delivery of this Agreement and prior to the
Closing Date:
(a) (i) trading generally shall have been suspended or materially
limited on or by any of the New York Stock Exchange or the over-the-counter
market; (ii) a general moratorium on commercial banking activities shall have
been declared by federal or New York State authorities; or (iii) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis, either within or outside the
United States, that in the judgment of the Representatives is material and
adverse and makes it impracticable to proceed with the offering, sale or
delivery of the Offered Notes
33
on the terms and in the manner contemplated by this Agreement and the
Prospectus or which in the view of the Representatives has caused a material
deterioration in the price and/or value of the Notes; or
(b) if there shall have come to the notice of the Underwriters any
breach of, or any event rendering untrue or incorrect in any material respect,
any of the warranties and representations contained in Section 2 (or any deemed
repetition thereof) or failure to perform any of the Issuer's or Halifax's
covenants or agreements in this Agreement in any material respect; or
(c) if any condition specified in Section 4 has not been satisfied or
waived by the Representatives on behalf of the Underwriters; or
(d) the Subscription Agreement is terminated.
If this Agreement shall be terminated pursuant to Clause 7 hereof, this
Agreement shall terminate and be of no further effect and no party hereto shall
be under any liability to any other in respect of this Agreement except that
(a) the Issuer, shall remain liable under Clause 10 for the payment of costs
and expenses already incurred or incurred in consequence of such termination,
and if the Issuer shall not pay such costs and expenses, Funding 1, the
Mortgages Trustee and Halifax shall be liable for the payment of such costs and
expenses already incurred or incurred in consequence of such termination for
which the Issuer was liable under Clause 10, (b) the parties hereto shall
remain liable under the indemnity agreement and contribution provisions set
forth in Clause 5 and in respect of accrued liabilities and (c) the
representations and agreements of the Underwriters made in Clause 1(h) of this
Agreement, which would have continued in accordance with Clause 12 had the
arrangements for the underwriting and issue of the Notes been completed, shall
so continue.
8. Listing.
(a) Application for Listing. The Issuer confirms that it has
authorized the Representatives to make or cause to be made at the Issuer's
expense applications on the Issuer's behalf for the Offered Notes to be
admitted to the Official List of the UK Listing Authority and for the Notes to
be admitted to trading on the Stock Exchange.
(b) Supply of Information. The Issuer agrees to supply to the
Representatives for delivery to the UK Listing Authority and the Stock Exchange
copies of the Prospectus and such other documents, information and undertakings
as may be required for the purpose of obtaining such listing.
(c) Maintenance of Listing. The Issuer agrees to use its reasonable
endeavours to maintain a listing of the Offered Notes on the Official List of
the UK Listing Authority and the admission of the Notes to trading on the Stock
Exchange for as long as any of the Offered Notes are outstanding and to pay all
fees and supply all further documents, information and undertakings and publish
all advertisements or other material as may be necessary for such purpose.
However, if such listing becomes impossible, the Issuer will obtain, and will
thereafter use its best endeavours to maintain, a quotation for, or listing of,
the Offered Notes on or by such other stock exchange, competent listing
authority and/or quotation system as is commonly used for the quotation or
listing of debt securities as it may, with the approval of the Representatives
(such approval not to be unreasonably withheld or delayed), decide.
34
9. Defaulting Underwriter.
(a) If, on the Closing Date, any Class A Underwriter defaults on its
obligation to purchase the Class A Offered Notes that it has agreed to purchase
hereunder, the non-defaulting Class A Underwriters may in their discretion
arrange for the purchase of such Class A Offered Notes by other persons
satisfactory to the Issuer on the terms contained in this Agreement. If,
within 36 hours after any such default by any Class A Underwriter, the non-
defaulting Class A Underwriters do not arrange for the purchase of such Class A
Offered Notes, then the Issuer shall be entitled to a further period of 36
hours within which to procure other persons to purchase such Class A Offered
Notes on such terms. If other persons become obligated or agree to purchase
the Class A Offered Notes of a defaulting Class A Underwriter, either the non-
defaulting Class A Underwriters or the Issuer may postpone the Closing Date for
up to five full business days in order to effect any changes that in the
opinion of counsel for the Issuer or counsel for the Class A Underwriters may
be necessary in the Registration Statement and the Prospectus or in any other
document or arrangement, and the Issuer agrees to promptly prepare any
amendment or supplement to the Registration Statement and the Prospectus that
effects any such changes.
If, on the Closing Date, a Class B/C Joint Lead Underwriter defaults on
its obligation to purchase the Class B/C Offered Notes that it has agreed to
purchase hereunder, the non-defaulting Class B/C Joint Lead Underwriter may in
its discretion arrange for the purchase of such Class B/C Offered Notes by
other persons satisfactory to the Issuer on the terms contained in this
Agreement. If, within 36 hours after any such default by a Class B/C Joint
Lead Underwriter, the non-defaulting Class B/C Joint Lead Underwriter does not
arrange for the purchase of such Class B/C Offered Notes, then the Issuer shall
be entitled to a further period of 36 hours within which to procure other
persons to purchase such Class B/C Offered Notes on such terms. If other
persons become obligated or agree to purchase the Class B/C Offered Notes of a
defaulting Class B/C Joint Lead Underwriter, either the non-defaulting Class
B/C Joint Lead Underwriter or the Issuer may postpone the Closing Date for up
to five full business days in order to effect any changes that in the opinion
of counsel for the Issuer or counsel for the Class B/C Joint Lead Underwriters
may be necessary in the Registration Statement and the Prospectus or in any
other document or arrangement, and the Issuer agrees to promptly prepare any
amendment or supplement to the Registration Statement and the Prospectus that
effects any such changes.
As used in this Agreement, the terms "Class A Underwriter" and
"Underwriter" include, for all purposes of this Agreement unless the context
otherwise requires, any person not listed in Schedule I hereto that, pursuant
to this Section 9, purchases Class A Offered Notes that a defaulting Class A
Underwriter agreed but failed to purchase. As used in this Agreement, the
terms "Class B/C Joint Lead Underwriter" and "Underwriter" include, for all
purposes of this Agreement unless the context otherwise requires, any person
not listed in Schedule I hereto that, pursuant to this Section 9, purchases
Class B/C Offered Notes that a defaulting Class B/C Joint Lead Underwriter
agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of
the Class A Offered Notes of a defaulting Class A Underwriter or Class A
Underwriters by the non-defaulting Class A Underwriters and the Issuer as
provided in paragraph (a) above, the aggregate principal amount of such Class A
Offered Notes that remains unpurchased does not exceed ten percent of the
aggregate principal amount of all the Offered Notes, then the Issuer shall have
the right to require each non-defaulting Class A Underwriter to purchase the
principal amount of Class A Offered Notes that such Class A Underwriter agreed
to purchase
35
hereunder plus such Class A Underwriter's pro rata share (based on the
principal amount of Class A Offered Notes that such Class A Underwriter agreed
to purchase hereunder) of the Class A Offered Notes of such defaulting Class A
Underwriter or Class A Underwriters for which such arrangements have not been
made.
If, after giving effect to any arrangements for the purchase of
the Class B/C Offered Notes of a defaulting Class B/C Joint Lead Underwriter by
the non-defaulting Class B/C Joint Lead Underwriter and the Issuer as provided
in paragraph (a) above, the aggregate principal amount of such Class B/C
Offered Notes that remains unpurchased does not exceed ten percent of the
aggregate principal amount of all the Offered Notes, then the Issuer shall have
the right to require the non-defaulting Class B/C Joint Lead Underwriter to
purchase the principal amount of Class B/C Offered Notes that such Class B/C
Joint Lead Underwriter agreed to purchase hereunder plus the Class B/C Offered
Notes of the defaulting Class B/C Joint Lead Underwriter for which such
arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of
the Class A Offered Notes of a defaulting Class A Underwriter or Class A
Underwriters by the non-defaulting Class A Underwriters and the Issuer as
provided in paragraph (a) above, the aggregate principal amount of such Class A
Offered Notes that remains unpurchased exceeds ten percent of the aggregate
principal amount of all the Offered Notes, or if the Issuer shall not exercise
the right described in paragraph (b) above, then this Agreement shall terminate
without liability on the part of the non-defaulting Class A Underwriters or the
Issuer, except that the Issuer will continue to be liable for the payment of
expenses as set forth in Section 10 hereof and except that the provisions of
Section 5 hereof shall not terminate and shall remain in effect.
If, after giving effect to any arrangements for the purchase of
the Class B/C Offered Notes of the defaulting Class B/C Joint Lead Underwriter
by the non-defaulting Class B/C Joint Lead Underwriter and the Issuer as
provided in paragraph (a) above, the aggregate principal amount of such Class
B/C Offered Notes that remains unpurchased exceeds ten percent of the aggregate
principal amount of all the Offered Notes, or if the Issuer shall not exercise
the right described in paragraph (b) above, then this Agreement shall terminate
without liability on the part of the non- defaulting Class B/C Joint Lead
Underwriter or the Issuer, except that the Issuer will continue to be liable
for the payment of expenses as set forth in Section 10 hereof and except that
the provisions of Section 5 hereof shall not terminate and shall remain in
effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Issuer or any non-defaulting Underwriter for
damages caused by its default.
10. Payment of Expenses.
(a) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Issuer will pay or cause to be
paid the following (together with (i) in respect of taxable supplies made to
the Issuer, any amount in respect of value added tax or similar tax payable in
respect thereof against production of a
36
valid tax invoice and (ii) in respect of taxable supplies made to a person
other than the Issuer, any amount in respect of Irrecoverable VAT (for the
purposes of this Agreement "Irrecoverable VAT" means any amount in respect of
VAT incurred by a party to the Transaction Documents (for the purposes of this
definition, a "Relevant Party") as part of a payment in respect of which it is
entitled to be indemnified under the relevant Transaction Documents to the
extent that the Relevant Party does not or will not receive and retain a credit
or repayment of such VAT as input tax (as that expression is defined in section
24(1) of the Value Added Tax Act 1994) for the prescribed accounting period (as
that expression is used in section 25(1) of the Value Added Tax Act 1994) to
which such input tax relates) or similar tax payable in respect thereof against
production of a valid tax invoice): (i) the costs of the Issuer incident to the
authorization, issuance, preparation and delivery of the Notes; (ii) the costs
incident to the preparation, printing and filing under the Securities Act of
the Registration Statement, the Preliminary Prospectus and the Prospectus
(including all exhibits, amendments and supplements thereto) and the
distribution thereof; (iii) the costs of the preparation and execution of the
Legal Agreements and any other relevant documents and the issue of the Offered
Notes and compliance with the Conditions of the Offered Notes, including the
reproduction and distribution thereof; (iv) the fees and expenses of counsel to
the Issuer, Funding 1, the Mortgages Trustee and the independent accountants;
(v) the fees and expenses incurred in connection with the registration or
qualification and determination of eligibility for investment of the Offered
Notes under such United States state securities, Blue Sky or similar laws as
the Representatives may designate and the preparation, printing and
distribution of a Blue Sky Memorandum (including the related fees and expenses
of counsel for the Underwriters); (vi) any fees charged by Rating Agencies for
rating the Offered Notes and annual fees in connection with such rating or any
other rating from the Rating Agencies for the Offered Notes; (vii) the fees and
expenses of the Note Trustee, the Security Trustee, the US Paying Agent, Agent
Bank, any paying agent in connection with the preparation and execution of the
Legal Agreements and any other relevant documents and the issue of the Offered
Notes and compliance with the Conditions of the Offered Notes (including
related fees and expenses of any counsel to the Note Trustee and the Security
Trustee) and the initial fees and expenses of The Depository Trust Company in
relation to the Offered Notes (excluding any such fees and expenses arising as
a result of any transfer of the Offered Notes); (viii) all expenses and
application fees incurred in connection with any filing with the National
Association of Securities Dealers, Inc.; (ix) the fees and expenses payable in
connection with obtaining and maintaining the admission to trading of the
Offered Notes on the Stock Exchange; (x) all out-of-pocket expenses (excluding
legal expenses) incurred by the Representatives on behalf of the Underwriters
in connection with the transactions contemplated hereby; (xi) all expenses
incurred by the Representatives in connection with any "road show" presentation
to potential investors; and (xii) any amount in respect of fees and
disbursements of the Underwriters' counsel, subject to any agreed limit or cap
on fees.
(b) The Issuer will reimburse the Underwriters for all amounts in
connection with the issue of the Notes which it has agreed to pay pursuant to
Section 10(a).
(c) For the avoidance of doubt, references to costs and expenses in
this Agreement shall be deemed to include, in addition, references to any
irrecoverable UK value added tax payable in respect of such costs and expenses.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Issuer, Funding 1, the
Mortgages Trustee, each of their officers and directors and any controlling
persons referred to herein, Halifax, the
37
Underwriters, their respective affiliates and any controlling persons referred
to herein, and their respective successors. Nothing in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein. No purchaser of Offered Notes from any Underwriter shall be
deemed to be a successor merely by reason of such purchase.
12. Survival.
(a) The respective indemnities, rights of contribution,
representations, warranties and agreements of the Issuer, Funding 1, the
Mortgages Trustee, Halifax and the Underwriters contained in this Agreement or
made by or on behalf of the Issuer, Funding 1, the Mortgages Trustee, Halifax
or the Underwriters pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Offered Notes
and shall remain in full force and effect, regardless of any investigation made
by or on behalf of the Issuer, Funding 1, the Mortgages Trustee, Halifax or the
Underwriters.
(b) Save for their respective responsibilities to comply with relevant
representations and warranties set forth herein, neither the Issuer, Funding 1,
the Mortgages Trustee nor Halifax shall have any responsibility in respect of
the legality of the Underwriters or other persons offering and selling the
Notes in any jurisdiction or in respect of the Notes qualifying for sale in any
jurisdiction.
13. Certain Defined Terms. For purposes of this Agreement, (a) except
where otherwise expressly provided, the term "affiliate" has the meaning set
forth in Rule 405 under the Securities Act; (b) the term "business day" (unless
otherwise indicated to be a London Business Day) means any day other than a day
on which banks are permitted or required to be closed in New York City; and (c)
the term "subsidiary" has the meaning set forth in Rule 405 under the
Securities Act.
14. Miscellaneous.
(a) Authority of the Representatives. Any action by the Underwriters
hereunder may be taken by the Representatives on behalf of the Underwriters,
and any such action taken by the Representatives shall be binding upon the
Underwriters.
(b) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed or transmitted
and confirmed by any standard form of telecommunication in accordance with the
following information (all notices to the Class A Underwriters shall be given
to the Class A Representatives):
(i) Class A Representatives
Citigroup Global Markets Limited
Citigroup Centre
Canada Square
London E14 5LB
(Fax: +44 (0)20 7986 4740)
Attention: Debt Syndicate Desk
Credit Suisse First Boston (Europe) Limited
One Cabot Square
38
London E14 4QJ
(Fax: +44 (0)20 7888 3719)
(Telephone: +44 (0)20 7888 3719)
Attention: Syndicate Desk
with a copy in each case to:
Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010
(Fax: (212) 325 8278)
Attention: Transaction Advisory Group
and
UBS Securities LLC
1285 Avenue of the Americas
New York, New York 10019
(Fax: [ ])
Attention: [ ]
(ii) Class B/C Joint Lead Underwriters
Citigroup Global Markets Limited
Citigroup Centre
Canada Square
London E14 5LB
(Fax: +44 (0)20 7986 4740)
Attention: Debt Syndicate Desk
and
Credit Suisse First Boston (Europe) Limited
One Cabot Square
London E14 4QJ
(Fax: +44 (0)20 7888 3719)
Attention: Syndicate Desk
(iii) Issuer
Blackwell House
Guildhall Yard
London EC2V 5AE
(Fax: 020 7556 0975)
Attention: The Directors
(iv) Funding 1
Blackwell House
Guildhall Yard
London EC2V 5AE
(Fax: 020 7556 0975)
Attention: The Directors
39
(v) Mortgages Trustee
47 Esplanade
St. Helier
Jersey JE1 0BD
(Fax: 01534 726391)
Attention: The Directors
(vi) Halifax
Trinity Road
Halifax (LP/3/3/SEC)
West Yorkshire
HX1 2RG
(Fax: 020 7574 8784)
Attention: Tracey Hill
(c) Appointment of Process Agent.
Each of the Issuer, Funding 1, the Mortgages Trustee and Halifax hereby
designates and appoints CT Corporation, New York, New York (the "Process
Agent"), as its authorized agent, upon whom process may be served in any legal
suit, action or proceeding based on or arising under or in connection with this
Agreement, it being understood that the designation and appointment of CT
Corporation, New York, New York as such authorized agent shall become effective
immediately without any further action on the part of the Issuer, Funding 1,
the Mortgages Trustee or Halifax, as applicable. Such appointment shall be
irrevocable to the extent permitted by applicable law and subject to the
appointment of a successor agent in the United States on terms substantially
similar to those contained in this Section 14(c) and reasonably satisfactory to
the Representatives. If the Process Agent shall cease to act as agent for
service of process, the Issuer, Funding 1, the Mortgages Trustee and Halifax
shall appoint, without unreasonable delay, another such agent, and notify the
Representatives of such appointment. Each of the Issuer, Funding 1, the
Mortgages Trustee and Halifax represents to the Underwriters that it has
notified the Process Agent of such designation and appointment and that the
Process Agent has accepted the same in writing and the Issuer, Funding 1, the
Mortgages Trustee and Halifax hereby authorize and direct the Process Agent to
accept such service. Each of the Issuer, Funding 1, the Mortgages Trustee and
Halifax further agree that service of process upon the Process Agent and
written notice of that service to it shall be deemed in every respect effective
service of process upon it in any such legal suit, action or proceeding.
Nothing in this Section 14(c) shall affect the right of any Underwriter or any
person controlling any Underwriter to serve process in any other manner
permitted by law.
(d) Consent to Jurisdiction. Each of the parties hereto submits to
the non-exclusive jurisdiction of the federal and state courts in the Borough
of Manhattan in The City of New York in any suit or proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby.
(e) Foreign Taxes. All payments to be made by the Issuer, Funding 1,
the Mortgages Trustee and Halifax hereunder shall be made without withholding
or deduction for or on account of any present or future taxes, duties or
governmental charges, excluding for the purposes of this Section 14(e), (a) any
taxes which are payable as a consequence of any Underwriter having a necessary
connection with the relevant taxing jurisdiction and (b) any
40
income or franchise tax on the overall net income of such Underwriter imposed
by the United States or the State of New York (all such non-excluded taxes,
duties or charges, "Foreign Taxes"), unless the Issuer, Funding 1, the
Mortgages Trustee or Halifax, as applicable, is compelled by law to deduct or
withhold such Foreign Taxes. In that event, the Issuer, Funding 1, the
Mortgages Trustee or Halifax, as applicable, shall pay such additional amounts
as may be necessary in order that the net amounts received after such
withholding or deduction shall equal the amounts that would have been received
if no withholding or deduction had been made.
(f) Judgment Currency. If any judgment or order in any legal
proceeding against any of the Issuer, Funding 1, the Mortgages Trustee or
Halifax is given or made for any amount due hereunder and such judgment or
order is expressed and paid in a currency (the "Judgment Currency") other than
United States dollars and there is any variation as between (i) the rate of
exchange (the "Judgment Rate") at which the United States dollar amount is
converted into the Judgment Currency for the purpose of such judgment or order,
and (ii) the rate of exchange (the "Market Rate") at which the person to whom
such amounts is paid (the "Payee") is able to purchase United States dollars
with the amount of the Judgment Currency actually received by the holder, then
the difference, expressed in United States dollars, between such amount
calculated at the Judgment Rate and such amount calculated at the Market Rate
shall be indemnified (a) if negative by the Issuer, Funding 1, the Mortgages
Trustee or Halifax, as applicable, to the Payee and (b) if positive by the
Payee to the Issuer, Funding 1, the Mortgages Trustee or Halifax, as
applicable. The foregoing indemnity shall constitute a separate and
independent obligation of the Issuer, Funding 1, the Mortgages Trustee, Halifax
and/or the Payee, as the case may be, and shall continue in full force and
effect notwithstanding any such judgment or order as aforesaid. The term "rate
of exchange" shall include any premiums and costs of exchange payable in
connection with the purchase of, or conversion into, the relevant currency.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
(h) Counterparts. This Agreement may be signed in counterparts (which
may include counterparts delivered by any standard form of telecommunication),
each of which shall be an original and all of which together shall constitute
one and the same instrument.
(i) Amendments or Waivers. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto.
(j) Headings. The headings herein are included for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
41
If the foregoing is in accordance with your understanding, please
indicate your acceptance of this Agreement by signing in the space provided
below.
Very truly yours,
PERMANENT FINANCING (NO. 3) PLC
By ___________________
Name:
Title:
PERMANENT FUNDING (NO.1) LIMITED
By ___________________
Name:
Title:
PERMANENT MORTGAGES TRUSTEE LIMITED
By ___________________
Name:
Title:
HALIFAX plc
By ___________________
Name:
Title:
Accepted: November [ ], 2003
CITIGROUP GLOBAL MARKETS LIMITED
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
UBS SECURITIES LLC
By: Credit Suisse First Boston (Europe) Limited
By ___________________
Authorized Signatory
For themselves and as Representatives of
the other several Underwriters listed
in Schedule I hereto.
42
SCHEDULE I
AGGREGATE INITIAL PRINCIPAL AMOUNT
OF CERTIFICATES TO BE PURCHASED
Series 1 Series 2 Series 3
Class A Class A Class A
Issuer Notes Issuer Notes Issuer Notes
Class A Representatives and Class A Underwriters:
Citigroup Global Markets Limited $[ ] $[ ] $[ ]
Credit Suisse First Boston (Europe) Limited $[ ] $[ ] $[ ]
UBS Securities LLC
Class A Underwriters:
J.P. Morgan Securities Inc. $[ ] $[ ] $[ ]
Morgan Stanley & Co. International Limited $[ ] $[ ] $[ ]
Series 1 Series 2 Series 3
Class B Class B Class B
Issuer Notes Issuer Notes Issuer Notes
Class B/C Joint Lead Underwriters:
Citigroup Global Markets Limited $[ ] $[ ] $[ ]
Credit Suisse First Boston (Europe) Limited $[ ] $[ ] $[ ]
43
SCHEDULE II
OFFERED NOTES RATING
Designation Standard & Poor's Moody's Fitch
Series 1 Class A Issuer Notes A-1+ P-1 F1+
Series 1 Class B Issuer Notes AA Aa3 AA
Series 1 Class C Issuer Notes BBB Baa2 BBB
Series 2 Class A Issuer Notes AAA Aaa AAA
Series 2 Class B Issuer Notes AA Aa3 AA
Series 2 Class C Issuer Notes BBB Baa2 BBB
Series 3 Class A Issuer Notes AAA Aaa AAA
Series 3 Class B Issuer Notes AA Aa3 AA
Series 3 Class C Issuer Notes BBB Baa2 BBB
44