DRAFT (2): 26.02.04
SERIES [2/4] CLASS [A/B/M[/C]]
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of {circle}, 2004
between
(1) CITIBANK, N.A., ACTING THROUGH ITS LONDON BRANCH ("PARTY A");
(2) PERMANENT FINANCING (NO. 4) PLC ("PARTY B"); and
(3) THE BANK OF NEW YORK (the "SECURITY TRUSTEE", which expression will
include its successors and assigns and which has agreed to become a
party to this Agreement solely for the purpose of taking the benefit of
Parts 5(b) and 5(l) of this Schedule and assuming the obligations under
[Part 5(s) and] the final paragraph of Part 5(f) of this Schedule).
Part 1. TERMINATION PROVISIONS
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:-
Section 5(a)(v), none
Section 5(a)(vi), none
Section 5(a)(vii), none
Section 5(b)(iv), none
and in relation to Party B for the purpose of:-
Section 5(a)(v), none
Section 5(a)(vi), none
Section 5(a)(vii), none
Section 5(b)(iv), none
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14 of
this Agreement.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi), will not apply to
Party A and will not apply to Party B.
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(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will not
apply to Party A and will not apply to Party B.
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not
apply to Party A and will not apply to Party B.
(f) PAYMENTS ON EARLY TERMINATION. For the purposes of Section 6(e) of this
Agreement:-
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means Sterling.
(h) "ADDITIONAL TERMINATION EVENT" will apply. In addition to the Additional
Termination Events set forth in Parts 5(f)(iv) and 5(f)(vi) of this
Schedule, the following will each constitute an Additional Termination
Event:
(i) The Additional Tax Representation (as defined in Part 2(b) of this
Schedule), proves to have been incorrect or misleading in any
material respect with respect to one or more Transactions (each an
"AFFECTED TRANSACTION" for the purpose of this Additional
Termination Event) when made or repeated or deemed to have been
made or repeated. For the purpose of the foregoing Termination
Event, the Affected Party will be Party A only.
(ii) A redemption or purchase of the Series [2/4] Class [A/B/M[/C]]
Fourth Issuer Notes occurs pursuant to Condition 5(F) (redemption
or purchase following a regulatory event) of the terms and
conditions thereof. For the purpose of the foregoing Termination
Event: (A) for the purpose of Section 6(b)(iv), both parties will
be Affected Parties; and (B) for the purpose of Section 6(e), the
Affected Party will be Party B only.
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Part 2. TAX REPRESENTATIONS
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this
Agreement, Party A and Party B each make the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
under this Agreement. In making this representation, it may rely on (i)
the accuracy of any representations made by the other party pursuant to
Section 3(f) of this Agreement, (ii) the satisfaction of the agreement
contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the
accuracy and effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the
satisfaction of the agreement of the other party contained in Section
4(d) of this Agreement, except that it will not be a breach of this
representation where reliance is placed on clause (ii) and the other
party does not deliver a form or document under Section 4(a)(iii) by
reason of material prejudice to its legal or commercial position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f) of the Agreement,
Party A makes the following representation (the "ADDITIONAL TAX
REPRESENTATION"):
(i) it is a party to each Transaction solely for the purposes of a
trade (or part of a trade) carried on by it in the United Kingdom
through a branch or agency; or
(ii) it is resident in the United Kingdom or in a jurisdiction with
which the United Kingdom has a double tax treaty which makes
provision, whether for relief or otherwise, in relation to
interest.
For the purpose of Section 3(f) of the Agreement, Party B does not make
any representation.
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Part 3. AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Sections 4(a)(i) and 4(a)(ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are: none
(b) Other documents to be delivered are:
PARTY REQUIRED COVERED BY
TO DELIVER FORM/DOCUMENT/ DATE BY WHICH SECTION 3(D)
DOCUMENT CERTIFICATE TO BE DELIVERED REPRESENTATION
Party A and Appropriate evidence of On signing of this Yes
Party B its signatory's authority Agreement
Party B Certified copy of On signing of this Yes
board resolution and Agreement
constitutional documents
Party A Legal opinion On signing of this No
Agreement
Party B Legal opinions from On signing of this No
Allen & Overy Agreement
Party B A copy of the annual Upon request, as soon Yes
report for such party as publicly available
containing audited or
certified financial
statements for the most
recently ended financial
year
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Part 4. MISCELLANEOUS
(a) ADDRESSES FOR NOTICES.
Notwithstanding the terms of Section 12(a) of this Agreement, notices
and other communications under Section 5 or 6 of this Agreement may be
given by facsimile transmission to the relevant facsimile number
specified below.
Address for notices or communications to Party A:
Address: Citibank, N.A.
Citigroup Centre
Canada Square
London E14 5LB
Attention: Head of Sales/Trading Legal Department
Facsimile No.: (+44 20) 7508 9115
With a copy to: {circle}
Address for notices or communications to Party B:
Address: Blackwell House
Guildhall Yard
London
EC2V 5AE
Attention: The Secretary
Facsimile No.: 020 7566 0975
With a copy to: (i) HBOS Treasury Services plc:
Address: 33 Old Broad Street
London
EC2N 1HZ
Attention: Head of Capital Markets and Securitisation
Facsimile No.: 020 7574 8784
(ii) the Security Trustee:
Address: The Bank of New York
One Canada Square
London
E14 5AL
Attention: Global Structured Finance - Corporate Trust
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Facsimile No.: 020 7964 6061/6399
(b) PROCESS AGENT. For the purpose of Section 13(c) of this Agreement:
Party A appoints as its Process Agent: None.
Party B appoints as its Process Agent: None.
(c) OFFICES. The provisions of Section 10(a) will apply to this Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:
In respect of Party A: None.
In respect of Party B: None.
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to
Party A, none.
Credit Support Provider means in relation to Party B, none.
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with English law.
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this Agreement
will apply to Transactions entered into under this Agreement unless
otherwise specified in a Confirmation.
(j) "AFFILIATE" will have the meaning specified in Section 14 of this
Agreement.
24
Part 5. OTHER PROVISIONS
(a) NO SET-OFF
(i) All payments under this Agreement will be made without set-off or
counterclaim, except as expressly provided for in Section 6.
(ii) Section 6(e) will be amended by the deletion of the following sentence:
"The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off."
(b) SECURITY INTEREST
Notwithstanding Section 7, Party A hereby agrees and consents to the assignment
by way of security by Party B of its interests under this Agreement (without
prejudice to, and after giving effect to, any contractual netting provision
contained in this Agreement) to the Security Trustee (or any successor thereto)
pursuant to and in accordance with the Fourth Issuer Deed of Charge and
acknowledges notice of such assignment. Each of the parties hereby confirms and
agrees that the Security Trustee will not be liable for any of the obligations
of Party B hereunder.
(c) DISAPPLICATION OF CERTAIN EVENTS OF DEFAULT
Section 5(a)(ii), Section 5(a)(iii), Section 5(a)(iv), Section 5(a)(v), Section
5(a)(vii)(2), (5), (6), (7) and (9) and Section 5(a)(viii) will not apply in
respect of Party B.
Section 5(a)(vii)(8) will not apply in respect of Party B to the extent that it
applies to Section 5(a)(vii)(2), (5), (6), (7) and (9).
(d) DISAPPLICATION OF CERTAIN TERMINATION EVENTS
The "Tax Event" and "Tax Event Upon Merger" provisions of Section 5(b)(ii) and
5(b)(iii) will not apply to Party A or to Party B.
(e) ADDITIONAL EVENT OF DEFAULT
The following will constitute an additional Event of Default with respect to
Party B:
"NOTE ACCELERATION NOTICE. A Note Acceleration Notice is served on Party B in
relation to the Series [2/4] Class [A/B/M[/C]] Fourth Issuer Notes."
(f) RATINGS EVENT
(i) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) or any Credit Support Provider
from time to time in respect of Party A cease to be rated at least as
high as ["A-1+"] by Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc. ("S&P") and, as a result of such cessation,
the then current rating of the Series [2/4] Class [A/B/M[/C]] Fourth
Issuer Notes is downgraded or placed under review for possible downgrade
by S&P (an "INITIAL S&P RATING EVENT"), then Party A will, within 30
days of the occurrence of such Initial S&P Rating Event, at its own cost
either:
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(A) put in place an appropriate mark-to-market collateral agreement
(which may be based on the credit support documentation published
by ISDA, or otherwise, and relates to collateral in the form of
cash or securities or both) in support of its obligations under
this Agreement provided that (x) the amount of collateral agreed to
be provided in the form of cash and/or securities (the "COLLATERAL
AMOUNT") will be determined on a basis which satisfies (but is no
more onerous than) the criteria of S&P published on 17th December,
2003, which enables entities rated lower than a specified level to
participate in structured finance transactions which, through
collateralisation are rated at a higher level (the "S&P CRITERIA"),
(y) the Collateral Amount will not be required to exceed such
amount as would be required (in accordance with the S&P Criteria)
to maintain or restore the rating of the Series [2/4] Class
[A/B/M[/C]] Fourth Issuer Notes at or to the level they would have
been at immediately prior to such Initial S&P Rating Event [and (z)
the enforceability of such collateral arrangement must be supported
by legal opinions with respect to each relevant jurisdiction
provided in a form reasonably acceptable to S&P within 30 days of
the occurrence of such Initial S&P Rating Event];
(B) transfer all of its rights and obligations with respect to this
Agreement to a replacement third party whose short-term, unsecured
and unsubordinated debt rating is at least ["A-1+"] from S&P or
such other rating as is commensurate with the rating assigned to
the Series [2/4] Class [A/B/M[/C]] Fourth Issuer Notes by S&P from
time to time;
(C) procure another person to become a co-obligor or guarantor in
respect of the obligations of Party A with respect to this
Agreement, provided that such guarantor or co-obligor has a
short-term, unsecured and unsubordinated debt rating of at least
["A-1+"] from S&P or such other rating as is commensurate with the
rating assigned to the Series [2/4] Class [A/B/M[/C]] Fourth Issuer
Notes by S&P from time to time; or
(D) take such other action as Party A may agree with S&P as will result
in the rating of the Series [2/4] Class [A/B/M[/C]] Fourth Issuer
Notes following the taking of such action being maintained at, or
restored to, the level it would have been at immediately prior to
such Initial S&P Rating Event.
If any of paragraphs (i)(B), (i)(C) or (i)(D) above are satisfied at any
time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (i)(A) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
(ii) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) or any Credit Support Provider
from time to time in respect of Party A cease to be rated at least as
high as ["A-3"]/1/ by S&P and, as a result of such downgrade, the then
current rating of the Series [2/4] Class [A/B/M[/C]] Fourth Issuer Notes
may in the reasonable opinion of S&P be downgraded or placed under
review for possible downgrade (such event, a "SUBSEQUENT S&P RATING
EVENT"), then Party A will, within 30 days of the occurrence of such
Subsequent S&P Rating Event, at its own cost either:
- ----------
/1/ Can Citibank use a long-term rating of "BBB-" instead?
26
(A) transfer all of its rights and obligations with respect to this
Agreement to a replacement third party whose short-term, unsecured
and unsubordinated debt rating is at least ["A-1+"] from S&P or
such other rating as is commensurate with the rating assigned to
the Series [2/4] Class [A/B/M[/C]] Fourth Issuer Notes by S&P from
time to time;
(B) take such other action as Party A may agree with S&P as will result
in the rating of the Series [2/4] Class [A/B/M[/C]] Fourth Issuer
Notes following the taking of such action being maintained at, or
restored to, the level it would have been at immediately prior to
such Subsequent S&P Rating Event[; or
(C) procure another person to become a co-obligor or guarantor in
respect of the obligations of Party A with respect to this
Agreement, provided that such co-obligor or guarantor has a
short-term, unsecured and unsubordinated debt rating of at least
["A-1+"] from S&P or such other rating as is commensurate with the
rating assigned to the Series [2/4] Class [A/B/M[/C]] Fourth Issuer
Notes by S&P from time to time],
and, if, at the time a Subsequent S&P Rating Event occurs, Party A has
provided collateral pursuant to a mark-to-market collateral arrangement
put in place pursuant to paragraph (i)(A) above following an Initial S&P
Rating Event, it will continue to post collateral notwithstanding the
occurrence of a Subsequent S&P Rating Event until such time as any of
paragraphs (ii)(A), (ii)(B) [or (ii)(C)] above have been satisfied.
If any of paragraphs (ii)(A), (ii)(B) or (ii)(C) above are satisfied at
any time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (i)(A) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
(iii) In the event that:
(A) the long-term, unsecured and unsubordinated debt obligations of
Party A (or its successor) or any Credit Support Provider in
respect of Party A cease to be rated at least as high as ["A1"] (or
its equivalent) by Moody's; or
(B) the short-term, unsecured and unsubordinated debt obligations of
Party A (or its successor) or any Credit Support Provider in
respect of Party A cease to be rated at least as high as
["Prime-1"] (or its equivalent) by Moody's,
and as a result of such downgrade the then current ratings of the Series
[2/4] Class [A/B/M[/C]] Fourth Issuer Notes may, in the reasonable
opinion of Moody's be downgraded or placed under review for possible
downgrade (such downgrade or placing under review for downgrade, an
"INITIAL MOODY'S RATING EVENT"), then Party A will, within 30 days of
the occurrence of such Initial Moody's Rating Event, on a reasonable
efforts basis and at its own cost attempt either to:
(1) transfer all of its rights and obligations with respect to this
Agreement to either (x) a replacement third party with the Moody's
Required Ratings (as defined below) domiciled in the same legal
jurisdiction as Party A or Party B, or (y) a replacement third
party in relation to whom Moody's has confirmed that there would be
no Initial Moody's Rating Event;
27
(2) procure another person to become co-obligor or guarantor in respect
of the obligations of Party A under this Agreement, which
co-obligor or guarantor may be either (x) a person with the Moody's
Required Ratings (as defined below) domiciled in the same legal
jurisdiction as Party A or Party B, or (y) a person in relation to
whom Moody's has confirmed that there would be no Initial Moody's
Rating Event;
(3) take such other action as Party A agrees with Moody's; or
(4) put in place a mark-to-market collateral agreement in a form and
substance acceptable to Moody's (which may be based on the credit
support documentation published by ISDA, or otherwise, and relates
to collateral in the form of cash or securities or both) in support
of its obligations under this Agreement which complies with the
Moody's Criteria (as defined below) or such other criteria relating
to the amount of collateral as may be agreed with Moody's.
If any of paragraphs (iii)(1), (iii)(2) or (iii)(3) above are satisfied
at any time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (iii)(4) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
(iv) In the event that:
(A) the long-term, unsecured and unsubordinated debt obligations of
Party A (or its successor) or any Credit Support Provider in
respect of Party A cease to be rated as high as ["A3"] (or its
equivalent) by Moody's; or
(B) the short-term, unsecured and unsubordinated debt obligations of
Party A (or its successor) or any Credit Support Provider in
respect of Party A cease to be rated as high as ["Prime-2"] (or its
equivalent) by Moody's,
(such cessation being a "SUBSEQUENT MOODY'S RATING EVENT"), then Party A
will:
(1) on a reasonable efforts basis within 30 days of the occurrence of
such Subsequent Moody's Rating Event, at its own cost, attempt
either to:
(aa) transfer all of its rights and obligations with respect to
this Agreement to either (x) a replacement third party with
the Moody's Required Ratings (as defined below) domiciled in
the same legal jurisdiction as Party A or Party B, or (y) a
replacement third party as agreed with Moody's;
(bb) procure another person to become co-obligor or guarantor in
respect of the obligations of Party A under this Agreement,
which co-obligor or guarantor may be either (x) a person with
the Moody's Required Ratings (as defined below) domiciled in
the same legal jurisdiction as Party A or Party B, or (y) such
other person as agreed with Moody's; or
(cc) take such other action as Party A agrees with Moody's; and
28
(2) within 10 days of the occurrence of such Subsequent Moody's Rating
Event, put in place, at its own cost, (or, if pursuant to paragraph
(ii)(4) above, Party A has not posted collateral within 30 days of
the occurrence of an Initial Moody's Rating Event, within 30 days
of the occurrence of such Subsequent Moody's Rating Event) pending
compliance with paragraph (iv)(1)(aa), (iv)(1)(bb) or (iv)(1)(cc)
above, a mark-to-market collateral agreement in a form and
substance acceptable to Moody's (which may be based on the credit
support documentation published by ISDA, or otherwise, and relates
to collateral in the form of cash or securities or both) in support
of its obligations under this Agreement which complies with the
Moody's Criteria (as defined below) or such other criteria relating
to the amount of collateral as may be agreed with Moody's, provided
that, if, at the time a Subsequent Moody's Rating Event occurs,
Party A has provided collateral pursuant to a mark-to-market
collateral arrangement put in place pursuant to paragraph (iii)(4)
above following an Initial Moody's Rating Event, it will continue
to post collateral notwithstanding the occurrence of a Subsequent
Moody's Rating Event.
If any of paragraphs (iv)(1)(aa), (bb) or (cc) above are satisfied at
any time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (iv)(2) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
For the purposes of paragraphs (iii) and (iv) of this Part 5(f),
"MOODY'S REQUIRED RATINGS" means, in respect of the relevant entity, its
short-term, unsecured and unsubordinated debt obligations are rated at
least as high as ["Prime-1"] and its long-term, unsecured and
unsubordinated debt obligations are rated at least as high as ["A1"], or
such other ratings as may be agreed with Moody's from time to time.
In relation to paragraphs (iii)(4) and (iv)(2) above, Party A will, upon
receipt of reasonable notice from Moody's demonstrate to Moody's the
calculation by Party A of the mark-to-market value of the outstanding
Transactions.
A failure by Party A to demonstrate the calculation will not be or give
rise to an Event of Default under Section 5(a)(ii) of this Agreement but
will constitute an Additional Termination Event with Party A as the sole
Affected Party and all Transactions as Affected Transactions.
["MOODY'S CRITERIA" means that the Collateral Amount will not exceed the
sum of (a) the product of A and the mark-to-market value of the
outstanding Transactions as determined by Party A in good faith on each
Local Business Day and (b) B multiplied by the product of (i) the
current aggregate notional amounts of the outstanding Transactions and
(ii) the weighted average life to maturity of such notional amounts,
where:
(1) "A" means 102% and "B" means [0.16%] if the long-term, unsecured
and unsubordinated debt obligations or the short-term, unsecured
and unsubordinated debt obligations of Party A (or its successor)
and any Credit Support Provider of Party A cease to be rated as
high as "A2" or "Prime-1" respectively by Moody's;
(2) "A" means 102% and "B" means [0.32%] if the long-term, unsecured
and unsubordinated debt obligations or the short-term, unsecured
and unsubordinated debt obligations of Party A (or its successor)
and any Credit
29
Support Provider of Party A cease to be rated as high as "A3" or
"Prime-2" respectively by Moody's; and
(3) "A" means 0% and "B" means 0% in all other cases.]
(v) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) or any Credit Support Provider
from time to time in respect of Party A cease to be rated at least as
high as ["F1"] (or its equivalent) by Fitch Ratings Ltd ("FITCH") and,
as a result of such cessation, the then current rating of the Series
[2/4] Class [A/B/M[/C]] Fourth Issuer Notes is downgraded or placed
under review for possible downgrade by Fitch (an "INITIAL FITCH RATING
EVENT") then Party A will, on a reasonable efforts basis within 30 days
of the occurrence of such Initial Fitch Rating Event, at its own cost,
either:
(A) put in place an appropriate mark-to-market collateral agreement
(which may be based on the credit support documentation published
by ISDA, or otherwise, and relates to collateral in the form of
cash or securities or both to be posted on a weekly basis) in
support of its obligations under this Agreement provided that (x)
the Collateral Amount will be determined on a basis which satisfies
(but is no more onerous than) the Fitch Criteria (as defined
below), and (y) the Collateral Amount will not be required to
exceed such amount as would be required (in accordance with the
Fitch Criteria) to maintain or restore the rating of the Series
[2/4] Class [A/B/M[/C]] Fourth Issuer Notes at or to the level it
would have been at immediately prior to such Initial Fitch Rating
Event;
(B) transfer all of its rights and obligations with respect to this
Agreement to a replacement third party whose short-term, unsecured
and unsubordinated debt rating is at least "F1" from Fitch or such
other rating as is commensurate with the rating assigned to the
Series [2/4] Class [A/B/M[/C]] Fourth Issuer Notes by Fitch from
time to time;
(C) procure another person to become a co-obligor or guarantor in
respect of the obligations of Party A with respect to this
Agreement, provided that such co-obligor or guarantor has a
short-term unsecured and unsubordinated debt rating of at least
"F1" from Fitch or such other rating as is commensurate with the
rating assigned to the Series [2/4] Class [A/B/M[/C]] Fourth Issuer
Notes by Fitch from time to time; or
(D) take such other action as Party A may agree with Fitch as will
result in the rating of the Series [2/4] Class [A/B/M[/C]] Fourth
Issuer Notes following the taking of such action being maintained
at, or restored to, the level it would have been at immediately
prior to such Initial Fitch Rating Event.
If any of paragraphs (v)(B), (v)(C) or (v)(D) above are satisfied at any
time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (v)(A) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
(vi) In the event that the short-term, unsecured and unsubordinated debt
obligations of Party A (or its successor) or any Credit Support Provider
from time to time in respect of Party A cease to be rated at least as
high as ["F2"] (or its equivalent) by Fitch and, as a result of such
cessation, the then current rating of the Series [2/4] Class [A/B/M[/C]]
30
Fourth Issuer Notes is downgraded or placed under review for possible
downgrade by Fitch (a "SUBSEQUENT FITCH RATING EVENT") then Party A
will:
(A) on a reasonable efforts basis within 30 days of the occurrence of
such Subsequent Fitch Rating Event, at its own cost, attempt either
to:
(1) transfer all of its rights and obligations with respect to
this Agreement to a replacement third party whose short-term,
unsecured and unsubordinated debt rating is at least "F1" from
Fitch or such other rating as is commensurate with the rating
assigned to the Series [2/4] Class [A/B/M[/C]] Fourth Issuer
Notes by Fitch from time to time;
(2) procure another person to become a co-obligor or guarantor in
respect of the obligations of Party A with respect to this
Agreement, provided that such co-obligor or guarantor has a
short-term, unsecured and unsubordinated debt rating of at
least "F1" from Fitch or such other rating as is commensurate
with the rating assigned to the Series [2/4] Class [A/B/M[/C]]
Fourth Issuer Notes by Fitch from time to time; or
(3) take such other action as Party A may agree with Fitch as will
result in the rating of the Series [2/4] Class [A/B/M[/C]]
Fourth Issuer Notes following the taking of such action being
maintained at, or restored to, the level it would have been at
immediately prior to such Subsequent Fitch Rating Event; and
(B) within 10 days of the occurrence of such Subsequent Fitch Rating
Event, put in place, at its own cost, (or, if pursuant to paragraph
(v)(A) above, Party A has not posted collateral within 30 days of
the occurrence of an Initial Fitch Rating Event, within 30 days of
the occurrence of such Subsequent Fitch Rating Event) pending
compliance with paragraph (vi)(A)(1), (vi)(A)(2) or (vi)(A)(3)
above, an appropriate mark-to-market collateral agreement in a form
and substance acceptable to Fitch (which may be based on the credit
support documentation published by ISDA, or otherwise, and relates
to collateral in the form of cash or securities or both to be
posted on a weekly basis) in support of its obligations under this
Agreement provided that (x) Party A will be deemed to have
satisfied the requirements of Fitch if the Collateral Amount is
determined on a basis which satisfies (but is no more onerous than)
the Fitch Criteria (as defined below), and (y) the Collateral
Amount will not be required to exceed such amount as would be
required (in accordance with the Fitch Criteria) to maintain or
restore the rating of the Series [2/4] Class [A/B/M[/C]] Fourth
Issuer Notes or to the level it would have been at immediately
prior to such Subsequent Fitch Rating Event, provided that, if, at
the time a Subsequent Fitch Rating Event occurs, Party A has
provided collateral pursuant to a mark-to-market collateral
arrangement put in place pursuant to paragraph (v)(A) above
following an Initial Fitch Rating Event, it will continue to post
collateral notwithstanding the occurrence of a Subsequent Fitch
Rating Event.
If any of paragraphs (vi)(A)(1), (2) or (3) above are satisfied at any
time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to paragraph (vi)(B) above will be
transferred to Party A and Party A will not be required to transfer any
additional collateral.
31
["FITCH CRITERIA" means that the Collateral Amount will equal the sum of
(a) the product of A multiplied by the mark-to-market value of the
outstanding Transactions as determined by Party A in good faith on each
Local Business Day and (b) the product of B multiplied by the current
aggregate notional amounts of the outstanding Transactions, where "A"
means [102%] and "B" means [1.6%].]
(vii) (A) If Party A does not take any of the measures described in
paragraph (i) above, such failure will not be or give rise to an
Event of Default but will constitute an Additional Termination
Event with respect to Party A which will be deemed to have occurred
on the thirtieth day following the Initial S&P Rating Event with
Party A as the sole Affected Party and all Transactions as Affected
Transactions.
[(B) If, at the time a Subsequent S&P Rating Event occurs, Party A has
provided collateral and fails to continue to post collateral
pending compliance with any of paragraphs (ii)(A), (ii)(B) [or
(ii)(C)] above, such failure will not be or give rise to an Event
of Default but will constitute an Additional Termination Event with
respect to Party A and will be deemed to have occurred on the
[tenth] day following such Subsequent S&P Rating Event with Party A
as the sole Affected Party and all Transactions as Affected
Transactions. Further, it will constitute an Additional Termination
Event with respect to Party A if, even if it is posting collateral
as required by paragraph (ii) above and notwithstanding Section
5(a)(ii), Party A does not take any of the measures described in
paragraphs (ii)(A), (ii)(B) [or (ii)(C)] above. Such Additional
Termination Event will be deemed to have occurred on the thirtieth
day following the Subsequent S&P Rating Event with Party A as the
sole Affected Party and all Transactions as Affected Transactions.]
(C) If Party A does not take any of the measures described in paragraph
(iii)(1), (2), (3) or (4) above, such failure will not be or give
rise to an Event of Default but will constitute an Additional
Termination Event with respect to Party A and will be deemed to
have occurred on the thirtieth day following the occurrence of such
Initial Moody's Rating Event with Party A as the sole Affected
Party and all Transactions as Affected Transactions.
(D) If Party A does not take the measures described in paragraph
(iv)(2) above, such failure will give rise to an Event of Default
with respect to Party A and will be deemed to have occurred on the
tenth day following such Subsequent Moody's Rating Event with Party
A as the Defaulting Party (except that if Party A has not
transferred collateral pursuant to (iii)(4) above, such Event of
Default will be deemed to have occurred on the thirtieth day
following the Subsequent Moody's Rating Event). Further, it will
constitute an Additional Termination Event with respect to Party A
if, even after satisfying the requirements of paragraph (iv)(2)
above and notwithstanding Section 5(a)(ii), Party A has failed,
within 10 days after receiving notice of failure to use reasonable
efforts (which notice will not be given until at least 30 days
following the Subsequent Moody's Rating Event), to either transfer
as described in paragraph (iv)(1)(aa), find a co-obligor or
guarantor as described in paragraph (iv)(1)(bb) or take such other
action as described in paragraph (iv)(1)(cc). Such Additional
Termination Event will be deemed to have occurred on the tenth day
after receiving notice of failure to use reasonable efforts with
Party A as the sole Affected Party and all Transactions as Affected
Transactions.
32
(E) If Party A does not take the measures described in paragraph (v)
above, such failure will not be or give rise to an Event of Default
but will constitute an Additional Termination Event with respect to
Party A which will be deemed to have occurred on the thirtieth day
following the Initial Fitch Rating Event with Party A as the sole
Affected Party and all Transactions as Affected Transactions.
(F) If Party A does not take the measures described in paragraph
(vi)(B) above, such failure will give rise to an Event of Default
with respect to Party A and will be deemed to have occurred on the
tenth day following such Subsequent Fitch Rating Event with Party A
as the Defaulting Party (except that if Party A has not transferred
collateral pursuant to paragraph (v)(A) above, such Event of
Default will be deemed to have occurred on the thirtieth day
following the Subsequent Fitch Rating Event). Further, it will
constitute an Additional Termination Event with respect to Party A
if, even after satisfying the requirements of paragraph (vi)(B)
above and notwithstanding Section 5(a)(ii), Party A has failed,
within 10 days after receiving notice of failure to use reasonable
efforts (which notice will not be given until at least 30 days
following the Subsequent Fitch Rating Event), to either transfer as
described in paragraph (vi)(A)(1), find a co-obligor or guarantor
as described in paragraph (vi)(A)(2) or take such other action as
described in paragraph (vi)(A)(3). Such Additional Termination
Event will be deemed to have occurred on the tenth day after
receiving notice of failure to use reasonable efforts with Party A
as the sole Affected Party and all Transactions as Affected
Transactions.
(G) In the event that Party B were to designate an Early Termination
Date and there would be a payment due to Party A, Party B may only
designate such an Early Termination Date in respect of an
Additional Termination Event under this Part 5(f) if Party B has
found a replacement counterparty willing to enter into a new
transaction on terms that reflect as closely as reasonably
possible, as determined by Party B in its sole and absolute
discretion, the economic, legal and credit terms of the Terminated
Transactions with Party A, and Party B has acquired the Security
Trustee's prior written consent.
Each of Party B and the Security Trustee will use their reasonable endeavours to
co-operate with Party A in putting in place such credit support documentation,
including (without limitation) agreeing to such arrangements in such
documentation as may satisfy S&P, Moody's and/or Fitch, as applicable, with
respect to the operation and management of the collateral and entering into such
documents as may reasonably be requested by Party A in connection with the
provision of such collateral or in connection with any of the other measures
which Party A may take under this Part 5(f) following its downgrade.
(g) TRANSFER POLICY
Section 7 of this Agreement will not apply to Party A, who will be required to
comply with, and will be bound by, the following:
Without prejudice to Section 6(b)(ii) as amended in this Schedule, Party A may
transfer all (but not part only) of its interests and obligations in and under
this Agreement to any [of its Affiliates or, with the prior written consent of
Party B, such consent not to be unreasonably withheld, to any] other entity
(each such [Affiliate or] entity a "TRANSFEREE") upon providing five Business
Days' prior written notice to the Note Trustee, provided that:
33
(i) the Transferee's short-term, unsecured and unsubordinated debt
obligations are then rated not less than ["A-1+"] by S&P, ["Prime-1"] by
Moody's and ["F1"] by Fitch and its long-term, unsecured and
unsubordinated debt obligations are then rated not less than [["BBB-"]
by S&P,] ["A1"] by Moody's (or its equivalent by any substitute rating
agency) or such Transferee's obligations under this Agreement are
guaranteed by an entity whose short-term, unsecured and unsubordinated
debt obligations are then rated not less than ["A-1+"] by S&P,
["Prime-1"] by Moody's and ["F1"] by Fitch and whose long-term,
unsecured and unsubordinated debt obligations are then rated not less
than [["AA-"] by S&P,] ["A1"] by Moody's [and ["A+"] by Fitch] (or its
equivalent by any substitute rating agency);
(ii) [the Ratings Agencies have confirmed that the transfer will not result
in the then current rating of the Series [2/4] Class [A/B/M[/C]] Fourth
Issuer Notes being downgraded;]
(iii) the Transferee will not, as a result of such transfer, be required on
the next succeeding Scheduled Payment Date to withhold or deduct on
account of any Tax (except in respect of default interest) amounts in
excess of that which Party A would, on the next succeeding Scheduled
Payment Date have been required to so withhold or deduct unless the
Transferee would be required to make additional payments pursuant to
Section 2(d)(i)(4) corresponding to such excess;
(iv) a Termination Event or Event of Default does not occur as a result of
such transfer;
(v) no additional amount will be payable by Party B to Party A or the
Transferee on the next succeeding Scheduled Payment Date as a result of
such transfer; and
(vi) the Transferee confirms in writing that it will accept all of the
interests and obligations in and under this Agreement which are to be
transferred to it in accordance with the terms of this provision.
With respect to paragraph (iii) above, each party agrees to make such Payee Tax
Representations and Payer Tax Representations as may reasonably be requested by
the other party in order to reasonably satisfy such other party that such
withholding or deduction will not occur.
Following the transfer, all references to Party A will be deemed to be
references to the Transferee.
Save as otherwise provided for in this Agreement and notwithstanding Section 7,
Party A will not be permitted to transfer (by way of security or otherwise) this
Agreement nor any interest or obligation in or under this Agreement without the
prior written consent of the Security Trustee.
(h) ADDITIONAL REPRESENTATION
Section 3 is amended by the addition at the end thereof of the following
additional representations (provided that the representation in Section 3(h)
will be made by Party A only):
"(g) NO AGENCY. It is entering into this Agreement, including each
Transaction, as principal and not as agent of any person or entity.
34
(h) PARI PASSU. Its obligations under this Agreement rank pari passu
with all of its other unsecured, unsubordinated obligations except those
obligations preferred by operation of law."
(i) RECORDING OF CONVERSATIONS
Each party to this Agreement (i) consents to the recording of the telephone
conversations of trading, marketing and operations personnel of the parties in
connection with this Agreement or any potential Transaction, (ii) agrees to
obtain any necessary consent of, and give notice of such recording to, such
personnel of it and (iii) agrees that in any Proceedings it will not object to
the introduction of such recordings in evidence on the ground that consent was
not properly given.
(j) RELATIONSHIP BETWEEN THE PARTIES
The Agreement is amended by the insertion after Section 14 of an additional
Section 15, reading in its entirety as follows:
"15. RELATIONSHIP BETWEEN THE PARTIES
Each party will be deemed to represent to the other party on the date on which
it enters into a Transaction that (absent a written agreement between the
parties that expressly imposes affirmative obligations to the contrary for that
Transaction):
(a) NON RELIANCE. It is acting for its own account, and it has made its own
independent decisions to enter into that Transaction and as to whether
that Transaction is appropriate or proper for it based upon advice from
such advisers as it has deemed necessary. It is not relying on any
communication (written or oral) of the other party as investment advice
or as a recommendation to enter into that Transaction, it being
understood that information and explanations related to the terms and
conditions of a Transaction will not be considered investment advice or
a recommendation to enter into that Transaction. No communication
(written or oral) received from the other party will be deemed to be an
assurance or guarantee as to the expected results of that Transaction.
(b) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the merits of
and understanding (on its own behalf or through independent professional
advice), and understands and accepts, the terms, conditions and risks of
that Transaction. It is also capable of assuming, and assumes, the
financial and other risks of that Transaction.
(c) STATUS OF PARTIES. The other party is not acting as a fiduciary for or
an adviser for it in respect of that Transaction."
(k) TAX
The Agreement is amended by deleting Section 2(d) in its entirety and replacing
it with the following:
35
"(d) Deduction or Withholding for Tax
(i) Requirement to Withhold
All payments under this Agreement will be made without any deduction or
withholding for or on account of any Tax unless such deduction or
withholding is required (including, for the avoidance of doubt, if such
deduction or withholding is required in order for the payer to obtain
relief from Tax) by any applicable law, as modified by the practice of
any relevant governmental revenue authority, then in effect. If a party
("X") is so required to deduct or withhold, then that party (the
"DEDUCTING PARTY"):
(1) will promptly notify the other party ("Y") of such requirement;
(2) will pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any Gross Up Amount (as defined below)
paid by the Deducting Party to Y under this Section 2(d)) promptly
upon the earlier of determining that such deduction or withholding
is required or receiving notice that such amount has been assessed
against Y;
(3) will promptly forward to Y an official receipt (or a certified
copy), or other documentation reasonably acceptable to Y,
evidencing such payment to such authorities; and
(4) if X is Party A, X will promptly pay in addition to the payment to
which Party B is otherwise entitled under this Agreement, such
additional amount (the "GROSS UP AMOUNT") as is necessary to ensure
that the net amount actually received by Party B will equal the
full amount which Party B would have received had no such deduction
or withholding been required.
(ii) Liability
If:
(1) X is required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, to make any deduction
or withholding for or on account of any Tax; and
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against X,
then, except to the extent that Y has satisfied or then satisfies the
liability resulting from such Tax, (A) where X is Party B, Party A will
promptly pay to Party B the amount of such liability (the "LIABILITY
AMOUNT") (including any related liability for interest and together with
an amount equal to the Tax payable by Party B on receipt of such amount
but including any related liability for penalties only if Party A has
failed to comply with or perform any agreement contained in Section
4(a)(i), 4(a)(iii) or 4(d)) and Party B will promptly pay to the
relevant government revenue authority the amount of such liability
(including any related liability for interest and penalties) and (B)
where X is Party A and Party A would have been required to pay a Gross
Up Amount to Party B, Party A will promptly pay to the relevant
government revenue authority the amount of such liability (including any
related liability for interest and penalties).
36
(iii) Tax Credit etc.
Where Party A pays an amount in accordance with Section 2(d)(i)(4)
above, Party B undertakes as follows:
(1) to the extent that Party B obtains any Tax credit, allowance,
set-off or repayment from the tax authorities of any jurisdiction
relating to any deduction or withholding giving rise to such
payment (a "TAX CREDIT"), it will pay to Party A as soon as
practical after receipt of the same so much of the cash benefit (as
calculated below) relating thereto which it has received as will
leave Party B in substantially the same (but in any event no worse)
position as Party B would have been in if no such deduction or
withholding had been required;
(2) the "cash benefit" will, in the case of a Tax credit, allowance or
set-off, be the additional amount of Tax which would have been
payable by Party B in the jurisdiction referred to in clause (1)
above but for the obtaining by it of the said Tax credit, allowance
or set-off and, in the case of a repayment, will be the amount of
the repayment together, in either case, with any related interest
or similar payment obtained by Party B;
(3) it will use all reasonable endeavours to obtain any Tax Credit as
soon as is reasonably practicable and it will, upon request by
Party A, supply Party A with a reasonably detailed explanation of
its calculation of the amount of any such Tax Credit and of the
date on which the same is received; and
(4) it will ensure that any Tax Credit obtained is paid directly to
Party A, and not applied in whole or part to pay any other Issuer
Secured Creditor or any other party, both prior to and subsequent
to any enforcement of the security constituted by the Fourth Issuer
Deed of Charge."
(l) SECURITY, ENFORCEMENT AND LIMITED RECOURSE
(i) Party A agrees with Party B and the Security Trustee to be bound by the
terms of the Fourth Issuer Deed of Charge and, in particular, confirms
that: (A) no sum will be payable by or on behalf of Party B to it except
in accordance with the provisions of the Fourth Issuer Deed of Charge;
and (B) it will not take any steps for the winding up, dissolution or
reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee, liquidator, sequestrator or similar
officer of Party B or of any or all of its revenues and assets nor
participate in any ex parte proceedings nor seek to enforce any judgment
against Party B, subject to the provisions of the Fourth Issuer Deed of
Charge.
(ii) In relation to all sums due and payable by Party B to Party A, Party A
agrees that it will have recourse only to Fourth Issuer Available Funds,
but always subject to the order of priority of payments set out in the
Fourth Issuer Cash Management Agreement and the Fourth Issuer Deed of
Charge.
(m) CONDITION PRECEDENT
Section 2(a)(iii) will be amended by the deletion of the words "a Potential
Event of Default" in respect of obligations of Party A only.
37
(n) REPRESENTATIONS
Section 3(b) will be amended by the deletion of the words "or Potential Event of
Default" in respect of the representation given by Party B only.
(o) ADDITIONAL DEFINITIONS
Words and expressions defined in the Amended and Restated Master Definitions and
Construction Schedule (the "MASTER SCHEDULE") and the Fourth Issuer Master
Definitions and Construction Schedule (the "ISSUER SCHEDULE") (together the
"MASTER DEFINITIONS SCHEDULE") signed on or about {circle}, 2004 will, except so
far as the context otherwise requires, have the same meaning in this Agreement.
In the event of any inconsistency between the definitions in this Agreement and
in the Master Definitions Schedule the definitions in this Agreement will
prevail. In the event of any inconsistency between the Master Schedule and the
Issuer Schedule, the Issuer Schedule will prevail. The rules of interpretation
set out in the Master Definitions Schedule will apply to this Agreement.
(p) CHANGE OF ACCOUNT
Section 2(b) of this Agreement is hereby amended by the addition of the
following at the end thereof:
"; provided that such new account will be in the same legal and tax jurisdiction
as the original account and such new account, in the case of Party B, is held
with a financial institution with a short-term, unsecured, unsubordinated and
unguaranteed debt obligation rating of at least ["Prime-1"] (in the case of
Moody's), ["A-1+"] (in the case of S&P) and ["F1+"] (in the case of Fitch) (or,
if such financial institution is not rated by a Rating Agency, at such
equivalent rating that is acceptable to such Rating Agency)."
(q) MODIFICATIONS TO CLOSE-OUT PROVISIONS
Upon the occurrence of an Event of Default with respect to Party A or an
Additional Termination Event which entitles Party B to terminate any Affected
Transaction pursuant to Section 6(b) of the Agreement, Party B will be entitled
(but not obliged in the event that it does not designate an Early Termination
Date) to proceed in accordance with Section 6 of this Agreement, subject to the
following:
(i) For the purposes of Section 6(d)(i), Party B's obligation with respect
to the extent of information to be provided with its calculations is
limited to information Party B has already received in writing and
provided Party B is able to release this information without breaching
the provisions of any law applicable to, or any contractual restriction
binding upon, Party B.
(ii) The following amendments will be deemed to be made to the definition of
"Market Quotation":
(A) the word "firm" will be added before the word "quotations" in the
second line; and
(B) the words ", provided that such documentation would either be the
same as this Agreement and the existing confirmations hereto (and
the long-term, unsecured and unsubordinated debt obligations of the
Reference Market-maker are rated not less than [["BBB-"] by S&P
and] ["A1"] by Moody's and the short-term,
38
unsecured and unsubordinated debt obligations of the Reference
Market-maker are rated not less than ["A-1+" by S&P,] ["Prime-1"]
by Moody's and ["F1"] by Fitch (or, if such Reference Market-maker
is not rated by a Rating Agency, at such equivalent rating that is
acceptable to such Rating Agency)) or the Rating Agencies have
confirmed in writing that such proposed documentation will not
adversely impact the ratings of the Notes" will be added after
"agree" in the sixteenth line; and
(C) the last sentence will be deleted and replaced with the following:
"If, on the last date set for delivery of quotations, exactly two
quotations are provided, the Market Quotation will be either (a)
the lower of the two quotations where there would be a sum payable
by Party A to Party B, or (b) the higher of the two quotations
where there would be a sum payable by Party B to Party A. If only
one quotation is provided on such date, Party B may, in its
discretion, accept such quotation as the Market Quotation and, if
Party B does not accept such quotation (or if no quotation has been
provided), it will be deemed that the Market Quotation in respect
of the Terminated Transaction cannot be determined. If no quotation
has been provided, it will be deemed that the Market Quotation in
respect of the Terminated Transaction cannot be determined."
(iii) For the purpose of the definition of "Market Quotation", and without
limitation of the general rights of Party B under the Agreement:
(A) Party B will undertake to use its reasonable efforts to obtain at
least three firm quotations as soon as reasonably practicable after
the Early Termination Date and in any event within the time period
specified pursuant to Part 5(q)(iii)(C) below;
(B) Party A will, for the purposes of Section 6(e), be permitted to
obtain on behalf of Party B quotations from Reference
Market-makers;
(C) If no quotations have been obtained within 6 Local Business Days
after the occurrence of the Early Termination Date or such longer
period as Party B may specify in writing to Party A, then it will
be deemed that the Market Quotation in respect of the Terminated
Transaction cannot be determined;
(D) Party B will be deemed to have discharged its obligations under
Part 5(q)(iii)(A) above if it promptly requests, in writing, Party
A (such request to be made within two Local Business Days after the
occurrence of the Early Termination Date) to obtain on behalf of
Party B quotations from Reference Market-makers. Party A agrees to
act in accordance with such request; and
(E) Party B will not be obliged to consult with Party A as to the day
and time of obtaining any quotations.
(r) CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
A person who is not a party to this Agreement will not have any right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms but
this will not affect any right or remedy of a third party which exists or is
available apart from that Act.
39
[(s) NOTICE OF REDEMPTION OF THE NOTES
The Security Trustee will notify Party A promptly following it giving or
receiving any notice (including any Note Acceleration Notice) in connection with
a transfer, purchase or redemption of all of the Series [2/4] Class [A/B/M[/C]]
Fourth Issuer Notes by the issuer.]/2/
- ----------
/2/ Subject to approval of Security Trustee.
40
DRAFT (1): 26.02.04
SERIES 2 CLASS M CONFIRMATION
From: Citibank, N.A., acting through its London Office
Citigroup Centre
Canada Square
London
E14 5LB
To: Permanent Financing (No. 4) PLC
Blackwell House
Guildhall Yard
London
EC2V 5AE
Attention: The Secretary
To: The Bank of New York
One Canada Square
London
E14 5AL
Attention: Global Structured Finance - Corporate Trust
{circle}, 2004
Dear Sirs,
CONFIRMATION - SERIES 2 CLASS M DOLLAR TO STERLING CURRENCY SWAP
The purpose of this letter is to confirm the terms and conditions of the Swap
Transaction entered into between us on the Trade Date specified below. This
letter constitutes a "CONFIRMATION" as referred to in the 1992 ISDA Master
Agreement (Multicurrency-Cross Border) (Series 2 Class M) entered into between
us, you and The Bank of New York (the "SECURITY TRUSTEE") dated as of {circle},
2004, as amended and supplemented from time to time (the "AGREEMENT").
The definitions and provisions contained in the 2000 ISDA Definitions as
published by the International Swaps and Derivatives Association, Inc. (the
"DEFINITIONS") are incorporated into this Confirmation. In the event of any
inconsistency between any of the following, the first listed will govern (i)
this Confirmation; (ii) the Master Definitions Schedule; and (iii) the
Definitions.
1. The terms of the particular Swap Transaction to which this Confirmation
relates are as follows:
Party A: Citibank, N.A., acting through its
London Office
Party B: Permanent Financing (No. 4) PLC
Trade Date: {circle}, 2004
Effective Date: {circle}, 2004
Termination Date: The earlier of the Quarterly Interest
Payment Date falling in {circle} and the
date on which all of the Series 2
Class M Fourth Issuer Notes are redeemed
in full.
Dollar Currency Exchange Rate: {circle} USD per GBP
Business Days: London Business Day, New York Business
Day and TARGET Business Day.
Calculation Period: Has the meaning given to such term in
the Definitions.
Calculation Agent: Party A
Party A Floating Amounts:
Party A Currency Amount: In respect of each Party A Calculation
Period, an amount in Dollars equal to
the principal amount outstanding of the
Series 2 Class M Fourth Issuer Notes on
the first day of such Calculation Period
(after taking into account any
redemption on such day).
Party A Payment Dates: Each Quarterly Interest Payment Date
from and including the Quarterly
Interest Payment Date falling in
{circle} 2004 up to the Termination Date
and the Termination Date.
Party A Floating Rate: In respect of each Party A Calculation
Period, Three-Month USD-LIBOR determined
in respect of the first day of such
Party A Calculation Period.
Spread: {circle} per cent. for Party A
Calculation Periods commencing prior to
the Quarterly Interest Payment Date
falling in {circle} and {circle}
per cent. thereafter.
Party A Floating Rate Day
Count Fraction: Actual/360
Party B Floating Amounts:
Party B Currency Amount: In respect of each Party B Calculation
Period, an amount in Sterling equivalent
to the Party A Currency Amount for the
Party A Calculation Period commencing on
the first day of such Party B
Calculation Period converted by
reference to the Dollar Currency
Exchange Rate.
Party B Payment Dates: Each Quarterly Interest Payment Date
from and including the Quarterly
Interest Payment Date falling in
{circle} 2004 up to the Termination Date
and the Termination Date.
Party B Floating Rate: In respect of each Party B Calculation
Period, Sterling-LIBOR determined in
respect of the first day of such Party B
Calculation Period.
Spread: {circle} per cent. for Party B
Calculation Periods commencing prior to
the Quarterly Interest Payment Date
falling in {circle} and {circle}
per cent. thereafter.
Party B Floating Rate Day
Count Fraction: Actual/365 (Fixed)
Initial Exchange:
Initial Exchange Date: Effective Date
2
Party A Initial
Exchange Amount: GBP {circle}
Party B Initial
Exchange Amount: USD {circle}
Interim Exchange:
Interim Exchange Dates: Each Quarterly Interest Payment Date
(other than the Termination Date) on
which any of the Series 2 Class M Fourth
Issuer Notes are redeemed in whole or in
part.
Party A Interim
Exchange Amount: In respect of each Interim Exchange
Date, an amount in Dollars equal to the
amount of the Series 2 Class M Fourth
Issuer Notes redeemed on such Interim
Exchange Date.
Party B Interim
Exchange Amount: In respect of each Interim Exchange
Date, the Sterling equivalent of the
Party A Interim Exchange Amount for such
Interim Exchange Date converted by
reference to the Dollar Currency
Exchange Rate.
Final Exchange:
Final Exchange Date: Termination Date
Party A Final Exchange Amount: An amount in Dollars equal to the
principal amount outstanding of the
Series 2 Class M Fourth Issuer Notes on
the Final Exchange Date (before taking
into account any redemption on such
day).
Party B Final Exchange Amount: The Sterling equivalent of the Party A
Final Exchange Amount converted by
reference to the Dollar Currency
Exchange Rate.
2. Deferral of Floating Amounts:
If any payment of interest under the Series 2 Class M Fourth Issuer Notes
is deferred in accordance with the terms and conditions of the Series 2
Class M Fourth Issuer Notes, a corresponding part of the Party A Floating
Amount and a pro rata part of the Party B Floating Amount which, in each
case, would otherwise be due in respect of the relevant Quarterly Interest
Payment Date will be deferred.
The amount so deferred on the Party A Floating Amount will be payable on
the next Party A Payment Date (together with an additional floating amount
accrued thereon at the applicable Party A Floating Rate) and the Party A
Floating Amount due on such date will be deemed to include such amounts.
The amount so deferred on the Party B Floating Amount will be payable on
the next Party B Payment Date (together with an additional floating amount
accrued thereon accrued at the applicable Party B Floating Rate) and the
Party B Floating Amount due on such will be deemed to include such amounts.
On any subsequent occasion if any payment of interest under the Series 2
Class M Fourth Issuer Notes is deferred (including any payment of a
previous shortfall of interest or any payment of
3
interest on such shortfall) in accordance with the terms and conditions of
the Series 2 Class M Fourth Issuer Notes, all or a corresponding part of
the Party A Floating Amount and a pro rata part of the Party B Floating
Amount will be deferred.
The amount so deferred on the Party A Floating Amount will be payable on
the next Party A Payment Date (together with an additional floating amount
accrued thereon at the applicable Party A Floating Rate) and the Party A
Floating Amount due on such date will be deemed to include such amounts.
The amount so deferred on the Party B Floating Amount will be payable on
the next Party B Payment Date (together with an additional floating amount
accrued thereon at the applicable Party B Floating Rate) and the Party B
Floating Amount due on such date will be deemed to include such amounts.
3. Account Details:
Payments to Party A
in Dollars: Bank: {circle}
Account Number: {circle}
SWIFT: {circle}
ABA No.: {circle}
Favour: {circle}
Payments to Party A
in Sterling: Bank: {circle}
SWIFT: {circle}
Account Number: {circle}
Favour: {circle}
Payments to Party B
in Dollars: Bank: Citibank, N.A., New York
Credit Account: {circle}
New York Swift: CITIUS33
FAO: Citibank, N.A., London
London Swift: CITIGB2L
Reference: GATS "Permanent Financing
(No. 4) PLC"
Payments to Party B
in Sterling: Bank: The Governor and Company of the
Bank of Scotland
Account Number: {circle}
Sort Code: 12-24-55
4
Account Name: Permanent Financing (No. 4) PLC
Transaction Account
It is agreed by the parties that payments made by Party A to the Principal
Paying Agent in accordance with the settlement instructions, as detailed
above, will be considered as absolute and conclusive discharge of Party A's
obligations to Party B in respect of such payment, regardless of whether
the Principal Paying Agent makes a payment in turn to Party B. This will
continue to be the case until Party B changes its account in accordance
with Section 2(b) of the Agreement.
4. Notification to Party A
For the purpose of making any determination or calculation hereunder, the
Calculation Agent may rely on any information, report, notice or
certificate delivered to it by the Fourth Issuer Cash Manager or Party B
and the Calculation Agent will not be liable for any error, incompleteness
or omission regarding such information.
Party B or the Fourth Issuer Cash Manager acting on its behalf, will notify
Party A of the amount of principal payments to be made on the Series 2
Class M Fourth Issuer Notes on each Quarterly Interest Payment Date no
later than one (1) Business Day prior to such Quarterly Interest Payment
Date.
5. Notice Details:
Party A: Citibank, N.A.
Address: {circle}
Facsimile No.: {circle}
Attention: {circle}
Party B: Permanent Financing (No. 4) PLC
Address: Blackwell House
Guildhall Yard
London
EC2V 5AE
Facsimile Number: 020 7566 0975
Attention: The Secretary
With a copy to: (i) the Security Trustee:
Name: The Bank of New York
Address: One Canada Square
London
E14 5AL
Facsimile Number: 020 7964 6061/6399
Attention: Global Structured Finance
(ii) HBOS Treasury Services plc
5
Address: 33 Old Broad Street
London
EC2N 1HZ
Facsimile Number: 020 7574 8784
Attention: Head of Capital Markets and Securitisation
Yours faithfully,
CITIBANK, N.A., ACTING THROUGH ITS LONDON OFFICE
By:
Name:
Title:
Confirmed as of the date first written:
PERMANENT FINANCING (NO. 4) PLC
By:
Name:
Title:
THE BANK OF NEW YORK
By:
Name:
Title:
6