Exhibit 10.3
ISDA[REGISTERED]
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of 21 February, 2007
Citibank N.A., London Branch and Permanent Master Issuer PLC and The Bank of New
York as Security Trustee
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:--
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the
provisions of the Schedule and the other provisions of this Master Agreement,
the Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant
Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in
each Confirmation to be made by it, subject to the other provisions of
this Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is, other
than by payment), such delivery will be made for receipt on the due
date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject
to (1) the condition precedent that no Event of Default or Potential
Event of Default with respect to the other party
has occurred and is continuing, (2) the condition precedent that no
Early Termination Date in respect of the relevant Transaction has
occurred or been effectively designated and (3) each other applicable
condition precedent specified in this Agreement.
(b) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the
other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess
of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of Offices through which the parties make
and receive payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. 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 by any applicable
law, as modified by the practice of any relevant governmental revenue
authority, then in effect. If a party is so required to deduct or
withhold, then that party ("X") will:--
(1) promptly notify the other party ("Y") of such
requirement;
(2) 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 additional amount
paid by X 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) 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
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(4) if such Tax is an Indemnifiable Tax, pay to Y, in
addition to the payment to which Y is otherwise entitled under
this Agreement, such additional amount as is necessary to
ensure that the net amount actually received by Y (free and
clear of Indemnifiable Taxes, whether assessed against X or Y)
will equal the full amount Y would have received had no such
deduction or withholding been required. However, X will not be
required to pay any additional amount to Y to the extent that
it would not be required to be paid but for:
(A) the failure by Y to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or
4(d); or
(B) the failure of a representation made by Y
pursuant to Section 3(f) to be accurate and true
unless such failure would not have occurred but for
(I) any action taken by a taxing authority, or brought
in a court of competent jurisdiction, on or after the
date on which a Transaction is entered into
(regardless of whether such action is taken or brought
with respect to a party to this Agreement) or (II) a
Change in Tax Law.
(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 in respect of which X
would not be required to pay an additional amount to Y under
Section 2(d)(i)(4);
(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 Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount
of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction, a party that defaults in the performance of any payment obligation
will, to the extent permitted by law and subject to Section 6(c), be required
to pay interest (before as well as after judgment) on the overdue amount to the
other party on demand in the same currency as such overdue amount, for the
period from (and including) the original due date for payment to (but
excluding) the date of actual payment, at the Default Rate. Such interest will
be calculated on the basis of daily compounding and the actual number of days
elapsed. If, prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party defaults in
the performance of any obligation required to be settled by delivery, it will
compensate the other party on demand if and to the extent provided for in the
relevant Confirmation or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into and, in the case of the representations in Section 3(f), at all times
until the termination of this Agreement) that:--
(a) BASIC REPRESENTATIONS.
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(i) STATUS. It is duly organised and validly existing under the
laws of the jurisdiction of its organisation or incorporation and, if
relevant under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any
other documentation relating to this Agreement to which it is a party,
to deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it
has under any Credit Support Document to which it is a party and has
taken all necessary action to authorise such execution, delivery and
performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment
of any court or other agency of government applicable to it or any of
its assets or any contractual restriction binding on or affecting it
or any of its assets;
(iv) CONSENTS. All governmental and other consents that are
required to have been obtained by it with respect to this Agreement or
any Credit Support Document to which it is a party have been obtained
and are in full force and effect and all conditions of any such
consents have been complied with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and
any Credit Support Document to which it is a party constitute its
legal, valid and binding obligations, enforceable in accordance with
their respective terms (subject to applicable bankruptcy,
reorganisation, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether
enforcement is sought in a proceeding in equity or at law)).
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is accurate
and true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.
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4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any
Confirmation; and
(iii) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing in
order to allow such other party or its Credit Support Provider to make
a payment under this Agreement or any applicable Credit Support
Document without any deduction or withholding for or on account of any
Tax or with such deduction or withholding at a reduced rate (so long
as the completion, execution or submission of such form or document
would not materially prejudice the legal or commercial position of the
party in receipt of such demand), with any such form or document to be
accurate and completed in a manner reasonably satisfactory to such
other party and to be executed and to be delivered with any reasonably
required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to
maintain in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this Agreement
or any Credit Support Document to which it is a party and will use all
reasonable efforts to obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.
(e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organised, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--
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(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section
2(a)(i) or 2(e) required to be made by it if such failure is not
remedied on or before the third Local Business Day after notice of
such failure is given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
with or performed by the party in accordance with this Agreement if
such failure is not remedied on or before the thirtieth day after
notice of such failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of
such party to comply with or perform any agreement or
obligation to be complied with or performed by it in
accordance with any Credit Support Document if such failure is
continuing after any applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support
Document to be in full force and effect for the purpose of
this Agreement (in either case other than in accordance with
its terms) prior to the satisfaction of all obligations of
such party under each Transaction to which such Credit Support
Document relates without the written consent of the other
party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a
representation under Section 3(e) or (f)) made or repeated or deemed
to have been made or repeated by the party or any Credit Support
Provider of such party in this Agreement or any Credit Support
Document proves to have been incorrect or misleading in any material
respect when made or repeated or deemed to have been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (l) defaults under a Specified Transaction and, after
giving effect to any applicable notice requirement or grace period,
there occurs a liquidation of, an acceleration of obligations under,
or an early termination of, that Specified Transaction, (2) defaults,
after giving effect to any applicable notice requirement or grace
period, in making any payment or delivery due on the last payment,
delivery or exchange date of, or any payment on early termination of,
a Specified Transaction (or such default continues for at least three
Local Business Days if there is no applicable notice requirement or
grace period) or (3) disaffirms, disclaims, repudiates or rejects, in
whole or in part, a Specified Transaction (or such action is taken by
any person or entity appointed or empowered to operate it or act on
its behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule
as applying to the party, the occurrence or existence of (l) a
default, event of default or other similar condition or event (however
described) in respect of such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified Indebtedness
of any of them (individually or collectively) in an aggregate amount
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of not less than the applicable Threshold Amount (as specified in the
Schedule) which has resulted in such Specified Indebtedness becoming,
or becoming capable at such time of being declared, due and payable
under such agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such Credit
Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof
in an aggregate amount of not less than the applicable Threshold
Amount under such agreements or instruments (after giving effect to
any applicable notice requirement or grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party:--
(l) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has instituted
against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors'
rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or
petition instituted or presented against it, such proceeding
or petition (A) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making
of an order for its winding-up or liquidation or (B) is not
dismissed, discharged, stayed or restrained in each case
within 30 days of the institution or presentation thereof; (5)
has a resolution passed for its winding-up, official
management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its
assets; (7) has a secured party take possession of all or
substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied,
enforced or sued on or against all or substantially all its
assets and such secured party maintains possession, or any
such process is not dismissed, discharged, stayed or
restrained, in each case within 30 days thereafter; (8) causes
or is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect
to any of the events specified in clauses (l) to (7)
(inclusive); or (9) takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in,
any of the foregoing acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges
with or into, or transfers all or substantially all its assets to,
another entity and, at the time of such consolidation, amalgamation,
merger or transfer:--
(l) the resulting, surviving or transferee entity fails to
assume all the obligations of such party or such Credit
Support Provider under this Agreement or any Credit Support
Document to which it or its predecessor was a party by
operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to
extend (without the consent of the other party) to the
performance by such resulting, surviving or transferee entity
of its obligations under this Agreement.
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(b) TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (iv) below or an Additional Termination Event if the
event is specified pursuant to (v) below:--
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law after such date, it becomes
unlawful (other than as a result of a breach by the party of Section
4(b)) for such party (which will be the Affected Party):--
(l) to perform any absolute or contingent obligation to
make a payment or delivery or to receive a payment or delivery
in respect of such Transaction or to comply with any other
material provision of this Agreement relating to such
Transaction; or
(2) to perform, or for any Credit Support Provider of such
party to perform, any contingent or other obligation which the
party (or such Credit Support Provider) has under any Credit
Support Document relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority,
or brought in a court of competent jurisdiction, on or after the date
on which a Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to this Agreement)
or (y) a Change in Tax Law, the party (which will be the Affected
Party) will, or there is a substantial likelihood that it will, on the
next succeeding Scheduled Payment Date (l) be required to pay to the
other party an additional amount in respect of an Indemnifiable Tax
under Section 2(d)(i)(4) (except in respect of interest under Section
2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
is required to be deducted or withheld for or on account of a Tax
(except in respect of interest under Section 2(e), 6(d)(ii) or 6(e))
and no additional amount is required to be paid in respect of such Tax
under Section 2(d)(i)(4) (other than by reason of Section
2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Indemnifiable Tax
in respect of which the other party is not required to pay an
additional amount (other than by reason of Section 2(d)(i)(4)(A) or
(B)), in either case as a result of a party consolidating or
amalgamating with, or merging with or into, or transferring all or
substantially all its assets to, another entity (which will be the
Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
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(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as applying,
the occurrence of such event (and, in such event, the Affected Party
or Affected Parties shall be as specified for such Additional
Termination Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as
an Early Termination Date in respect of all outstanding Transactions. If,
however, "Automatic Early Termination" is specified in the Schedule as applying
to a party, then an Early Termination Date in respect of all outstanding
Transactions will occur immediately upon the occurrence with respect to such
party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6)
or, to the extent analogous thereto, (8), and as of the time immediately
preceding the institution of the relevant proceeding or the presentation of the
relevant petition upon the occurrence with respect to such party of an Event of
Default specified in Section 5(a)(vii)(4) or, to the extent analogous
thereto, (8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality
under Section 5(b)(i)(l) or a Tax Event occurs and there is only one
Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
Party is the Affected Party, the Affected Party will, as a condition
to its right to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not require such
party to incur a loss, excluding immaterial, incidental expenses) to
transfer within 20 days after it gives notice under Section 6(b)(i)
all its rights and obligations under this Agreement in respect of the
Affected Transactions to another of its Offices or Affiliates so that
such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the other
party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section
5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties,
each party will use all reasonable efforts to reach agreement
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within 30 days after notice thereof is given under Section 6(b)(i) on
action to avoid that Termination Event.
(iv) RIGHT TO TERMINATE. If:--
(l) a transfer under Section 6(b)(ii) or an agreement
under Section 6(b)(iii), as the case may be, has not been
effected with respect to all Affected Transactions within 30
days after an Affected Party gives notice under Section
6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event
Upon Merger or an Additional Termination Event occurs, or a
Tax Event Upon Merger occurs and the Burdened Party is not the
Affected Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a
Tax Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event
if there is only one Affected Party may, by not more than 20 days
notice to the other party and provided that the relevant Termination
Event is then continuing, designate a day not earlier than the day
such notice is effective as an Early Termination Date in respect of
all Affected Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following
the occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and
will provide to the other party a statement (l) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is
to be paid. In the absence of written confirmation from the source of
a quotation obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of
any Early Termination Date under Section 6(e) will be payable on the
day that notice of the amount payable is effective (in the case of an
Early Termination Date which is designated or occurs as a result of an
Event of Default) and on the day which is two Local Business Days
after the day on which notice of the amount payable is effective (in
the case of an Early Termination Date which is designated as a result
of a Termination Event). Such amount will be paid together with (to
the extent permitted under applicable law) interest thereon (before as
well as after judgment) in the Termination Currency, from (and
including) the relevant Early Termination Date to (but
10
excluding) the date such amount is paid, at the Applicable Rate. Such
interest will be calculated on the basis of daily compounding and the
actual number of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs,
the following provisions shall apply based on the parties' election in the
Schedule of a payment measure, either "Market Quotation" or "Loss", and a
payment method, either the "First Method" or the "Second Method". If the
parties fail to designate a payment measure or payment method in the Schedule,
it will be deemed that "Market Quotation" or the "Second Method", as the case
may be, shall apply. 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.
(i) EVENTS OF DEFAULT. If the Early Termination Date results
from an Event of Default:--
(1) First Method and Market Quotation. If the First Method
and Market Quotation apply, the Defaulting Party will pay to
the Non-defaulting Party the excess, if a positive number, of
(A) the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party over (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss
apply, the Defaulting Party will pay to the Non-defaulting
Party, if a positive number, the Non-defaulting Party's Loss
in respect of this Agreement.
(3) Second Method and Market Quotation. If the Second
Method and Market Quotation apply, an amount will be payable
equal to (A) the sum of the Settlement Amount (determined by
the Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party less (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Defaulting Party. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if
it is a negative number, the Non-defaulting Party will pay the
absolute value of that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting
Party's Loss in respect of this Agreement. If that amount is a
positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from
a Termination Event:--
(l) One Affected Party. If there is one Affected Party,
the amount payable will be determined in accordance with
Section 6(e)(i)(3), if Market Quotation applies, or Section
6(e)(i)(4), if Loss applies, except that, in either case,
references to the Defaulting Party and to the Non-defaulting
Party will be deemed to be references to the Affected Party
and the party which is not the Affected Party, respectively,
and, if Loss applies and fewer than all the Transactions are
being terminated, Loss shall be calculated in respect of all
Terminated Transactions.
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(2) Two Affected Parties. If there are two Affected
Parties:--
(A) if Market Quotation applies, each party will
determine a Settlement Amount in respect of the
Terminated Transactions, and an amount will be payable
equal to (I) the sum of (a) one-half of the difference
between the Settlement Amount of the party with the
higher Settlement Amount ("X") and the Settlement
Amount of the party with the lower Settlement Amount
("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (II) the
Termination Currency Equivalent of the Unpaid Amounts
owing to Y; and
(B) if Loss applies, each party will determine its
Loss in respect of this Agreement (or, if fewer than
all the Transactions are being terminated, in respect
of all Terminated Transactions) and an amount will be
payable equal to one-half of the difference between
the Loss of the party with the higher Loss ("X") and
the Loss of the party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to
X; if it is a negative number, X will pay the absolute value
of that amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted
by law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation
applies an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to
any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be
void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the
12
Contractual Currency will not be discharged or satisfied by any tender in any
currency other than the Contractual Currency, except to the extent such tender
results in the actual receipt by the party to which payment is owed, acting in
a reasonable manner and in good faith in converting the currency so tendered
into the Contractual Currency, of the full amount in the Contractual Currency
of all amounts payable in respect of this Agreement. If for any reason the
amount in the Contractual Currency so received falls short of the amount in the
Contractual Currency payable in respect of this Agreement, the party required
to make the payment will, to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the amount in the
Contractual Currency so received exceeds the amount in the Contractual Currency
payable in respect of this Agreement, the party receiving the payment will
refund promptly the amount of such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is
rendered (i) for the payment of any amount owing in respect of this Agreement,
(ii) for the payment of any amount relating to any early termination in respect
of this Agreement or (iii) in respect of a judgment or order of another court
for the payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such
party. The term "rate of exchange" includes, without limitation, any premiums
and costs of exchange payable in connection with the purchase of or conversion
into the Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the
party to which any payment is owed and will not be affected by judgment being
obtained or claim or proof being made for any other sums payable in respect of
this Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by
an exchange of telexes or electronic messages on an electronic messaging
system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
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(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts
(including by facsimile transmission), each of which will be deemed an
original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constitutes a
Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it had entered into the
Transaction through its head or home office. This representation will be deemed
to be repeated by such party on each date on which a Transaction is entered
into.
(b) Neither party may change the Office through which it makes and
receives payments or deliveries for the purpose of a Transaction without the
prior written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a
Transaction will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.
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12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the
date it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of the recipient in
legible form (it being agreed that the burden of proving receipt will
be on the sender and will not be met by a transmission report
generated by the sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas)
or the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change
the address, telex or facsimile number or electronic messaging system details
at which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan
in New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(ii) waives any objection which it may have at any time to the
laying of venue of any Proceedings brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not have any jurisdiction over such
party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification,
15
extension or re-enactment thereof for the time being in force) nor will the
bringing of Proceedings in any one or more jurisdictions preclude the bringing
of Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any reason any
party's Process Agent is unable to act as such, such party will promptly notify
the other party and within 30 days appoint a substitute process agent
acceptable to the other party. The parties irrevocably consent to service of
process given in the manner provided for notices in Section 12. Nothing in this
Agreement will affect the right of either party to serve process in any other
manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:--
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means:--
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
16
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after the
date on which the relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified
as such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to such
recipient (including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or resident of such
jurisdiction, or being or having been organised, present or engaged in a trade
or business in such jurisdiction, or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such recipient or related person having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement or a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority)
and "LAWFUL" and "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
17
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating, liquidating,
obtaining or reestablishing any hedge or related trading position (or any gain
resulting from any of them). Loss includes losses and costs (or gains) in
respect of any payment or delivery required to have been made (assuming
satisfaction of each applicable condition precedent) on or before the relevant
Early Termination Date and not made, except, so as to avoid duplication, if
Section 6(e)(i)(l) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a
party's legal fees and out-of-pocket expenses referred to under Section 11. A
party will determine its Loss as of the relevant Early Termination Date, or, if
that is not reasonably practicable, as of the earliest date thereafter as is
reasonably practicable. A party may (but need not) determine its Loss by
reference to quotations of relevant rates or prices from one or more leading
dealers in the relevant markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition
precedent) by the parties under Section 2(a)(i) in respect of such Terminated
Transaction or group of Terminated Transactions that would, but for the
occurrence of the relevant Early Termination Date, have been required after
that date. For this purpose, Unpaid Amounts in respect of the Terminated
Transaction or group of Terminated Transactions are to be excluded but, without
limitation, any payment or delivery that would, but for the relevant Early
Termination Date, have been required (assuming satisfaction of each applicable
condition precedent) after that Early Termination Date is to be included. The
Replacement Transaction would be subject to such documentation as such party
and the Reference Market-maker may, in good faith, agree. The party making the
determination (or its agent) will request each Reference Market-maker to
provide its quotation to the extent reasonably practicable as of the same day
and time (without regard to different time zones) on or as soon as reasonably
practicable after the relevant Early Termination Date. The day and time as of
which those quotations are to be obtained will be selected in good faith by the
party obliged to make a determination under Section 6(e), and, if each party is
so obliged, after consultation with the other. If more than three quotations
are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation
will be the quotation remaining after disregarding the highest and lowest
quotations. For this purpose, if more than one quotation has the same highest
value or lowest value, then one of such quotations shall be disregarded. If
fewer than three quotations are provided, it will be deemed that the Market
Quotation in respect of such Terminated Transaction or group of Terminated
Transactions cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's head or
home office.
18
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organised, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
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"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:--
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of
such party or any applicable Specified Entity of such party) and the other
party to this Agreement (or any Credit Support Provider of such other party or
any applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond
option, interest rate option, foreign exchange transaction, cap transaction,
floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions),
(b) any combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the relevant
confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto) that
is imposed by any government or other taxing authority in respect of any
payment under this Agreement other than a stamp, registration, documentation or
similar tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated
in the Termination Currency, such Termination Currency amount and, in respect
of any amount denominated in a currency other than the Termination Currency
(the "Other Currency"), the amount in the Termination Currency determined by
the party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the
20
relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a
rate for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under
Section 2(a)(i) which was (or would have been but for Section 2(a)(iii))
required to be settled by delivery to such party on or prior to such Early
Termination Date and which has not been so settled as at such Early Termination
Date, an amount equal to the fair market value of that which was (or would have
been) required to be delivered as of the originally scheduled date for
delivery, in each case together with (to the extent permitted under applicable
law) interest, in the currency of such amounts, from (and including) the date
such amounts or obligations were or would have been required to have been paid
or performed to (but excluding) such Early Termination Date, at the Applicable
Rate. Such amounts of interest will be calculated on the basis of daily
compounding and the actual number of days elapsed. The fair market value of any
obligation referred to in clause (b) above shall be reasonably determined by
the party obliged to make the determination under Section 6(e) or, if each
party is so obliged, it shall be the average of the Termination Currency
Equivalents of the fair market values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
Citibank N.A., London Permanent Master Issuer PLC
(Name of Party) (Name of Party)
By: /s/ Stephane Carrier By: /s/ Claudia Wallace
Name: Name:
Title: Title:
Date: Date:
The Bank of New York
/s/ Vincent Giraud
SERIES 3 CLASS A
21
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of 21 February 2007
between
(1) CITIBANK, N.A., ACTING THROUGH ITS LONDON BRANCH ("PARTY A");
(2) PERMANENT MASTER ISSUER PLC ("PARTY B"); and
(3) THE BANK OF NEW YORK (the "Master Issuer SECURITY TRUSTEE", which
expression will include its successors and assigns and which has
agreed to become a party to this Agreement solely for the purpose of
taking the benefit of Parts 5(b) and 5(l) of this Schedule and
assuming the obligations under the final paragraph of Part 5(f) of
this Schedule).
Part 1. TERMINATION PROVISIONS
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:-
Section 5(a)(v), none
Section 5(a)(vi), none
Section 5(a)(vii), none
Section 5(b)(iv), none
and in relation to Party B for the purpose of:-
Section 5(a)(v), none
Section 5(a)(vi), none
Section 5(a)(vii), none
Section 5(b)(iv), none
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14
of this Agreement.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will not apply to
Party A and will not apply to Party B.
(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.
22
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not
apply to Party A and will not apply to Party B.
(f) PAYMENTS ON EARLY TERMINATION. For the purposes of Section 6(e) of
this Agreement:-
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means Sterling.
(h) "ADDITIONAL TERMINATION EVENT" will apply. In addition to the
Additional Termination Events set forth in Part 5(f)(viii) 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.
23
Part 2. TAX REPRESENTATIONS
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this
Agreement, Party A and Party B each make the following representation:
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e) of this Agreement) to be made by it to the other
party under this Agreement. In making this representation, it may rely
on (i) the accuracy of any representations made by the other party
pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of
the agreement contained in Section 4(a)(i) or 4(a)(iii) of this
Agreement and the accuracy and effectiveness of any document provided
by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this
Agreement and (iii) the satisfaction of the agreement of the other
party contained in Section 4(d) of this Agreement, except that it will
not be a breach of this representation where reliance is placed on
clause (ii) and the other party does not deliver a form or document
under Section 4(a)(iii) by reason of material prejudice to its legal
or commercial position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f) of the
Agreement, Party A makes the following representation (the "ADDITIONAL
TAX REPRESENTATION"):
(i) it is a party to each Transaction solely for the purposes of a
trade (or part of a trade) carried on by it in the United
Kingdom through a branch or agency or permanent establishment;
or
(ii) it is resident for tax purposes in the United Kingdom or in a
jurisdiction with which the United Kingdom has a double tax
treaty which makes provision, whether for relief or otherwise,
in relation to interest.
For the purpose of Section 3(f) of the Agreement, Party B makes the
following representation:
Any payment received by it under this Agreement is not effectively
connected with a trade or business in the United States of America.
24
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:
PARTY REQUIRED COVERED BY
TO DELIVER FORM/DOCUMENT/ DATE BY WHICH SECTION 3(d)
DOCUMENT CERTIFICATE TO BE DELIVERED REPRESENTATION
Party B Executed United States On signing of this Yes
Internal Revenue Form W-8 Agreement and
BEN (or any successor form thereafter as soon as
thereto) reasonably
practicable upon
learning that any
form previously
provided by Party B
has become incorrect
or obsolete
(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 LLP Agreement
Party B A copy of the annual report Upon request, as Yes
for such party containing soon as publicly
audited or certified financial available
statements for the most
recently ended financial year
25
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 2
25 Canada Square
London E14 5LB
Attention: Head of Trading Legal Services, Europe
Facsimile No.: (+44 20) 7508 9118/9
With a copy to: Citibank, N.A.
Citigroup Centre 2
25 Canada Square
London E14 5LB
Attention: Head of Structured Support Team
Facsimile No.: (+44 20) 8636 3868
Address for notices or communications to Party B:
Address: 35 Great St. Helen's
London
EC3A 6AP
Attention: The Secretary
Facsimile No.: 020 7398 6325
With a copy to: (i) HBOS Treasury Services plc:
Address: 33 Old Broad Street
London
EC2N 1HZ
Attention: Senior Director, Securitisation
Facsimile No.: 020 7574 8303
(ii) the Master Issuer Security Trustee:
Address: The Bank of New York
26
One Canada Square
London
E14 5AL
Attention:Global Structured Finance - Corporate Trust
Facsimile No.: 020 7964 6061/6339
(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.
27
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 Master Issuer Security Trustee (or any
successor thereto) pursuant to and in accordance with the Master Issuer Deed of
Charge and acknowledges notice of such assignment. Each of the parties hereby
confirms and agrees that the Master Issuer 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), (4) (to the extent that it relates to actions taken by Party A or
its Affiliates) (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), (4) (to the extent that it does not apply as
described in the paragraph above), (6) and (7).
Section 5(a)(v) will not apply in respect of Party A.
(d) DISAPPLICATION OF CERTAIN TERMINATION EVENTS
The "Tax Event Upon Merger" provision of Section 5(b)(iii) will not apply to
Party A or to Party B.
The "Tax Event" provision of Section 5(b)(ii) will not apply to Party B and
will apply to Party A, provided that the application and interpretation of
Section 5(b)(ii) shall be restricted to a Change in Tax Law (as defined below),
as a result of which Party A has been or will be required to pay a Gross-Up
Amount (or, as the case may be, a Liability Amount) under Section 2(d).
For these purposes "Change in Tax Law" means any enactment, promulgation,
execution or ratification of, or any change in or amendment to, any law that
occurs on or after the date on which the relevant Transaction is entered into.
(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 Relevant Notes."
28
(f) RATINGS EVENT
(i) If 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") (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:
(A) provide collateral in the form of cash or securities or both
in support of its obligations under this Agreement in
accordance with the provisions of the Credit Support Annex,
provided that such posting of collateral shall be subject to
(i) if required by S&P at the time of such posting, Party A
obtaining legal opinions satisfactory to S&P in relation to
such posting and (ii) if the short-term, unsecured and
unsubordinated debt obligations or the long-term, unsecured
and unsubordinated debt obligations of Party A (or its
successor) or any Credit Support Provider from time to time in
respect of Party A cease to be rated at least as high as "A-2"
or "BBB+", respectively, by S&P, the verification by an
independent third party on a monthly basis of the valuation of
collateral;
(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 Relevant 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 Relevant 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 Relevant 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) If the long-term, unsecured and unsubordinated debt obligations of
Party A (or its successor) or any Credit Support Provider from time to
time in respect of Party A cease to be rated at least as high as
"BBB-" by S&P (such event, a "SUBSEQUENT S&P RATING EVENT"), then
Party A will, within 10 days of the occurrence of such Subsequent S&P
Rating Event, at its own cost either:
(A) transfer all of its rights and obligations with respect to
this Agreement to a replacement third party 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 Relevant Notes by S&P from time to
time;
29
(B) take such other action as Party A may agree with S&P as will
result in the rating of the Relevant 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 Relevant 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 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) If (A) the long-term, unsecured and unsubordinated debt obligations of
Party A (or its successor) and, if relevant, any Credit Support
Provider of Party A, cease to be rated at least as high as "Al" (or
its equivalent) by Moody's or (B) the short-term, unsecured and
unsubordinated debt obligations of Party A (or its successor) and, if
relevant, any Credit Support Provider of Party A, cease to be rated at
least as high as "Prime-1" (or its equivalent) by Moody's (an "INITIAL
MOODY'S RATING EVENT"), then Party A will, on a reasonable efforts
basis and at its own cost attempt 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;
or
(2) procure another person to become a co-obligor or guarantor in
respect of the obligations of Party A under this Agreement.
Such co-obligor or guarantor may be either (x) a person with
the Moody's Required Ratings 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; or
(3) take such other action as Moody's shall confirm to Party A
will remedy an Initial Moody's Rating Event.
Pending compliance with any of paragraphs (iii)(1), (iii)(2) or
(iii)(3) above, Party A will, at its own cost:
(4) within 10 days of the occurrence of an Initial Moody's Rating
Event, provide collateral in the form of cash or securities or
both in support of its obligations under this Agreement in
accordance with the provisions of the Credit Support Annex.
30
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) If (A) the long-term, unsecured and unsubordinated debt obligations of
Party A (or its successor) and, if relevant, any Credit Support
Provider of Party A, cease to be rated at least 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) and, if
relevant, any Credit Support Provider of Party A, cease to be rated at
least as high as "Prime-2" (or its equivalent) by Moody's (a
"SUBSEQUENT MOODY'S RATING EVENT"), then Party A will, on a reasonable
efforts basis, within 30 days of the occurrence of such Subsequent
Moody's Rating Event or as soon as reasonably practicable thereafter,
and at its own cost:
(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 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 Subsequent Moody's Rating Event; or
(2) procure another person to become a co-obligor or guarantor in
respect of the obligations of Party A under this Agreement.
Such co-obligor or guarantor may be either (x) a person with
the Moody's Required Ratings 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
Subsequent Moody's Rating Event; or
(3) take such other action as Moody's shall confirm to Party A
will remedy a Subsequent Moody's Rating Event.
Pending compliance with any of paragraphs (iv)(1), (iv)(2) or (iv)(3)
above, Party A will at its own cost:
(4) provide collateral in the form of cash or securities or both
in support of its obligations under this Agreement in
accordance with the provisions of the Credit Support Annex.
If any of paragraphs (iv)(1), (iv)(2) or (iv)(3) above are satisfied
at any time, all collateral (or the equivalent thereof, as
appropriate) transferred by Party A pursuant to paragraph (iv)(4)
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 Party A may agree with Moody's from time to
time.
In relation to paragraphs (iii)(4) and (iv)(4) 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.
(v) If either the long-term, unsecured and unsubordinated debt obligations
of Party A (or its successor) or any Credit Support Provider from time
to time in respect of Party A cease to be
31
rated at least as high as "A+" (or its equivalent) by Fitch Ratings
Ltd ("FITCH") or 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 and, as a result of
such cessation, the then current rating of the Relevant Notes is
downgraded or placed on credit watch for possible downgrade by Fitch
(an "INITIAL FITCH RATING EVENT") then Party A will, at its own cost,
either:
(A) provide collateral in the form of cash or securities or both
in support of its obligations under this Agreement in
accordance with the provisions of the Credit Support Annex;
(B) transfer all of its rights and obligations with respect to
this Agreement to a replacement third party whose long-term,
unsecured and unsubordinated debt rating is at least "A+" from
Fitch and whose short-term, unsecured and unsubordinated debt
rating is at least "F1" from Fitch or, in either case, such
lower rating as is commensurate with the rating assigned to
the Relevant 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
long-term, unsecured and unsubordinated debt rating is at
least "A+" from Fitch and a short-term unsecured and
unsubordinated debt rating of at least "F1" from Fitch or, in
either case, such lower rating as is commensurate with the
rating assigned to the Relevant 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 Relevant 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) If either the long-term, unsecured and unsubordinated debt obligations
of Party A (or its successor) or any Credit Support Provider from time
to time in respect of Party A cease to be rated at least as high as
"BBB+" (or its equivalent) by Fitch or 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 Relevant
Notes is downgraded or placed on credit watch for possible downgrade
by Fitch (a "FIRST SUBSEQUENT FITCH RATING EVENT") then Party A will,
on a reasonable efforts basis, either:
(A) within 30 days of the occurrence of such First Subsequent
Fitch Rating Event and at its own cost, provide collateral in
the form of cash or securities or both in support of its
obligations under this Agreement in accordance with the
provisions of the Credit Support Annex (provided that the
mark-to-market calculations and the correct and timely posting
of collateral thereunder are verified by an independent third
party (with the costs of such independent verification being
borne by Party A)); or
(B) within 30 days of the occurrence of such First Subsequent
Fitch Rating Event, at its own cost, attempt either to:
32
(1) transfer all of its rights and obligations with
respect to this Agreement to a replacement third party
whose long-term, unsecured and unsubordinated debt
rating is at least "A+" from Fitch and whose
short-term, unsecured and unsubordinated debt rating
is at least "F1" from Fitch or, in either case, such
lower rating as is commensurate with the rating
assigned to the Relevant Notes by Fitch from time to
time;
(2) obtain a guarantee of its rights and obligations with
respect to this Agreement from a third party whose
long-term, unsecured and unsubordinated debt rating is
at least "A+" from Fitch and whose short-term,
unsecured and unsubordinated debt rating is at least
"F1" from Fitch or, in either case, such lower rating
as is commensurate with the rating assigned to the
Relevant 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 Relevant Notes
following the taking of such action being maintained
at, or restored to, the level it would have been at
immediately prior to such First Subsequent Fitch
Rating Event.
If any of paragraphs (vi)(B)(1), (2) or (3) above are satisfied at any
time, all collateral (or the equivalent thereof, as appropriate)
transferred by Party A pursuant to a Credit Support Annex in
accordance with paragraph (v)(A) above or paragraph (vi)(A) will be
transferred to Party A and Party A will not be required to transfer
any additional collateral.
(vii) If either the long-term, unsecured and unsubordinated debt obligations
of Party A (or its successor) or any Credit Support Provider from time
to time in respect of Party A cease to be rated at least as high as
"BBB-" (or its equivalent) by Fitch or 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 "F3" (or its equivalent) by Fitch and,
as a result of such cessation, the then current rating of the Relevant
Notes is downgraded or placed on credit watch for possible downgrade
by Fitch (a "SECOND SUBSEQUENT FITCH RATING EVENT") then Party A will,
on a reasonable efforts basis within 30 days of the occurrence of such
Second Subsequent Fitch Rating Event, at its own cost, attempt either
to:
(A) transfer all of its rights and obligations with respect to
this Agreement to a replacement third party whose long-term,
unsecured and unsubordinated debt rating is at least "A+" from
Fitch and whose short-term, unsecured and unsubordinated debt
rating is at least "F1" from Fitch or, in either case, such
lower rating as is commensurate with the rating assigned to
the Relevant Notes by Fitch from time to time;
(B) 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
long-term, unsecured and unsubordinated debt rating is at
least "A+" from Fitch and a short-term, unsecured and
unsubordinated debt rating of at least "F1" from Fitch or, in
either case, such lower rating as is commensurate with the
rating assigned to the Relevant Notes by Fitch from time to
time; or
(C) take such other action as Party A may agree with Fitch as will
result in the rating of the Relevant Notes following the
taking of such action being maintained at, or
33
restored to, the level it would have been at immediately prior
to such Second Subsequent Fitch Rating Event.
Pending compliance with any of paragraphs (vii)(A), (B) or (C) above,
Party A will within 10 days of the occurrence of the Second Subsequent
Fitch Rating Event and at its own cost, provide collateral in the form
of cash or securities or both in support of its obligations under this
Agreement in accordance with the provisions of the Credit Support
Annex (provided that the mark-to-market calculations and the correct
and timely posting of collateral thereunder are verified by an
independent third party (with the costs of such independent
verification being borne by Party A)). If any of paragraphs (vii)(A),
(B) or (C) above are satisfied at any time, all collateral (or the
equivalent thereof, as appropriate) transferred by Party A under such
Credit Support Annex will be transferred to Party A and Party A will
not be required to transfer any additional collateral.
(viii) (A) If Party A does not take any of the measures described in
paragraph (i) above, such failure will not be or give rise to
an Event of Default but will constitute an Additional
Termination Event with respect to Party A which will be deemed
to have occurred on the thirtieth day following the Initial
S&P Rating Event with Party A as the sole Affected Party and
all Transactions as Affected Transactions.
(B) If, at the time a Subsequent S&P Rating Event occurs, Party A
has provided collateral pursuant to paragraph (i)(A) above and
fails to continue to post collateral pending compliance with
any of paragraphs (ii)(A), (ii)(B) or (ii)(C) above, such
failure will not be or give rise to an Event of Default but
will constitute an Additional Termination Event with respect
to Party A and will be deemed to have occurred on the later of
the tenth day following such Subsequent S&P Rating Event and
the thirtieth day following the Initial S&P Rating Event with
Party A as the sole Affected Party and all Transactions as
Affected Transactions. Further, it will constitute an
Additional Termination Event with respect to Party A if, even
if it is posting collateral as required by paragraph (ii)
above and notwithstanding Section 5(a)(ii), Party A does not
take any of the measures described in paragraphs (ii)(A),
(ii)(B) or (ii)(C) above. Such Additional Termination Event
will be deemed to have occurred on the tenth 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)(4) 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 thirtieth day following such Subsequent
Moody's Rating Event (or, if Party A has provided collateral
in accordance with the requirements of paragraph (iii)(4)
above, such Event of Default will be deemed to have occurred
on the tenth day following such Subsequent Moody's Rating
Event) with Party A as the Defaulting Party. Further, it will
constitute an Additional Termination Event with respect to
Party A if, even after satisfying the requirements of
paragraph (iv)(4) above
34
and notwithstanding Section 5(a)(ii), Party A has failed,
having applied reasonable efforts, to either transfer as
described in paragraph (iv)(1), find a co-obligor or guarantor
as described in paragraph (iv)(2) or take such other action as
described in paragraph (iv)(3). Such Additional Termination
Event will be deemed to have occurred on the thirtieth day
following such Subsequent Moody's Rating Event with Party A as
the sole Affected Party and all Transactions as Affected
Transactions.
(E) If Party A does not take the measures described in paragraph
(v) above, such failure will not be or give rise to an Event
of Default but will constitute an Additional Termination Event
with respect to Party A which will be deemed to have occurred
on the thirtieth day following the Initial Fitch Rating Event
with Party A as the sole Affected Party and all Transactions
as Affected Transactions.
(F) If Party A does not take the measures described in paragraph
(vi) 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 First Subsequent Fitch
Rating Event with Party A as the sole Affected Party and all
Transactions as Affected Transactions.
(G) If Party A does not, pending compliance with any of paragraphs
(vii)(A), (B) or (C), continue to comply with the terms of the
Credit Support Annex, 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 Second Subsequent
Fitch Rating Event with Party A as the Defaulting Party.
Further, it will constitute an Additional Termination Event
with respect to Party A if, even after satisfying the above
requirements, 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 such
Second Subsequent Fitch Rating Event), to either transfer as
described in paragraph (vii)(A), find a co-obligor or
guarantor as described in paragraph (vii)(B) or take such
other action as described in paragraph (vii)(C). Such
Additional Termination Event will be deemed to have occurred
on the tenth day after receiving notice of failure to use
reasonable efforts (unless, on or prior to such day, Party A
has effected a transfer as described in paragraph (vii)(A),
found a co-obligor or guarantor as described in paragraph
(vii)(B) or taken such other action as described in paragraph
(vii) (C)) with Party A as the sole Affected Party and all
Transactions as Affected Transactions.
(H) 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 or Event of Default
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 Master Issuer Security
Trustee's prior written consent.
Each of Party B and the Master Issuer Security Trustee will use their
reasonable endeavours to co-operate with Party A in entering into such
documents as may reasonably be requested by Party A in connection with the
provision of collateral or in connection with any of the other measures which
Party A may take under this Part 5(f) following its downgrade.
35
(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 other entity (each such entity a "TRANSFEREE") upon
providing five Business Days' prior written notice to the Note Trustee,
provided that:
(i) the Transferee's short-term, unsecured and unsubordinated debt
obligations are then rated not less than "A-1+" by S&P, "Prime-1" by
Moody's and "F1" by Fitch and its long-term, unsecured and
unsubordinated debt obligations are then rated not less than "A1" by
Moody's and "A+" by Fitch (or its equivalent by any substitute rating
agency) or such Transferee's obligations under this Agreement are
guaranteed by an entity whose short-term, unsecured and unsubordinated
debt obligations are then rated not less than "A-1+" by S&P, "Prime-1"
by Moody's and "F1" by Fitch and whose long-term, unsecured and
unsubordinated debt obligations are then rated not less than "A1" by
Moody's and "A+" by Fitch (or its equivalent by any substitute rating
agency);
(ii) If the Transferee is domiciled in a different country from both Party
A and Party B, the Rating Agencies have confirmed that the transfer
will not result in the then current rating of the Relevant 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 and that no deductibility issues will
arise.
36
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 Master Issuer Security Trustee.
(h) ADDITIONAL REPRESENTATION
Section 3 is amended by the addition at the end thereof of the following
additional representations (provided that the representation in Section 3(h)
will be made by Party A only):
"(g) NO AGENCY. It is entering into this Agreement, including each
Transaction, as principal and not as agent of any person or entity.
(h) PARI PASSU. Its obligations under this Agreement rank pari
passu with all of its other unsecured, unsubordinated obligations
except those obligations preferred by operation of law."
(i) RECORDING OF CONVERSATIONS
Each party to this Agreement (i) consents to the recording of the telephone
conversations of trading, marketing and operations personnel of the parties in
connection with this Agreement or any potential Transaction, (ii) agrees to
obtain any necessary consent of, and give notice of such recording to, such
personnel of it and (iii) agrees that in any Proceedings it will not object to
the introduction of such recordings in evidence on the ground that consent was
not properly given.
(j) RELATIONSHIP BETWEEN THE PARTIES
The Agreement is amended by the insertion after Section 14 of an additional
Section 15, reading in its entirety as follows:
"15. RELATIONSHIP BETWEEN THE PARTIES
Each party will be deemed to represent to the other party on the date on which
it enters into a Transaction that (absent a written agreement between the
parties that expressly imposes affirmative obligations to the contrary for that
Transaction):
(a) NON RELIANCE. It is acting for its own account, and it has made its
own independent decisions to enter into that Transaction and as to
whether that Transaction is appropriate or proper for it based upon
advice from such advisers as it has deemed necessary. It is not
relying on any communication (written or oral) of the other party as
investment advice or as a recommendation to enter into that
Transaction, it being understood that information and explanations
related to the terms and conditions of a Transaction will not be
considered investment advice or a recommendation to enter into that
Transaction. No communication (written or oral) received from the
other 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.
37
(c) STATUS OF PARTIES. The other party is not acting as a fiduciary for or
an adviser for it in respect of that Transaction."
(k) TAX
The Agreement is amended by deleting Section 2(d) in its entirety and replacing
it with the following:
"(d) Deduction or Withholding for Tax
(i) Requirement to Withhold
All payments under this Agreement will be made without any deduction
or withholding for or on account of any Tax unless such deduction or
withholding is required (including, for the avoidance of doubt, if
such deduction or withholding is required in order for the payer to
obtain relief from Tax) by any applicable law, as modified by the
practice of any relevant governmental revenue authority, then in
effect. If a party ("X") is so required to deduct or withhold, then
that party (the "DEDUCTING PARTY"):
(1) will promptly notify the other party ("Y") of such
requirement;
(2) will pay to the relevant authorities the full amount required
to be deducted or withheld (including the full amount required
to be deducted or withheld from any Gross Up Amount (as
defined below) paid by the Deducting Party to Y under this
Section 2(d)) promptly upon the earlier of determining that
such deduction or withholding is required or receiving notice
that such amount has been assessed against Y;
(3) will promptly forward to Y an official receipt (or a certified
copy), or other documentation reasonably acceptable to Y,
evidencing such payment to such authorities; and
(4) if X is Party A, X will promptly pay in addition to the
payment to which Party B is otherwise entitled under this
Agreement, such additional amount (the "GROSS UP AMOUNT") as
is necessary to ensure that the net amount actually received
by Party B will equal the full amount which Party B would have
received had no such deduction or withholding been required.
(ii) Liability
If:
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to
make any deduction or withholding for or on account of any
Tax; and
(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
penalties) 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
38
agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)) and Party B
will promptly pay to the relevant government revenue authority the
amount of such liability (including any related liability for interest
and penalties) and (B) where X is Party A and Party A would have been
required to pay a Gross Up Amount to Party B, Party A will promptly
pay to the relevant government revenue authority the amount of such
liability (including any related liability for interest and
penalties).
(iii) Tax Credit etc.
Where Party A pays an amount in accordance with Section 2(d)(i)(4)
above, Party B undertakes as follows:
(1) to the extent that Party B obtains any Tax credit, allowance,
set-off or repayment from the tax authorities of any
jurisdiction relating to any deduction or withholding giving
rise to such payment (a "TAX CREDIT"), it will pay to Party A
as soon as practical after receipt of the same so much of the
cash benefit (as calculated below) relating thereto which it
has received as will leave Party B in substantially the same
(but in any event no worse) position as Party B would have
been in if no such deduction or withholding had been required;
(2) the "cash benefit" will, in the case of a Tax credit,
allowance or set-off, be the additional amount of Tax which
would have been payable by Party B in the jurisdiction
referred to in clause (1) above but for the obtaining by it of
the said Tax credit, allowance or set-off and, in the case of
a repayment, will be the amount of the repayment together, in
either case, with any related interest, repayment supplement
or similar payment obtained by Party B; and
(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."
(l) SECURITY, ENFORCEMENT AND LIMITED RECOURSE
(i) Party A agrees with Party B and the Master Issuer Security Trustee to
be bound by the terms of the Master 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
Master 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 Master 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 Master Issuer Available
Funds, but always subject to the order of priority of payments set out
in the Master Issuer Cash Management Agreement and the Master 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.
39
(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 signed for the purposes of identification by Allen &
Overy and Sidley Austin on 1 March 2007 (as the same may be amended, varied or
supplemented from time to time) (the MASTER ISSUER MASTER DEFINITIONS AND
CONSTRUCTION SCHEDULE) 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 Issuer Master
Definitions and Construction Schedule, the definitions in this Agreement will
prevail. The rules of interpretation set out in the Master Issuer Master
Definitions and Construction 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) 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 "A1" by Moody's and/or the short-term, 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/or "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
40
documentation will not adversely impact the ratings of the
Notes" will be added after "agree" in the sixteenth line; and
(C) the last sentence will be deleted and replaced with the
following:
"If, on the last date set for delivery of quotations, exactly
two quotations are provided, the Market Quotation will be the
higher of the two quotations. If only one quotation is
provided on such date, Party B may, in its discretion, accept
such quotation as the Market Quotation and, if Party B does
not accept such quotation (or if no quotation has been
provided), it will be deemed that the Market Quotation in
respect of the Terminated Transaction cannot be determined. If
no quotation has been provided, it will be deemed that the
Market Quotation in respect of the Terminated Transaction
cannot be determined."
(iii) For the purpose of the definition of "Market Quotation", and without
limitation of the general rights of Party B under the Agreement:
(A) Party B will undertake to use its reasonable efforts to obtain
at least three firm quotations as soon as reasonably
practicable after the Early Termination Date and in any event
within the time period specified pursuant to Part 5(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.
(s) SCOPE OF AGREEMENT
The provisions of this Agreement do not apply to any Transaction other than the
Credit Support Annex attached hereto and the Currency Swap Transaction in
respect of the Series 3 Class A Notes issued by Permanent Master Issuer PLC
(the RELEVANT NOTES) having a Trade Date of 21 February, 2007 and entered into
between Party A and Party B.
41
(BILATERAL FORM - TRANSFER) 1 (ISDA AGREEMENTS SUBJECT TO ENGLISH LAW) 2
ISDA[REGISTERED]
International Swaps and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the
ISDA MASTER AGREEMENT
dated as of .............
between
................................ and ................................
("PARTY A") ("PARTY B")
This Annex supplements, forms part of, and is subject to, the ISDA Master
Agreement referred to above and is part of its Schedule. For the purposes of
this Agreement, including, without limitation, Sections 1(c), 2(a), 5 and 6 ,
the credit support arrangements set out in this Annex constitute a Transaction
(for which this Annex constitutes the Confirmation).
PARAGRAPH 1. INTERPRETATION
Capitalised terms not otherwise defined in this Annex or elsewhere in this
Agreement have the meanings specified pursuant to Paragraph 10, and all
references in this Annex to Paragraphs are to Paragraphs of this Annex. In the
event of any inconsistency between this Annex and the other provisions of this
Schedule, this Annex will prevail, and in the event of any inconsistency
between Paragraph 11 and the other provisions of this Annex, Paragraph 11 will
prevail. For the avoidance of doubt, references to "transfer" in this Annex
mean, in relation to cash, payment and, in relation to other assets, delivery.
PARAGRAPH 2. CREDIT SUPPORT OBLIGATIONS
(a) DELIVERY AMOUNT. Subject to Paragraphs 3 and 4, upon a demand made by
the Transferee on or promptly following a Valuation Date, if the Delivery
Amount for that Valuation Date equals or exceeds the Transferor's Minimum
Transfer Amount, then the Transferor will transfer to the
__________
1 This document is not intended to create a charge or other security interest
over the assets transferred under its terms. Persons intending to establish a
collateral arrangement based on the creation of a charge or other security
interest should consider using the ISDA Credit Support Deed (English law) or
the ISDA Credit Support Annex (New York law), as appropriate.
2 This Credit Support Annex has been prepared for use with ISDA Master
Agreements subject to English law. Users should consult their legal advisers as
to the proper use and effect of this form and the arrangements it contemplates.
In particular, users should consult their legal advisers if they wish to have
the Credit Support Annex made subject to a governing law other than English law
or to have the Credit Support Annex subject to a different governing law than
that governing the rest of the ISDA Master Agreement (e.g., English law for the
Credit Support Annex and New York law for the rest of the ISDA Master
Agreement).
Transferee Eligible Credit Support having a Value as of the date of transfer at
least equal to the applicable Delivery Amount (rounded pursuant to Paragraph
11(b)(iii)(D)). Unless otherwise specified in Paragraph 11(b), the "Delivery
Amount" applicable to the Transferor for any Valuation Date will equal the
amount by which:
(i) the Credit Support Amount
exceeds
(ii) the Value as of that Valuation Date of the Transferor's Credit
Support Balance (adjusted to include any prior Delivery Amount and to
exclude any prior Return Amount, the transfer of which, in either
case, has not yet been completed and for which the relevant Settlement
Day falls on or after such Valuation Date).
(b) RETURN AMOUNT. Subject to Paragraphs 3 and 4, upon a demand made by
the Transferor on or promptly following a Valuation Date, if the Return Amount
for that Valuation Date equals or exceeds the Transferee's Minimum Transfer
Amount, then the Transferee will transfer to the Transferor Equivalent Credit
Support specified by the Transferor in that demand having a Value as of the
date of transfer as close as practicable to the applicable Return Amount
(rounded pursuant to Paragraph 11(b)(iii)(D)) and the Credit Support Balance
will, upon such transfer, be reduced accordingly. Unless otherwise specified in
Paragraph 11(b), the "Return Amount" applicable to the Transferee for any
Valuation Date will equal the amount by which:
(i) the Value as of that Valuation Date of the Transferor's Credit
Support Balance (adjusted to include any prior Delivery Amount and to
exclude any prior Return Amount, the tranfer of which, in either case,
has not yet been completed and for which the relevant Settlement Day
falls on or after such Valuation Date)
exceeds
(ii) the Credit Support Amount.
PARAGRAPH 3. TRANSFERS, CALCULATIONS AND EXCHANGES
(a) TRANSFERS. All transfers under this Annex of any Eligible Credit
Support, Equivalent Credit Support, Interest Amount or Equivalent Distributions
shall be made in accordance with the instructions of the Transferee or
Transferor, as applicable, and shall be made:
(i) in the case of cash, by transfer into one or more bank
accounts specified by the recipient;
(ii) in the case of certificated securities which cannot or which
the parties have agreed will not be delivered by book-entry, by
delivery in appropriate physical form to the recipient or its account
accompanied by any duly executed instruments of transfer, transfer tax
stamps and any other documents necessary to constitute a legally valid
transfer of the transferring party's legal and beneficial title to the
recipient; and
(iii) in the case of securities which the parties have agreed will
be delivered by book-entry, by the giving of written instructions
(including, for the avoidance of doubt, instructions given by telex,
facsimile transmission or electronic messaging system) to the relevant
depository institution or other entity specified by the recipient,
together with a written copy of the
2
instructions to the recipient, sufficient, if complied with, to result
in a legally effective transfer of the transferring party's legal and
beneficial title to the recipient.
Subject to Paragraph 4 and unless otherwise specified, if a demand for the
transfer of Eligible Credit Support or Equivalent Credit Support is received by
the Notification Time, then the relevant transfer will be made not later than
the close of business on the Settlement Day relating to the date such demand is
received; if a demand is received after the Notification Time, then the
relevant transfer will be made not later than the close of business on the
Settlement Day relating to the day after the date such demand is received.
(b) CALCULATIONS. All calculations of Value and Exposure for purposes of
Paragraphs 2 and 4(a) will be made by the relevant Valuation Agent as of the
relevant Valuation Time. The Valuation Agent will notify each party (or the
other party, if the Valuation Agent is a party) of its calculations not later
than the Notification Time on the Local Business Day following the applicable
Valuation Date (or, in the case of Paragraph 4(a), following the date of
calculation).
(c) EXCHANGES.
(i) Unless otherwise specified in Paragraph 11, the Transferor may
on any Local Business Day by notice inform the Transferee that it
wishes to transfer to the Transferee Eligible Credit Support specified
in that notice (the "New Credit Support") in exchange for certain
Eligible Credit Support (the "Original Credit Support") specified in
that notice comprised in the Transferor's Credit Support Balance.
(ii) If the Transferee notifies the Transferor that it has
consented to the proposed exchange, (A) the Transferor will be obliged
to transfer the New Credit Support to the Transferee on the first
Settlement Day following the date on which it receives notice (which
may be oral telephonic notice) from the Transferee of its consent and
(B) the Transferee will be obliged to transfer to the Transferor
Equivalent Credit Support in respect of the Original Credit Support
not later than the Settlement Day following the date on which the
Transferee receives the New Credit Support, unless otherwise specified
in Paragraph 11(d) (the "Exchange Date"); provided that the Transferee
will only be obliged to transfer Equivalent Credit Support with a
Value as of the date of transfer as close as practicable to, but in
any event not more than, the Value of the New Credit Support as of
that date.
PARAGRAPH 4. DISPUTE RESOLUTION
(a) DISPUTED CALCULATIONS OR VALUATIONS. If a party (a "Disputing Party")
reasonably disputes (I) the Valuation Agent's calculation of a Delivery Amount
or a Return Amount or (II) the Value of any transfer of Eligible Credit Support
or Equivalent Credit Support, then:
(1) the Disputing Party will notify the other party and the
Valuation Agent (if the Valuation Agent is not the other party) not
later than the close of business on the Local Business Day following,
in the case of (I) above, the date that the demand is received under
Paragraph 2 or, in the case of (II) above, the date of transfer;
(2) in the case of (I) above, the appropriate party will transfer
the undisputed amount to the other party not later than the close of
business on the Settlement Day following the date that the demand is
received under Paragraph 2;
(3) the parties will consult with each other in an attempt to
resolve the dispute; and
3
(4) if they fail to resolve the dispute by the Resolution Time,
then:
(i) in the case of a dispute involving a Delivery Amount or Return
Amount, unless otherwise specified in Paragraph 11(e), the Valuation
Agent will recalculate the Exposure and the Value as of the
Recalculation Date by:
(A) utilising any calculations of that part of the
Exposure attributable to the Transactions that the parties
have agreed are not in dispute;
(B) calculating that part of the Exposure attributable to
the Transactions in dispute by seeking four actual quotations
at mid-market from Reference Market-makers for purposes of
calculating Market Quotation, and taking the arithmetic
average of those obtained; provided that if four quotations
are not available for a particular Transaction, then fewer
than four quotations may be used for that Transaction, and if
no quotations are available for a particular Transaction, then
the Valuation Agent's original calculations will be used for
the Transaction; and
(C) utilising the procedures specified in Paragraph
11(e)(ii) for calculating the Value, if disputed, of the
outstanding Credit Support Balance;
(ii) in the case of a dispute involving the Value of any transfer
of Eligible Credit Support or Equivalent Credit Support, the Valuation
Agent will recalculate the Value as of the date of transfer pursuant
to Paragraph 11(e)(ii).
Following a recalculation pursuant to this Paragraph, the Valuation Agent will
notify each party (or the other party, if the Valuation Agent is a party) as
soon as possible but in any event not later than the Notification Time on the
Local Business Day following the Resolution Time. The appropriate party will,
upon demand following such notice given by the Valuation Agent or a resolution
pursuant to (3) above and subject to Paragraph 3(a), make the appropriate
transfer.
(b) NO EVENT OF DEFAULT. The failure by a party to make a transfer of any
amount which is the subject of a dispute to which Paragraph 4(a) applies will
not constitute an Event of Default for as long as the procedures set out in
this Paragraph 4 are being carried out. For the avoidance of doubt, upon
completion of those procedures, Section 5(a)(i) of this Agreement will apply to
any failure by a party to make a transfer required under the final sentence of
Paragraph 4(a) on the relevant due date.
PARAGRAPH 5. TRANSFER OF TITLE, NO SECURITY INTEREST, DISTRIBUTIONS AND
INTEREST AMOUNT
(a) TRANSFER OF TITLE. Each party agrees that all right, title and
interest in and to any Eligible Credit Support, Equivalent Credit Support,
Equivalent Distributions or Interest Amount which it transfers to the other
party under the terms of this Annex shall vest in the recipient free and clear
of any liens, claims, charges or encumbrances or any other interest of the
transferring party or of any third person (other than a lien routinely imposed
on all securities in a relevant clearance system).
(b) NO SECURITY INTEREST. Nothing in this Annex is intended to create or
does create in favour of either party any mortgage, charge, lien, pledge,
encumbrance or other security interest in any cash or other property
transferred by one party to the other party under the terms of this Annex.
4
(c) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) DISTRIBUTIONS. The Transferee will transfer to the Transferor
not later than the Settlement Day following each Distributions Date
cash, securities or other property of the same type, nominal value,
description and amount as the relevant Distributions ("Equivalent
Distributions") to the extent that a Delivery Amount would not be
created or increased by the transfer, as calculated by the Valuation
Agent (and the date of calculation will be deemed a Valuation Date for
this purpose).
(ii) INTEREST AMOUNT. Unless otherwise specified in Paragraph
11(f)(iii), the Transferee will transfer to the Transferor at the
times specified in Paragraph 11(f)(ii) the relevant Interest Amount to
the extent that a Delivery Amount would not be created or increased by
the transfer, as calculated by the Valuation Agent (and the date of
calculation will be deemed a Valuation Date for this purpose).
PARAGRAPH 6. DEFAULT
If an Early Termination Date is designated or deemed to occur as a result of an
Event of Default in relation to a party, an amount equal to the Value of the
Credit Support Balance, determined as though the Early Termination Date were a
Valuation Date, will be deemed to be an Unpaid Amount due to the Transferor
(which may or may not be the Defaulting Party) for purposes of Section 6(e).
For the avoidance of doubt, if Market Quotation is the applicable payment
measure for purposes of Section 6(e), then the Market Quotation determined
under Section 6(e) in relation to the Transaction constituted by this Annex
will be deemed to be zero, and, if Loss is the applicable payment measure for
purposes of Section 6(e), then the Loss determined under Section 6(e) in
relation to the Transaction will be limited to the Unpaid Amount representing
the Value of the Credit Support Balance.
PARAGRAPH 7. REPRESENTATION
Each party represents to the other party (which representation will be deemed
to be repeated as of each date on which it transfers Eligible Credit Support,
Equivalent Credit Support or Equivalent Distributions) that it is the sole
owner of or otherwise has the right to transfer all Eligible Credit Support,
Equivalent Credit Support or Equivalent Distributions it transfers to the other
party under this Annex, free and clear of any security interest, lien,
encumbrance or other restriction (other than a lien routinely imposed on all
securities in a relevant clearance system).
PARAGRAPH 8. EXPENSES
Each party will pay its own costs and expenses (including any stamp, transfer
or similar transaction tax or duty payable on any transfer it is required to
make under this Annex) in connection with performing its obligations under this
Annex, and neither party will be liable for any such costs and expenses
incurred by the other party.
PARAGRAPH 9. MISCELLANEOUS
(a) DEFAULT INTEREST. Other than in the case of an amount which is the
subject of a dispute under Paragraph 4(a), if a Transferee fails to make, when
due, any transfer of Equivalent Credit Support, Equivalent Distributions or the
Interest Amount, it will be obliged to pay the Transferor (to the extent
permitted under applicable law) an amount equal to interest at the Default Rate
multiplied by the Value on the relevant Valuation Date of the items of property
that were required to be transferred, from (and including) the date that the
Equivalent Credit Support, Equivalent Distributions or Interest Amount were
required to be transferred to (but excluding) the date of transfer of the
Equivalent Credit
5
Support, Equivalent Distributions or Interest Amount. This interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed.
(b) GOOD FAITH AND COMMERCIALLY REASONABLE MANNER. Performance of all
obligations under this Annex, including, but not limited to, all calculations,
valuations and determinations made by either party, will be made in good faith
and in a commercially reasonable manner.
(c) DEMANDS AND NOTICES. All demands and notices given by a party under
this Annex will be given as specified in Section 12 of this Agreement.
(d) SPECIFICATIONS OF CERTAIN MATTERS. Anything referred to in this Annex
as being specified in Paragraph 11 also may be specified in one or more
Confirmations or other documents and this Annex will be construed accordingly.
PARAGRAPH 10. DEFINITIONS
As used in this Annex:
"BASE CURRENCY" means the currency specified as such in Paragraph 11(a)(i).
"BASE CURRENCY EQUIVALENT" means, with respect to an amount on a Valuation
Date, in the case of an amount denominated in the Base Currency, such Base
Currency amount and, in the case of an amount denominated in a currency other
than the Base Currency (the "Other Currency"), the amount of Base Currency
required to purchase such amount of the Other Currency at the spot exchange
rate determined by the Valuation Agent for value on such Valuation Date.
"CREDIT SUPPORT AMOUNT" means, with respect to a Transferor on a Valuation
Date, (i) the Transferee's Exposure plus (ii) all Independent Amounts
applicable to the Transferor, if any, minus (iii) all Independent Amounts
applicable to the Transferee, if any, minus (iv) the Transferor's Threshold;
provided, however, that the Credit Support Amount will be deemed to be zero
whenever the calculation of Credit Support Amount yields a number less than
zero.
"CREDIT SUPPORT BALANCE" means, with respect to a Transferor on a Valuation
Date, the aggregate of all Eligible Credit Support that has been transferred to
or received by the Transferee under this Annex, together with any Distributions
and all proceeds of any such Eligible Credit Support or Distributions, as
reduced pursuant to Paragraph 2(b), 3(c)(ii) or 6. Any Equivalent Distributions
or Interest Amount (or portion of either) not transferred pursuant to Paragraph
5(c)(i) or (ii) will form part of the Credit Support Balance.
"DELIVERY AMOUNT" has the meaning specified in Paragraph 2(a).
"DISPUTING PARTY" has the meaning specified in Paragraph 4.
"DISTRIBUTIONS" means, with respect to any Eligible Credit Support comprised in
the Credit Support Balance consisting of securities, all principal, interest
and other payments and distributions of cash or other property to which a
holder of securities of the same type, nominal value, description and amount as
such Eligible Credit Support would be entitled from time to time.
"DISTRIBUTIONS DATE" means, with respect to any Eligible Credit Support
comprised in the Credit Support Balance other than cash, each date on which a
holder of such Eligible Credit Support is entitled to receive Distributions or,
if that date is not a Local Business Day, the next following Local Business
Day.
6
"ELIGIBLE CREDIT SUPPORT" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 11(b)(ii) including, in relation
to any securities, if applicable, the proceeds of any redemption in whole or in
part of such securities by the relevant issuer.
"ELIGIBLE CURRENCY" means each currency specified as such in Paragraph
11(a)(ii), if such currency is freely available.
"EQUIVALENT CREDIT SUPPORT" means, in relation to any Eligible Credit Support
comprised in the Credit Support Balance, Eligible Credit Support of the same
type, nominal value, description and amount as that Eligible Credit Support.
"EQUIVALENT DISTRIBUTIONS" has the meaning specified in Paragraph 5(c)(i).
"EXCHANGE DATE" has the meaning specified in Paragraph 11(d).
"EXPOSURE" means, with respect to a party on a Valuation Date and subject to
Paragraph 4 in the case of a dispute, the amount, if any, that would be payable
to that party by the other party (expressed as a positive number) or by that
party to the other party (expressed as a negative number) pursuant to Section
6(e)(ii)(1) of this Agreement if all Transactions (other than the Transaction
constituted by this Annex) were being terminated as of the relevant Valuation
Time, on the basis that (i) that party is not the Affected Party and (ii) the
Base Currency is the Termination Currency; provided that Market Quotations will
be determined by the Valuation Agent on behalf of that party using its
estimates at mid-market of the amounts that would be paid for Replacement
Transactions (as that term is defined in the definition of "Market Quotation").
"INDEPENDENT AMOUNT" means, with respect to a party, the Base Currency
Equivalent of the amount specified as such for that party in Paragraph
11(b)(iii)(A); if no amount is specified, zero.
"INTEREST AMOUNT" means, with respect to an Interest Period, the aggregate sum
of the Base Currency Equivalents of the amounts of interest determined for each
relevant currency and calculated for each day in that Interest Period on the
principal amount of the portion of the Credit Support Balance comprised of cash
in such currency, determined by the Valuation Agent for each such day as
follows:
(x) the amount of cash in such currency on that day; multiplied by
(y) the relevant Interest Rate in effect for that day; divided by
(z) 360 (or, in the case of pounds sterling, 365).
"INTEREST PERIOD" means the period from (and including) the last Local Business
Day on which an Interest Amount was transferred (or, if no Interest Amount has
yet been transferred, the Local Business Day on which Eligible Credit Support
or Equivalent Credit Support in the form of cash was transferred to or received
by the Transferee) to (but excluding) the Local Business Day on which the
current Interest Amount is transferred.
"INTEREST RATE" means, with respect to an Eligible Currency, the rate specified
in Paragraph 11(f)(i) for that currency.
"LOCAL BUSINESS DAY", unless otherwise specified in Paragraph 11(h), means:
7
(i) in relation to a transfer of cash or other property (other
than securities) under this Annex, a day on which commercial banks are
open for business (including dealings in foreign exchange and foreign
currency deposits) in the place where the relevant account is located
and, if different, in the principal financial centre, if any, of the
currency of such payment;
(ii) in relation to a transfer of securities under this Annex, a
day on which the clearance system agreed between the parties for
delivery of the securities is open for the acceptance and execution of
settlement instructions or, if delivery of the securities is
contemplated by other means, a day on which commercial banks are open
for business (including dealings in foreign exchange and foreign
currency deposits) in the place(s) agreed between the parties for this
purpose;
(iii) in relation to a valuation under this Annex, a day on which
commercial banks are open for business (including dealings in foreign
exchange and foreign currency deposits) in the place of location of
the Valuation Agent and in the place(s) agreed between the parties for
this purpose; and
(iv) in relation to any notice or other communication under this
Annex, a day on which commercial banks are open for business
(including dealings in foreign exchange and foreign currency deposits)
in the place specified in the address for notice most recently
provided by the recipient.
"MINIMUM TRANSFER AMOUNT" means, with respect to a party, the amount specified
as such for that party in Paragraph 11(b)(iii)(C); if no amount is specified,
zero.
"NEW CREDIT SUPPORT" has the meaning specified in Paragraph 3(c)(i).
"NOTIFICATION TIME" has the meaning specified in Paragraph 11(c)(iv).
"RECALCULATION DATE" means the Valuation Date that gives rise to the dispute
under Paragraph 4; provided, however, that if a subsequent Valuation Date
occurs under Paragraph 2 prior to the resolution of the dispute, then the
"RECALCULATION DATE" means the most recent Valuation Date under Paragraph 2.
"RESOLUTION TIME" has the meaning specified in Paragraph 11(e)(i).
"RETURN AMOUNT" has the meaning specified in Paragraph 2(b).
"SETTLEMENT DAY" means, in relation to a date, (i) with respect to a transfer
of cash or other property (other than securities), the next Local Business Day
and (ii) with respect to a transfer of securities, the first Local Business Day
after such date on which settlement of a trade in the relevant securities, if
effected on such date, would have been settled in accordance with customary
practice when settling through the clearance system agreed between the parties
for delivery of such securities or, otherwise, on the market in which such
securities are principally traded (or, in either case, if there is no such
customary practice, on the first Local Business Day after such date on which it
is reasonably practicable to deliver such securities).
"THRESHOLD" means, with respect to a party, the Base Currency Equivalent of the
amount specified as such for that party in Paragraph 11(b)(iii)(B); if no
amount is specified, zero.
"TRANSFEREE" means, in relation to each Valuation Date, the party in respect of
which Exposure is a positive number and, in relation to a Credit Support
Balance, the party which, subject to this Annex,
8
owes such Credit Support Balance or, as the case may be, the Value of such
Credit Support Balance to the other party.
"TRANSFEROR" means, in relation to a Transferee, the other party.
"VALUATION AGENT" has the meaning specified in Paragraph 11(c)(i).
"VALUATION DATE" means each date specified in or otherwise determined pursuant
to Paragraph 11(c)(ii).
"VALUATION PERCENTAGE" means, for any item of Eligible Credit Support, the
percentage specified in Paragraph 11(b)(ii).
"VALUATION TIME" has the meaning specified in Paragraph 11(c)(iii).
"VALUE" means, for any Valuation Date or other date for which Value is
calculated, and subject to Paragraph 4 in the case of a dispute, with respect
to:
(i) Eligible Credit Support comprised in a Credit Support Balance
that is:
(A) an amount of cash, the Base Currency Equivalent of
such amount multiplied by the applicable Valuation Percentage,
if any; and
(B) a security, the Base Currency Equivalent of the bid
price obtained by the Valuation Agent multiplied by the
applicable Valuation Percentage, if any; and
(ii) items that are comprised in a Credit Support Balance and are
not Eligible Credit Support, zero.
9
Citibank, N.A., London Branch as Party A and Permanent Master Issuer PLC as
Party B
PARAGRAPH 11. ELECTIONS AND VARIABLES
(A) BASE AND ELIGIBLE CURRENCY.
(i) "Base Currency" means GBP.
(ii) "Eligible Currency" means the Base Currency.
It is agreed by the Parties that where the Credit Support Amount is
transferred in a currency other than Base Currency, the Valuation
Percentage for each item listed as Eligible Credit Support in
Paragraph 11(b)(ii) shall be reduced by a percentage agreed by the
Parties and approved by the relevant rating agency ("Additional
Valuation Percentage"), such Additional Valuation Percentage as agreed
by the Parties and approved by the relevant rating agency. For the
purpose of this Annex, references to the "relevant rating agency"
shall mean the rating agency whose criteria will be used to determine
the amount of Eligible Credit Support that Party A is required to
transfer to Party B following a credit ratings downgrade of Party A.
(B) CREDIT SUPPORT OBLIGATIONS.
(i) DELIVERY AMOUNT, RETURN AMOUNT AND CREDIT SUPPORT AMOUNT.
(A) "Delivery Amount" has the meaning specified in
Paragraph 2(a), except that the words "upon a demand
made by the Transferee" shall be deleted.
(B) "Return Amount" has the meaning specified in Paragraph
2(b).
(C) "Credit Support Amount" means:
(w) if there has been an Initial S&P Rating Event or a
Subsequent S&P Rating Event only, an amount calculated
in accordance with the S&P criteria of S&P as set out
in the articles "Standard and Poor's Global Interest
Rate and Swap Counterparty Criteria Expanded"
published in December 2003 and "Global Interest Rate
and Currency Swaps: Calculating the Collateral
Required Amount" published on 26 February 2004, as
amended pursuant to (D) below;
(x) if there has been an Initial Moody's Rating Event or a
Subsequent Moody's Rating Event only, an amount equal
to 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) the product of B and the current
aggregate notional amounts of the outstanding
Transaction, where:
(a) "A" means 102% and "B" means 1.6% 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 "A1" or
"Prime-1 by Moody's;
(b) "A" means 102% and "B" means 3.7% 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
10
Credit Support Provider of Party A cease to be
rated as high as "A3" or "Prime-2 by Moody's;
(c) "A" means 0% and "B" means 0% in all other
cases.
(y) if there has been an Initial Fitch Rating Event, a
First Subsequent Fitch Rating Event or a Second
Subsequent Fitch Rating Event only, an amount equal to
the greater of (a) the sum of (i) 1.05 multiplied by
the current aggregate notional principal or currency
amounts in respect of Party A under the outstanding
Transaction multiplied by the Volatility Cushion and
(ii) the mark-to-market value of the outstanding
Transaction as determined by Party A in good faith on
a weekly basis and (b) zero.
"VOLATILITY CUSHION" means the applicable percentage
determined in accordance with Appendix 2 to Fitch's
Structured Finance Criteria Report entitled
"Counterparty Risk in Structured Finance Transactions:
Swap Criteria" dated 13 September, 2004.
(z) In the event that there has been a downgrade event
under more than one of (w), (x) and (y) above, the
Credit Support Amount shall be calculated in
accordance with the provisions of whichever of (w),
(x) or (y), as applicable, results in the provision of
the greatest amount of collateral.
(D) The article "Global Interest Rate and Currency Swaps:
Calculating the Collateral Required Amount" dated 26
February 2004 shall, for the purposes of this
Agreement, be amended as follows:
(1) Calculating the Collateral Require Amount: The
formula for calculating the collateral required
amount shall be as follows:
(x) Collateral requirements for interest rate
(including caps, collars and floors) and
currency swaps equal the sum of:
(xx) the mark-to-market; and
(yy) the VB multiplied by the notional
balance of the swap;
(y) Collateral requirements for basis risk
swaps equal the sum of:
(xx) the mark-to-market; and
(yy) the [VB* .1] multiplied by the
notional balance of the swap.
(2) Volatility Buffer tables: The weighted average
life of the Notes instead of the legal final
maturity of the swap shall be used when
determining the appropriate VB.
(ii) ELIGIBLE CREDIT SUPPORT. The items set forth on Schedule I
hereto will qualify as "Eligible Credit Support".
(iii) THRESHOLDS.
11
(A) "INDEPENDENT AMOUNT" shall mean, with respect to Party
A and Party B, zero.
(B) "THRESHOLD" means with respect to Party A: Infinity
provided that, in the event that the unsecured,
unsubordinated debt obligations of Party A fall below
the rating requirement and Party A is required to take
action pursuant to Part 5(f) of the Schedule to the
Agreement and unless Party A has put in place
alternative arrangements as contemplated by the
Agreement, the Threshold shall be zero. For the
avoidance of doubt, in the event that the unsecured,
unsubordinated debt obligations of Party A regain and
retain the applicable rating requirement, then the
Threshold for Party A will be infinity, subject to
adjustment in accordance with this paragraph
11(b)(iii)(B).
"THRESHOLD" means with respect to Party B: Infinity.
(C) "MINIMUM TRANSFER AMOUNT" means with respect to Party
A and Party B, GBP 50,000 provided that if (1) an
Event of Default has occurred and is continuing in
respect of Party A is the Defaulting Party, or (2) an
Additional Termination Event has occurred in respect
of which Party A is an Affected Party, the Minimum
Transfer Amount with respect to Party A shall be zero.
(D) ROUNDING. The Delivery Amount and the Return Amount
will be rounded up and down to the nearest integral
multiple of GBP 10,000 respectively, subject to the
maximum Return Amount being equal to the Credit
Support Balance.
(C) VALUATION AND TIMING.
(i) "Valuation Agent" means Party A.
(ii) "Valuation Date" means each Local Business Day.
(iii) "Valuation Time" means, with respect to the determination of
Exposure and Value, the close of business on the Local
Business Day immediately preceding the Valuation Date or date
of calculation, as applicable, provided that the calculations
of Value and Exposure will, as far as practicable, be made on
approximately the same time on the same day.
(iv) "Notification Time" shall be 2:00 p.m., London time on a
Valuation Date.
(D) EXCHANGE DATE. "EXCHANGE DATE" has the meaning specified in Paragraph
3(c)(ii). The following shall be inserted at the end of Paragraph
3(c)(ii): "and provided, further however, that the Transferor can only
request to exchange Eligible Credit Support in an amount greater than
the Transferor's Minimum Transfer Amount. The parties hereby agree
that consent shall not be required to an exchange which otherwise
meets the requirements of this Annex."
(E) DISPUTE RESOLUTION.
(i) "RESOLUTION TIME" means 2:00 p.m., London time, on the Local
Business Day following the date on which notice is given that
gives rise to a dispute under Paragraph 4.
(ii) VALUE. For purposes of Paragraphs 4(a)(4)(i)(C) and
4(a)(4)(ii), the Value of the outstanding Credit Support
Balance or of any transfer of Eligible Credit Support or
12
Equivalent Credit Support, as the case may be, on the relevant
date will be calculated as follows:
(A) with respect to any Eligible Credit Support or
Equivalent Credit Support comprising securities
("SECURITIES") the Base Currency Equivalent of the sum
of:
(a)(x) the last bid price on such date for such
Securities on the principal national securities
exchange on which such Securities are listed
multiplied by the applicable Valuation Percentage; or
(y) where any Securities are not listed on a national
securities exchange, the bid price for such Securities
quoted as at the close of business on such date by any
principal market maker (which shall be independent
from the Valuation Agent) for such Securities chosen
by the Valuation Agent, multiplied by the applicable
Valuation Percentage; or (z) if no such bid price is
able to be obtained for such date under (x) or (y)
above, the last bid price listed determined pursuant
to (x) or failing which (y), as of the day next
preceding such date on which such prices were
available, multiplied by the applicable Valuation
Percentage; and
(b) the accrued interest where applicable on such
Securities (except to the extent that such interest
shall have been paid to the Transferor pursuant to
Paragraph 5(c)(ii) or included in the applicable price
referred to in Paragraph 11(e)(ii)(A)(a) above) as of
such date, provided that it is understood that in no
circumstances shall the Transferee be required to
transfer a Return Amount in excess of the Credit
Support Balance;
(B) with respect to any Cash, the Base Currency Equivalent
of the amount thereof; and
(C) with respect to any Eligible Credit Support or
Equivalent Credit Support other than Securities and
Cash, the Base Currency Equivalent of the fair market
value thereof on such date, as determined in any
manner chosen by the Valuation Agent, multiplied by
the applicable Valuation Percentage.
(iii) ALTERNATIVE. The provisions of Paragraph 4 will apply,
provided, however, that in the event of a dispute regarding
the Value of securities which are Eligible Credit Support,
Party B may submit bid market quotations from two other
recognised dealers in which case the Value of such securities
shall be the mean between the two such quotations.
(F) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) INTEREST RATE. The "INTEREST RATE" in relation to each
Eligible Currency specified below will be:
Eligible Currency Interest Rate
EUR For the relevant determination
date "Eonia", which means the
overnight rate for such day, as
set forth under the heading on
Telerate Screen Page 247 or any
successor page.
GBP For the relevant determination
date "SONIA" which means the
reference rate equal to the
13
overnight rate as calculated by
the Wholesale Market Brokers
Association which appears on
Telerate Page 3937 under the
heading "Sterling Overnight Index"
as of 9.00am , London time, on the
first London Banking Day following
that day.
(ii) TRANSFER OF INTEREST AMOUNT. The transfer of the Interest
Amount will be made on the first Local Business Day following
the end of each calendar month, to the extent that Party B has
earned and received such amount of interest and that a
Delivery Amount would not be created or increased as a result
of such transfer.
(iii) ALTERNATIVE TO INTEREST AMOUNT. The provisions of Paragraph
5(c)(ii) will apply. For the purposes of calculating the
Interest Amount the amount of interest calculated for each day
of the Interest Period shall, with respect to any Eligible
Currency, be compounded daily.
(iv) "DISTRIBUTIONS" has the meaning specified in Paragraph 10,
except that the words "to which a holder of securities of the
same type, nominal value, description and amount as such
Eligible Credit Support would be entitled from time to time"
shall be deleted and replaced by the words "received by the
Transferee in respect of such Eligible Credit Support".
(v) "DISTRIBUTION DATE" has the meaning specified in Paragraph 10,
except that the words "a holder of such Eligible Credit
Support is entitled to receive Distributions" shall be deleted
and replaced by the words "Distributions are received by the
Transferee".
(G) DEMANDS AND NOTICES.
All demands, specifications and notices under this Annex will be made
pursuant to Section 12 of this Agreement unless otherwise specified in
this Annex:
With respect to Party A:
Citibank, N.A.
Collateral Management Group
333 West 34th Street, 2nd FL
New York, NY 10001
Telephone Number: (212) 615-8589
Facsimile Number: (212) 994-0728
(H) OTHER PROVISIONS.
(i) PARAGRAPH 6. For the purposes of determining the Credit
Support Balance pursuant to Paragraph 6, the definition of
Value in Paragraph 10 shall be amended by deleting the words
"multiplied by the applicable Valuation Percentage, if any"
from subsection (i)(A) and (B).
(ii) WIRE TRANSFERS. At any time when a party shall be required to
transfer Eligible Credit Support or Equivalent Credit Support
in the form of cash hereunder such party shall, unless
otherwise instructed by the other party, transfer the relevant
amount by means of a wire transfer of immediately available
funds denominated in the relevant Eligible Currency for credit
to the account of its counterparty.
14
(iii) ACTIONS HEREUNDER. Party A may take any actions hereunder,
including liquidation rights, through any of Citigroup
Financial Products Inc. or Citigroup Global Markets Inc. or
any successor to any of the foregoing, each as agent for Party
A.
(iv) SUCCESSORS. This Annex and all obligations of the Transferor
hereunder shall be binding upon the successors and assigns of
the Transferor and shall, together with the rights and
remedies of the Transferee hereunder, inure to the benefit of
the Transferee and its respective successors and assigns.
(v) NO THIRD PARTY RIGHTS. This Annex has been and is made solely
for the benefit of Party A and Party B and their respective
successors and assigns, and no other person or entity shall
acquire or have any right under or by virtue of this Annex.
(vi) LOCAL BUSINESS DAY. Notwithstanding anything to the contrary
contained herein, Local Business Day shall, in addition to any
other meaning specified herein, include a day on which
commercial banks are open for business (including dealings in
foreign exchange and foreign currency deposits) in New York.
(vii) MINIMUM TRANSFER AMOUNT. Notwithstanding the provisions of
Paragraph 11(b)(iii)(C), when the Credit Support Amount with
respect to both parties on a Valuation Date is zero, the
Minimum Transfer Amount with respect to both parties will be
zero.
(viii) INDEPENDENT PARTY. If Party A is at any time rated below A1 or
Prime-1 by Moody's, Party A shall on a weekly basis (on the
same date that the Valuation Agent makes its calculation),
obtain a calculation from a party which is independent of
Party A's trading desk (or the equivalent) (for example the
middle office or market risk department of Party A, Party A's
auditors or a consulting firm in derivative products appointed
by Party A) to validate the calculation of any mark to market
by Party A's trading desk (or the equivalent).
(ix) AGREEMENT AS TO SINGLE TRANSFEREE PARTY AND TRANSFEROR. Party
A and Party B agree that, notwithstanding anything to the
contrary in this Annex, (a) the term "Transferee" as used in
this Annex means only Party B, (b) the term "Transferor" as
used in this Annex means only Party A and (c) only Party A
will be required to make transfers of Eligible Credit Support
hereunder.
(x) EARLY TERMINATION. The heading of Paragraph 6 shall be deleted
and replaced with "Early Termination" and the following shall
be added after the word "party" in the second line of
Paragraph 6, "or a Termination Event where all Transactions
are Affected Transactions".
(xi) COST OF TRANSFER ON EXCHANGE. Notwithstanding Paragraph 8, the
Transferor will be responsible for and will reimburse the
Transferee for all costs and expenses (including any stamp,
transfer or similar transaction tax or duty payable on any
transfer that it is required to make under this Annex) of the
Transferee in relation to the transfer of Eligible Credit
Support either from the Transferee to the Transferor or from
the Transferor to the Transferee pursuant to the terms hereto.
(xii) TRANSFER TIMING.
(A) The final paragraph of Paragraph 3(a) shall be deleted
and replaced with the following:
15
"Subject to Paragraph 4, and unless otherwise specified, any
transfer of Eligible Credit Support or Equivalent Credit
Support (whether by the Transferor pursuant to Paragraph 2(a)
or by the Transferee pursuant to Paragraph 2(b)) shall be made
not later than the close of business on the Settlement Day."
(B) The definition of Settlement Day shall be deleted and
replaced with the following:
"SETTLEMENT DAY" means:
(i) in respect of a transfer of cash or other property
(except Securities), the second Local Business Day
after the Demand Date; and
(ii) in respect of a transfer of Securities:
(a) the second Local Business Day after the Demand
Date; or if later,
(b) the first Local Business Day after the Demand
Date on which settlement of a trade in the
relevant securities, if effected on the Demand
Date, would have occurred in accordance with
customary practice when settling through the
clearance system agreed between the parties for
delivery of such securities or, otherwise, on
the market on which such securities are
principally traded (or, in either case, if
there is not such customary practice, on the
first Local Business Day after the Demand Date
on which it is reasonably practicable to
deliver such securities).
(C) For the purposes of this Paragraph 11(h)(xii):
"DEMAND DATE" means, with respect to a transfer by a
party:
(i) in the case of a transfer pursuant to Paragraph
2 or Paragraph 4(a)(2), (A) the first Local
Business Day of each week on which the
Transferor will be deemed to receive notice of
the demand by the other party to make such a
transfer, or (B) following the downgrade by
Moody's of the long term, unsecured and
unsubordinated debt obligations of Party A
below A3, each Local Business Day of each week
on which the Transferor will be deemed to
receive notice of the demand by the other party
to make such transfer;
(ii) in the case of a transfer pursuant to Paragraph
3(c)(ii)(A), the date on which the Transferor
will be deemed to receive notice of the demand
by the other party to make such a transfer and
the Transferee has given its consent to the
proposed exchange; and
(iii) in the case of a transfer pursuant to Paragraph
5(c)(i), the Distributions Date.
16
SCHEDULE I
Eligible Credit Support Valuation Percentage
(A) cash in an Eligible Currency 100%
(B) negotiable debt obligations For the purposes of S&P, 98.5
issued by the Government of per cent., for the purposes of
the United Kingdom, Germany Moody's, 98%, and for the purposes
or the United States of America of Fitch, the Advanced Rate (the
(with local and foreign "ADVANCED RATE") under the heading
currency issuer ratings equal to "Notes' Rating/AAA" in the table
or greater than AA- by S&P, entitled "Advanced Rates (%)" in
AA- by Fitch and Aa3 by Appendix 3 to Fitch's Structured
Moody's) having a remaining Finance Report entitled
time to maturity of not more "Counterparty Risk in Structured
than one year; Finance Transactions: Swap
Criteria" dated 13 September, 2004
(the "Fitch Report"), provided
that the Advanced Rate in respect
of Euro-denominated negotiable
debt obligations shall be:
Maturity (y) Advanced Rate
<=1 99
1-3 97
3-5 95.5
5-7 94
7-10 92
10-15 to be agreed
>15 to be agreed
(C) negotiable debt obligations For the purposes of S&P, 92 per
issued by the Government of cent., for the purposes of
the United Kingdom, Germany Moody's, 94 per cent. and for the
or the United States of America purposes of Fitch, the Advanced
(with local and foreign cent. Rate.
and for the purposes of Fitch,
the Advanced currency issuer
ratings equal to or greater
than AA- by S&P, AA- by Fitch
and Aa3 by Moody's) having a
remaining time to maturity
of more than one year but not
more than 5 years;
(D) negotiable debt obligations For the purposes of S&P, 85.4 per
issued by the Government of cent., for the purposes of
the United Kingdom, Germany Moody's, 91 per cent. and for
or the United States of America the purposes of Fitch, the
(with local and foreign Advanced Rate.
currency issuer ratings equal to
17
or greater than AA- by S&P,
AA- by Fitch and Aa3 by
Moody's) having a remaining
time to maturity of more than
5 years but not more than 10
years;
(E) negotiable debt obligations For the purposes of S&P and
issued by the Government of Moody's, 77.5 per cent., and
the United Kingdom, Germany for the purposes of Fitch, the
or the United States of America Advanced Rate.
(with local and foreign
currency issuer ratings equal to
or greater than AA- by S&P,
AA- by Fitch and Aa3 by
Moody's) having a remaining
time to maturity of more than
10 years but not more than 15
years;
(F) negotiable debt obligations For the purposes of S&P and
issued by the Government of Moody's, to be agreed, and
the United Kingdom, Germany for the purposes of Fitch, the
or the United States of America Advanced Rate.
(with local and foreign
currency issuer ratings equal to
or greater than AA- by S&P,
AA- by Fitch and Aa3 by
Moody's) having a remaining
time to maturity of more than
15 years; or
(G) such other items as agreed Such Valuation Percentage as
between Party A and the Rating agreed between Party A and the
Agencies, from time to time, Rating Agencies from time to time
which Party B can lawfully in respect of such Eligible Credit
receive from, and transfer back Support.
to, Party A as required, that
will qualify as Eligible Credit
Support.
Where negotiable debt obligations are rated by only one of the above relevant
rating agencies, the rating applied will be based on the rating of that agency.
Where the ratings of the relevant agencies differ with respect to the same
negotiable debt obligation, for the purposes of B to F above the lower of the
ratings shall apply.
18
From: Citibank, N.A., London Branch
Citigroup Centre
Canada Square
London
E14 5LB
To: Permanent Master Issuer PLC
35 Great St. Helen's
London
EC3A 6AP
Attention: The Secretary
To: The Bank of New York
One Canada Square
London
E14 5AL
Attention: Global Structured Finance - Corporate Trust
1 March 2007
Dear Sirs,
CONFIRMATION - SERIES 3 CLASS A EURO TO STERLING CURRENCY SWAP
The purpose of this letter is to confirm the terms and conditions of the Swap
Transaction entered into between us on the Trade Date specified below. This
letter constitutes a "CONFIRMATION" as referred to in the 1992 ISDA Master
Agreement (Multicurrency-Cross Border) (Series 3 Class A) entered into between
us, you and The Bank of New York (the "SECURITY TRUSTEE") dated as of 21
February 2007, 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. Words and expressions
defined in the Amended and Restated Master Definitions and Construction
Schedule (the "MASTER SCHEDULE") and the Master Issuer Master Definitions and
Construction Schedule (the "MASTER ISSUER SCHEDULE") (together the "MASTER
DEFINITIONS SCHEDULE") signed on or about the date of this Confirmation will,
except so far as the context otherwise requires, have the same meaning in 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., London Branch
Party B: Permanent Master Issuer PLC
Relevant Notes: Series 3 Class A Notes
Trade Date: 21 February 2007
Effective Date: 1 March 2007
Termination Date: The earlier of (i) the Quarterly Interest
Payment Date falling in October 2033 and (ii)
the date on which all of the outstanding
Relevant Notes are redeemed in full except
following delivery of a Note Acceleration
Notice on Party B in relation to the Relevant
Notes.
Euro Currency Exchange
Rate: 1.48743 EUR 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 In respect of each Party A Calculation
Amount: Period, an amount in euros equal to the
principal amount outstanding of the Relevant
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 April 2007 up to the Termination
Date and the Termination Date.
Party A Floating Rate: In respect of each Party A Calculation
Period, EURIBOR determined in respect of the
first day of such Party A Calculation Period.
Spread: 0.09 per cent. for Party A Calculation
Periods commencing prior to the Quarterly
Interest Payment Date falling in January 2013
and 0.18 per cent. thereafter.
Party A Floating Rate
Day Count Fraction: Actual/360
Party B Floating Amounts:
Party B Currency In respect of each Party B Calculation
Amount: Period, an amount in Sterling equivalent to
the Party A Currency
2
Amount for the Party A Calculation Period
commencing on the first day of such Party B
Calculation Period converted by reference to
the Euro Currency Exchange Rate.
Party B Payment Dates: Each Quarterly Interest Payment Date from and
including the Quarterly Interest Payment Date
falling in April 2007 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: 0.0971 per cent. for Party B Calculation
Periods commencing prior to the Quarterly
Interest Payment Date falling in January 2013
and 0.4442 per cent. thereafter.
Party B Floating Rate
Day Count Fraction: Actual/365 (fixed)
Initial Exchange:
Initial Exchange Date: Effective Date
Party A Initial
Exchange Amount: GBP 1,008,450,000
Party B Initial
Exchange Amount: EUR 1,500,000,000
Interim Exchange:
Interim Exchange Dates: Each Quarterly Interest Payment Date (other
than the Termination Date) on which any of
the Relevant Notes are redeemed in whole or
in part.
Party A Interim
Exchange Amount: In respect of each Interim Exchange Date, an
amount in euros equal to the amount of the
Relevant 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 Euro
Currency Exchange Rate.
Final Exchange:
3
Final Exchange Date: Termination Date
Party A Final Exchange An amount in Euros equal to the principal
Amount: amount outstanding of the Relevant Notes on
the Final Exchange Date (before taking into
account any redemption on such day). Party B
Final Exchange Amount: An amount in Sterling
equal to the principal amount outstanding of
the Relevant Notes on the Final Exchange Date
(before taking into account any redemption on
such day), converted by reference to the Euro
Currency Exchange Rate.
If Party B does not have sufficient principal
available pursuant to the Master Issuer Cash
Management Agreement to pay the Party B Final
Exchange Amount in full on the Final Exchange
Date and accordingly pays only a part of the
Party B Final Exchange Amount to Party A on
such date, Party A will be obliged on such
date to deliver only the Euro equivalent of
such part of the Party B Final Exchange
Amount, converted by reference to the Euro
Currency Exchange Rate.
2. Account Details:
Payments to Party A
in Euros: Bank: Citibank, N.A., London
Account Number: 780839
SWIFT: CITIGB2L
Payments to Party A
in Sterling: Bank: Direct s/c 18 50 04
SWIFT: CITIGB2L
Account Number: 9380001172
Payments to Party B
in Euros: Bank: Citibank, N.A., London
Credit Account: 8378339
FAO: Citibank, N.A., London
London Swift: CITIGB2L
Reference: CATS XS0288090342
4
Payments to Party B
in Sterling: Bank: The Governor and Company of
the Bank of Scotland
Account Number: 06052794
Sort Code: 12-08-83
Account Name: Permanent Master Issuer PLC
Transaction Account
Reference: CATS XS0288090342
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.
3. 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 Master Issuer Cash Manager or Party
B and the Calculation Agent will not be liable for any error,
incompleteness or omission regarding such information.
No later than one (1) Business Day prior to a Quarterly Interest
Payment Date, Party B, or the Master Issuer Cash Manager acting on its
behalf, will notify Party A of the amount of (a) any principal
payments to be made on the Relevant Notes on such Quarterly Interest
Payment Date and (b) any interest payments otherwise due to be made on
such Quarterly Interest Payment Date that will be deferred in
accordance with the terms and conditions of the Relevant Notes.
4. Notice Details:
Party A: Citibank, N.A.
Address: Citigroup Centre
Canada Square
London
E14 5LB
Facsimile No.: (+44 20) 7508 9115
Attention: Head of Trading Legal Services, Europe
With a copy to: Citibank, N.A.
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB
5
Facsimile No.: (+44 20) 8636 3868
Attention: Head of Structured Support Team
Party B: Permanent Master Issuer PLC
Address: 35 Great St. Helen's
London
EC3A 6AP
Facsimile Number: 020 7398 6325
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 6061/6339
Attention: Global Structured Finance
(ii) Halifax plc
Address: LP/3/3/SEC
Trinity Road
Halifax
West Yorkshire
HX1 2RG
Facsimile Number: 0113 235 7511
Attention: Head of Mortgage Securitisation
Citibank, N.A., London Branch is authorised and regulated by the UK Financial
Services Authority.
Citibank, N.A., London Branch is entering into this Swap Transaction as
principal and not as an agent for any other party.
Unless specified herein, information about the time of dealing and the amount
or basis of any charges shared with any third party in connection with this
Swap Transaction will be made available on request.
6
Your counterparty to this Swap Transaction is Citibank, N.A., London Branch,
which is authorised and regulated by the UK Financial Services Authority (the
"FSA"). In the event that you have dealt with employees of an affiliate of
Citibank N.A., London Branch in placing the order for or otherwise arranging
this Swap Transaction (which is likely if you are not a UK person), then this
Swap Transaction has been introduced to you, and arranged by, such affiliate.
Such affiliate does not act as agent for Citibank, N.A., London Branch, which
is the principal to this Swap Transaction with you. In the European Union, such
affiliate may be Citigroup Global Markets Limited or Citibank International plc
(each of which is authorised and regulated by the FSA) or Citibank Ireland
Financial Services plc (authorised and regulated by the Irish Financial
Services Regulatory Authority).
7
Yours faithfully,
CITIBANK, N.A., LONDON BRANCH
By: /s/ Stephane Carrier
Name:
Title:
Confirmed as of the date first written:
PERMANENT MASTER ISSUER PLC
By: /s/ Claudia Wallace
Name:
Title:
THE BANK OF NEW YORK
By: /s/ Vincent Giraud
Name:
Title:
8