Offering Circular. - SFM

Swap Counterparty or the Swap Guarantor under certain OTC derivative contracts with the Issuer, (vi)
upon the occurrence of the insolvency of the Swap Counterparty, the Swap Guarantor or the Issuer, (vii)
if there is a merger of the Swap Counterparty or the Swap Guarantor without an assumption of their
obligations under the Swap Agreement or the Swap Guarantee, as applicable, or (viii) if a change in
law results in the obligations of the Swap Counterparty, the Swap Guarantor or the Issuer becoming
illegal, or (ix) if there is a merger involving the Swap Counterparty or the Issuer as a result of which
the Issuer must (i) gross up payments or (ii) receive payments net which the Swap Counterparty is not
obliged to gross up;
(b)
(c)
(d)
if an Event of Default has occurred under the Notes and the Representative of the Noteholders has
served an Issuer Acceleration Notice;
if the Issuer exercises its option to redeem the Notes in accordance with Condition 7(c) (Optional
redemption for taxation, legal or regulatory reasons); and
if there occurs a Ratings Downgrade Termination (as defined below).
If at any time the ratings of (i) the short-term, unsecured and unsubordinated debt obligations of the Swap
Guarantor fall below “F1” by Fitch or “P-1” by Moody’s or (ii) the long-term, unsecured and unsubordinated
debt obligations of the Swap Guarantor fall below “A+” by Fitch or “A1” by Moody’s, the Swap
Counterparty will be required, within the time period specified in the Swap Agreement:
(a)
(b)
(c)
(d)
to transfer all of its rights and obligations with respect to the Swap Agreement to an appropriately rated
entity; or
to arrange for an appropriately rated entity to become co-obligor in respect of the obligations of the
Swap Counterparty under the Swap Agreement; or
to deliver collateral under the Credit Support Annex; or
to take such other action as may be agreed with the relevant Rating Agency.
In the event that (i) the short-term, unsecured and unsubordinated debt obligations of the Swap Guarantor
fall below “F2” by Fitch or “P-2” by Moody’s or (ii) the long-term, unsecured and unsubordinated debt
obligations of the Swap Guarantor fall below “BBB+” by Fitch or “A3” by Moody’s, the Swap Counterparty
will be required, within the time period specified in the Swap Agreement:
(a)
(b)
(c)
to transfer all of its rights and obligations with respect to the Swap Agreement to an appropriately rated
entity; or
to arrange for an appropriately rated entity to become co-obligor in respect of the obligations of the
Swap Counterparty under the Swap Agreement; or
to take such other action as may be agreed with the relevant Rating Agency.
In the interim period, the Swap Counterparty may also have to post collateral under the Credit Support
Annex.
If the Swap Counterparty does not take any of the measures described above as appropriate, then the Swap
Transaction may be terminated by the Issuer (a “Ratings Downgrade Termination”).
Any collateral posted by the Swap Counterparty following a ratings downgrade as described above will be
placed by the Issuer in a collateral account and dealt with in accordance with the Swap Agreement.
In the event that the Swap Agreement is terminated prior to the enforcement of the security or the final
redemption of the Notes, the Issuer shall use its best efforts to enter into a replacement swap on terms
acceptable to the Rating Agencies and the Representative of the Noteholders and with a replacement swap
counterparty whom the Rating Agencies have confirmed will not cause the then current ratings of the Notes
to be downgraded, withdrawn or qualified.
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