ISDA® International Swap Dealers Association, Inc. MASTER AGREEMENT dated as of August 3, 2007
(Multicurrency—Cross
Border)
ISDA®
International
Swap Dealers Association, Inc.
dated
as
of August 3, 2007
|
XXXXXX
XXXXXXX CAPITAL SERVICES INC.
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and
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DEUTSCHE
BANK NATIONAL TRUST COMPANY, a national banking association, not
individually, but solely as Trustee on behalf of the Supplemental
Interest
Trust with respect to Saxon Asset Securities Trust 2007-3, Mortgage
Loan
Asset Backed Certificates, Series
2007-3
|
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
purposes 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
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(a)
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General
Conditions.
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(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.
1
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 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,
2
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.
(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.
3
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:—
(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;
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
(2) 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;
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(v) Default
under Specified Transaction. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party (1) 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 (1) 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 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: —
(1) 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 (1) 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: —
(1) 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.
(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
5
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): —
(1) 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 (1) 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
(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.
6
(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)(1)
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 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: —
(1) 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
(1)
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 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.
7
(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:
—
(1) 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.
(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.
8
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 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 tbe 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.
9
(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 he entered into as soon as practicable and may he 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.
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.
10
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 Xxx 0000 or any modification, 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).
“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.
11
“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.
“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)(1) 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 15 ISDAÒ 1992 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.
12
“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.
“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.
“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 meanings 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.
13
“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
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
14
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.
|
XXXXXX
XXXXXXX CAPITAL SERVICES INC.
|
DEUTSCHE
BANK NATIONAL TRUST COMPANY, not individually, but solely as Trustee
on
behalf of the Supplemental Interest Trust with respect to Saxon
Asset
Securities Trust 2007-3, Mortgage Loan Asset Backed Certificates,
Series
2007-3
|
|
By:
/s/
Xxxxxxxxx
Xxxxxx
Name:
Xxxxxxxx Xxxxxx
Title:
Authorized Signatory
Date:
August 3, 2007
|
By:
/s/
Xxxxxxx
Xxxxxxxxx
Name:
Xxxxxxx Xxxxxxxxx
Title:
Authorized Signer
Date:
August 3, 2007
|
15
EXECUTION
COPY
SCHEDULE
TO
THE
1992
ISDA MASTER AGREEMENT
dated
as of August 3, 2007
between
XXXXXX
XXXXXXX CAPITAL SERVICES INC.
a
Delaware corporation
(“Party
A”)
and
DEUTSCHE
BANK NATIONAL TRUST COMPANY
a
national banking association, not individually, but solely as Trustee on
behalf
of the Supplemental Interest Trust (the “Trust”) with respect to Saxon Asset
Securities Trust 2007-3, Mortgage Loan Asset Backed Certificates, Series
2007-3
(“Party
B”)
|
Part
1.
|
Termination
Provisions.
|
|
(a)
|
“Specified
Entity”
means in relation to Party A for the purpose
of:
|
Section 5(a)(v),
None Specified
Section 5(a)(vi),
None Specified
Section 5(a)(vii),
None Specified
Section 5(b)(iv),
None Specified
and
in
relation to Party B for the purpose of:
Section 5(a)(v),
None Specified
Section 5(a)(vi),
None Specified
Section 5(a)(vii),
None Specified
Section 5(b)(iv),
None Specified
|
(b)
|
Events
of Default.
Notwithstanding anything in this Agreement to the contrary, the
following
Events of Default shall apply to the specified
party:
|
|
Party A
|
Party B
|
|||
|
(i)
|
Section
5(a)(i), Failure to Pay or Deliver
|
Applicable
|
Applicable
|
|
|
(ii)
|
Section
5(a)(ii), Breach of Agreement
|
Applicable
|
Not
Applicable
|
|
|
(iii)
|
Section
5(a)(iii), Credit Support Default
|
Applicable
|
Applicable
|
|
|
(iv)
|
Section
5(a)(iv), Misrepresentation
|
Applicable
|
Not
Applicable
|
|
|
(v)
|
Section
5(a)(v), Default Under Specified Transaction
|
Not
Applicable
|
Not
Applicable
|
|
|
(vi)
|
Section
5(a)(vi), Cross Default
|
Applicable
|
Not
Applicable
|
|
|
(vii)
|
Section
5(a)(vii), Bankruptcy
|
Applicable
|
Applicable
|
|
|
(viii)
|
Section
5(a)(viii), Merger Without Assumption
|
Applicable
|
Applicable
|
provided,
however, that with respect to:
|
(i)
|
Section
5(a)(iii)(1) (Credit Support Default), as it applies to Party
B only,
shall be deleted in its entirety and replaced with the following:
“Failure
by Party B to comply with or perform any agreement or obligation
to be
complied with or performed by it in accordance with Paragraph
3(b) of the
Credit Support Annex if such failure is continuing after any
applicable
grace period has elapsed.”
|
-19-
|
(ii)
|
Section
5(a)(vi) (Cross Default), “Threshold Amount” means, with respect to Party
A, 3% of its Credit Support Provider’s (or the applicable Relevant
Entity’s) shareholder’s equity (as detailed in its Credit Support
Provider’s or the Relevant Entity’s most recent financial
statements).
|
|
(iii)
|
Section
5(a)(vii) (Bankruptcy), (i) clause (2) and (9) shall not be applicable
to
Party B; (ii) clause (4) shall not be applicable to Party B if
the
proceeding or petition is instituted or presented by Party A
or any of its
Affiliates and is in breach of Party A’s agreement set forth in Part 5(j)
of this Schedule; (iii) the appointment of a trustee or other
secured
party by Party B or the Certificateholders for the purpose of
holding all
or a substantial portion of the assets of Party B for the benefit
of the
Certificateholders or Party A does not qualify as the appointment
of a
trustee, custodian or similar official under clause (6); (iv)
a security
interest granted by Party B to a trustee, collateral agent, custodian
or
other secured party, as applicable (the "Secured Party"), pursuant
to an
indenture, trust agreement, pooling and servicing agreement or
other
customary securitization transaction document (the "Security
Agreement"),
in property of Party B (the "Securitization Collateral") supporting
a
rated securitization transaction (the "Securitization"), and
the rights of
the Secured Party in and to the Securitization Collateral for
the benefit
of the investors in the Securitization and/or Party A, is not
intended to
constitute and shall not be treated as a secured party taking
possession
of the assets of Party B for purposes of clause (7); (v) the
words “seeks
or” shall be deleted from clause (6); and (vi) clause (8) shall not
apply
to Party B to the extent that clause (8) relates to clauses of
Section
5(a)(vii) that are not applicable to Party B as a result of the
modifications set forth herein. Notwithstanding the foregoing,
for the
avoidance of doubt, the deletion of clause (9) is not intended
to render
clauses (1) through (8) inapplicable on the basis that Party
B did not
actively contest or oppose any of the acts referred to in such
clauses or,
in the case of clause (4), if a proceeding or petition referred
to therein
is instituted or presented against Party B, on the basis that
Party B
consented to or acquiesced in a judgment of bankruptcy or insolvency
or
the entry of an order for relief or the making of an order for
its winding
up or liquidation as a result of such proceeding or
petition.
|
|
(c)
|
Termination
Events.
Notwithstanding anything in this Agreement to the contrary, the
following
Termination Events shall apply to the specified
party:
|
|
Party A
|
Party B
|
|||
|
(i)
|
Section
5(b)(i), Illegality
|
Applicable
|
Applicable
|
|
|
(ii)
|
Section
5(b)(ii), Tax Event
|
Applicable
|
Applicable
|
|
|
(iii)
|
Section
5(b)(iii), Tax Event Upon Merger
|
Applicable
|
Applicable
|
|
|
(iv)
|
Section
5(b)(iv), Credit Event Upon Merger
|
Not
Applicable
|
Not
Applicable
|
|
|
(v)
|
Section
5(b)(v), Additional Termination Event
|
Applicable
(as set forth in Part 1(h) below)
|
Applicable
(as set forth in Part 1(h) below)
|
provided,
however, that with respect to Section 5(b)(iii), Party A shall not be entitled
to designate an Early Termination Date by reason of a Tax Event Upon Merger
in
respect of which it is the Affected Party.
|
(d)
|
The “Automatic
Early Termination”
provisions of Section 6(a) will not apply to Party A and will not
apply to Party B.
|
|
(e)
|
The
“Transfer
to Avoid Termination Event”
provisions of 6(b)(ii) will apply, provided that the words “or if a Tax
Event Upon Merger occurs and the Burdened Party is the Affected
Party,”
shall be deleted.
|
-20-
|
(f)
|
Payments
on Early Termination.
|
|
(i)
|
For
the purpose of Section 6(e), “Market
Quotation”
and “Second
Method”
will apply.
|
|
(ii)
|
Where
an Early Termination Date is designated as a result of an Event
of Default
with respect to which Party A is the Defaulting Party or a Termination
Event under Section 5(b)(iii), Section 5(b)(iv) or Section 5(b)(v)
with
respect to which Party A is the sole Affected Party, paragraphs
(1)
through (8) below shall apply:
|
|
(1)
|
The
definition of “Market Quotation” shall be deleted in its entirety and
replaced with the following:
|
“‘Market
Quotation’
means,
with respect to one or more Terminated Transactions, a Firm Offer which
is (1)
made by an Eligible Replacement, (2) for an amount, if any, that would
be paid
to Party B (expressed as a negative number) or by Party B (expressed as
a
positive number) in consideration of an agreement between Party B and an
Eligible Replacement 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 Transactions
or group of Terminated Transactions that would, but for the occurrence
of the
relevant Early Termination Date, have been required after that date, (3)
made on
the basis that Unpaid Amounts in respect of the Terminated Transaction
or group
of 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 and (4) made in respect of
a
Replacement Transaction with terms substantially the same as those of this
Agreement (save for the exclusion of provisions relating to Transactions
that
are not Terminated Transactions). Party A and Party B will request each
Eligible
Replacement to provide a Firm Offer to the extent reasonably practicable
as of
the same day and time (without regard to different time zones). If no Firm
Offers are provided, it will be deemed that the Market Quotation in respect
of
such Terminated Transaction or group of Terminated Transactions cannot
be
determined.
|
(2)
|
The
definition of “Settlement Amount” shall be deleted in its entirety and
replaced with the following:
|
“Settlement
Amount”
means,
with respect to any Early Termination Date, an amount (as determined by
Party B
in accordance with clauses (a) and (b) below; provided, however, if Party
B
fails to make such determination promptly, Party A shall have the right
to make
such determination) equal to:
(a) the
Termination Currency Equivalent of the amount (whether positive or negative)
for
each Terminated Transaction or group of Terminated Transactions for which
a
Market Quotation is determined. If more than one Market Quotation is capable
of
becoming legally binding upon acceptance, Party B shall accept the Market
Quotation that constitutes (1) the highest Market Quotation in the case
of a
payment by an Eligible Replacement to Party B or (2) the lowest Market
Quotation
in the case of a payment by Party B to an Eligible Replacement; provided,
however, if Party B fails to make such determination promptly, Party A
shall
have the right to make such determination. If only one Market Quotation
is
provided, Party B shall accept the single Market Quotation. Party B shall
be
obligated to accept the Market Quotation immediately upon determination
so as to
become legally binding; or
-21-
(b) Party
B’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.
|
(3)
|
For
the purpose of paragraph (4) of the definition of Market Quotation,
Party
B shall make reasonable efforts to determine, acting in a commercially
reasonable manner, whether a Firm Offer is made in respect of
a
Replacement Transaction with terms substantially the same as
those of this
Agreement (save for the exclusion of provisions relating to Transactions
that are not Terminated Transactions); provided, however, if
Party B fails
to make such determination promptly, Party A shall have the right
to make
such determination.
|
|
(4)
|
Party
B undertakes to use its reasonable efforts to obtain at least
one Market
Quotation on or before the later of (a) the Early Termination
Date or (b)
10 Business Days following the designation of the Early Termination
Date
(the “Latest
Settlement Amount Determination Day”).
|
|
(5)
|
Party
B will be deemed to have discharged its obligations under (4)
above if it
requests Party A to obtain Market Quotations, where such request
is made
in writing within two Business Days after the day on which the
Early
Termination Date is designated.
|
|
(6)
|
If
Party B requests Party A in writing to obtain Market Quotations,
Party A
shall use its reasonable efforts to do so before the Latest Settlement
Amount Determination Day.
|
|
(7)
|
Party
A shall have the right to obtain Market Quotations, without prior
request
by Party B, before the Latest Settlement Amount Determination
Day.
|
|
(8)
|
If
the Settlement Amount is a negative number, Section 6(e)(i)(3)
of this
Agreement shall be deleted in its entirety and replaced with
the
following:
|
“Second
Method and Market Quotation.
If
Second Method and Market Quotation apply, (1) Party B shall pay to Party
A an
amount equal to the absolute value of the Settlement Amount in respect
of the
Terminated Transactions, (2) Party B shall pay to Party A the Termination
Currency Equivalent of the Unpaid Amounts owing to Party A and (3) Party
A shall
pay to Party B the Termination Currency Equivalent of the Unpaid Amounts
owing
to Party B, provided
that,
(i) the
amounts payable under (2) and (3) shall be subject to netting in accordance
with
Section 2(c) of this Agreement and (ii) notwithstanding any other provision
of this Agreement, any amount payable by Party A under (3) due to a failure
by
Party A to make, when due, any payment under this Agreement, shall not
be netted
against any amount payable by Party B under (1).”
|
(g)
|
“Termination
Currency”
means U.S. Dollars.
|
-22-
|
(h)
|
Additional
Termination Event.
|
|
(A)
|
The
following Additional Termination Event will apply to Party A,
with Party A
as the sole Affected Party and all Transaction as Affected
Transactions.
|
|
(i)
|
Party
A fails to comply with the Rating Agency Downgrade provisions
as set forth
in Part 5(f) below; or
|
|
(ii)
|
A
Firm Offer is accepted by Party B pursuant to Part 5(f)(ii)(2)(B)
following a Xxxxx’x Second Tier Downgrade
Event.
|
|
(B)
|
The
following Additional Termination Events will apply to Party B,
with Party
B as the sole Affected Party and all Transaction as Affected
Transactions.
|
|
(i)
|
Upon
any amendment, supplement, modification or waiver of any provision
of the
PSA (as defined below) without the consent of Party A that materially
and
adversely affects the rights or interests of Party
A.
|
|
(ii)
|
The
Servicer exercises its option to purchase the Mortgage Loans
pursuant to
Section 9.1 of the PSA.
|
|
(iii)
|
Upon
the irrevocable direction to dissolve or otherwise terminate
the Trust
following which all assets of the Trust will be liquidated and
the
proceeds of such liquidation distributed to the
Certificateholders.
|
|
Part
2.
|
Tax
Representations.
|
Party
A and Party B Payer Tax Representations.
(i)
For
the purpose of Section 3(e), each of Party A and Party B makes 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, provided that it shall 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.
(ii)
For
the purposes of Section 3(f), Party A makes the following
representation:
Party
A
is a U.S. corporation organized under the laws of Delaware.
-23-
|
Part
3.
|
Agreement
to Deliver Documents.
|
For
the
purpose of Sections 4(a)(i) and (ii), each party agrees to deliver the
following
documents, as applicable:
|
(a)
|
Tax
forms, documents or certificates to be delivered are:
|
|
Party
required
to
deliver
document
|
Form/Document/Certificate
|
Date
by which to be delivered
|
||
|
Party
A
|
A
correct, complete and duly executed IRS Form W-9.
|
(i)
Upon entering into this Agreement, (ii) promptly upon reasonable
demand by
Party B, and (iii) promptly upon learning that any such Form
previously
provided by Party A has become obsolete or incorrect. In each
case
|
||
|
Party
B
|
(i)
A correct, complete and duly executed IRS Form W-9 (if the beneficial
interest in Party B is held by a single owner for federal income
tax
purposes, in the name of the sole owner and if the beneficial
interest in
Party B is held by more than a single owner for federal income
tax
purposes, in the name of the Trust) (or any successor thereto)
that
eliminates U.S. federal withholding and backup withholding tax
on payments
under this Agreement, (ii) if requested by Party A, a correct,
complete
and duly executed Form W-8IMY, and (iii) a complete and executed
IRS Form
X-0, X-0XXX, X-0XXX, or W-8IMY (with attachments) (as appropriate)
from
each Certificateholder that is not an “exempt recipient” as that term is
defined in Treasury regulations section 1.6049-4(c)(ii), that
eliminates
U.S. federal withholding and backup withholding tax on payments
under this
Agreement.
|
(a)
upon entering into this Agreement; (b) in the case of a W-8ECI,
W-8IMY,
and W-8BEN that does not include a U.S. taxpayer identification
number in
line 6, before December 31 of each third succeeding calendar
year, (c)
promptly upon reasonable demand by Party A, (d) promptly upon
the
ownership of beneficial interest in the Trust changing between
being held
by a single owner to being held by more than a single owner or
from being
held by more than a single owner to being held by a single owner
for
federal tax purposes, and (e) promptly upon actual knowledge
that any such
Form previously provided by Party B has become obsolete or
incorrect.
|
-24-
|
(b)
|
Other
documents to be delivered are:-
|
|
Party
required to deliver document
|
Form/Document/Certificate
|
Date
by which to be delivered
|
Covered
by Section 3(d) Representation
|
|||
|
Party
A
and
Party
B
|
Either
(1) a signature booklet containing secretary’s certificate and
resolutions (“authorizing
resolutions”)
authorizing the party to enter into derivatives transactions
of the type
contemplated by the parties or (2) a secretary’s certificate,
authorizing resolutions and incumbency certificate, in either
case, for
such party and any Credit Support Provider of such party reasonably
satisfactory in form and substance to the other party.
|
The
earlier of the fifth Business Day after the Trade Date of the
first
Transaction or upon execution of this Agreement and as deemed
necessary
for any further documentation.
|
Yes
|
|||
|
Party
B
|
An
executed copy of the Pooling and Servicing Agreement (“PSA”),
dated as of July [1], 2007, among Saxon Asset Securities Company,
as
Depositor, Deutsche Bank National Trust Company, as Trustee,
and Saxon
Mortgage Services, Inc., as Servicer.
|
Upon
execution of this Agreement.
|
Yes
|
|||
|
Party
A
and
Party
B
|
A
duly executed copy of the Credit Support Document specified in
Part 4 of
this Schedule.
|
As
soon as practicable after the execution of this Agreement.
|
No
|
|||
|
Party
A and Party B
|
An
opinion of counsel reasonably satisfactory in form and substance
to the
other party.
|
As
soon as practicable after the execution of this Agreement.
|
No
|
|
Part
4.
|
Miscellaneous
|
|
(a)
|
Addresses
for Notices.
For the purpose of
Section 12(a):-
|
|
(i)
|
Address
for notices or communications to Party
A:-
|
XXXXXX
XXXXXXX CAPITAL SERVICES INC.
Transaction
Management Group
0000
Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Attention: CHIEF
LEGAL OFFICER
Fax
No:
001
212
507 4622
|
(ii)
|
Address
for notices or communications to Party
B:
|
DEUTSCHE
BANK NATIONAL TRUST COMPANY
0000 Xxxx
Xx. Xxxxxx Xxxxx
Xxxxx
Xxx, Xxxxxxxxxx 00000-0000
Attention:
Trust
Administration - SX0703
Facsimile
No.: 000
000
0000
Telephone
No.: 000
000
0000
-25-
|
(b)
|
Notices.
Section 12(a) is amended by adding in the third line thereof after
the phrase “messaging system” and before the “)” the words, “; provided,
however, any such notice or other communication may be given
by facsimile
transmission if telex is unavailable, no telex number is supplied
to the
party providing notice, or if answer back confirmation is not
received
from the party to whom the telex is
sent.”
|
|
(c)
|
Process
Agent.
For the purpose of
Section 13(c):
|
Party
A
appoints as its Process Agent: Not Applicable.
Party
B
appoints as its Process Agent: Not Applicable.
|
(d)
|
Offices.
The provisions of Section 10(a) will not apply to Party A and to
Party B.
|
|
(e)
|
Multibranch
Party.
For the purpose of
Section 10(c):
|
Party
A
is not a Multibranch Party.
Party
B
is not a Multibranch Party.
|
(f)
|
“Calculation
Agent”
means Party A.
|
|
(g)
|
“Credit
Support Document”
means (a) with respect to Party A, (1) the Credit Support Annex
between
Party A and Party B dated as of the date hereof (the “Credit
Support Annex”)
and (2) the guarantee of Xxxxxx Xxxxxxx and (b) with respect
to Party B,
the Credit Support Annex.
|
|
(h)
|
Credit
Support Provider
means in relation to Party A: Xxxxxx Xxxxxxx, a Delaware
corporation.
|
Credit
Support Provider
means in
relation to Party B: None
|
(i)
|
Governing
Law; Jurisdiction.
This Agreement, each Credit Support Document and each Confirmation
will be
governed by and construed in accordance with the laws of the
State of New
York without regard to conflict of law provisions thereof other
than New
York General Obligations Law Sections 5-1401 and 5-1402.
Section 13(b) is amended by: (1) deleting “non-” from the second
line of clause (i); and (2) deleting the final
paragraph.
|
|
(j)
|
Waiver
of Jury Trial.
Each party waives, to the fullest extent permitted by applicable
law, any
right it may have to a trial by jury in respect of any Proceedings
relating to this Agreement or any Credit Support
Document.
|
|
(k)
|
Netting
of Payments.
Clause (ii) of Section 2(c) will apply to any amounts payable with
respect to Transactions from the date of this
Agreement.
|
|
(l)
|
“Affiliate”.
Party A and Party B shall be deemed not to have any Affiliates
for
purposes of this Agreement, including for purposes of
Section 6(b)(ii). For the avoidance of doubt, with respect to Party
A, such definition shall be understood to exclude Xxxxxx Xxxxxxx
Derivative Products Inc.
|
|
(m)
|
Additional
Definitions.
All capitalized terms used but not otherwise defined in this
Agreement
shall have the meanings given thereto in the
PSA.
|
-26-
|
Part
5.
|
Other
Provisions
|
|
(a)
|
Additional
Representations.
|
|
(i)
|
The
introductory clause of Section 3 of this Agreement is hereby amended
to read in its entirety as follows:
|
“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) and
Section 3(g)(4), at all times until the termination of this Agreement)
that:—”
|
(ii)
|
Section 3
of this Agreement is hereby amended by adding at the end thereof
the
following subsection (g):
|
“(g) Relationship
Between Parties.
(1) Nonreliance.
It is
not relying on any statement or representation of the other party regarding
a
Transaction (whether written or oral), other than the representations expressly
made in this Agreement or the Confirmation in respect of that
Transaction.
(2) Evaluation
and Understanding.
(i) Non-Reliance.
In the
case of Party A, it is acting for its own account, and in the case of Party
B,
the Trustee is acting on behalf of the Trust. Party A has made its own
independent decisions to enter into each Transaction under the Agreement
and as
to whether such Transaction is appropriate or proper for it based upon
its own
judgment and upon advice from such advisers as it has deemed necessary
and, with
respect to Party B, it has entered into each Transaction under the Agreement
as
directed under the PSA. It is not relying on any communication (written
or oral)
of the other party as investment advice or as a recommendation to enter
into
such Transaction; it being understood that information and explanations
related
to the terms and conditions of a Transaction shall not be considered investment
advice or a recommendation to enter into that Transaction. No communication
(written or oral) received from the other party shall be deemed to be an
assurance or guarantee as to the expected results of each such
Transaction.
(ii) 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 risks of that Transaction.
(iii) Status
of Parties.
The
other party is not acting as a fiduciary for or an adviser to it in respect
of
that Transaction.
(3) Purpose.
It is an
“eligible swap participant” as such term is defined in Section 35.1(b)(2)
of the regulations (17 C.F.R 35) promulgated under, and an “eligible contract
participant” as defined in Section 1a(12) of, the Commodity Exchange Act,
as amended, and it is entering into the Transaction for the purposes of
managing
its borrowings or investments, hedging its underlying assets or liabilities
or
in connection with a line of business.
-27-
(4) ERISA
Representation.
(i)
Party
A represents and warrants at all times hereunder that it is not a pension
plan
or employee benefit plan and that it is not using assets of any such plan
or
assets deemed to be assets of such a plan in connection with any Transaction
under this Agreement, and
(ii)
Party B represents and warrants at all times hereunder that (x) it is not
a
pension plan or employee benefit plan, and (y) (1) that it is not acting
on
behalf of any such plan or using assets of any such plan or assets deemed
to be
assets of any such plan in connection with any Transaction under this Agreement
or (2) any pension plan or employee benefits plan subject to the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”),
or
Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”),
or
any person who is acting on behalf of such a plan or using assets of such
plan
or assets deemed to be “plan assets” of such plan pursuant to U.S. Department of
Labor regulation section 2510.3-101, who purchases a certificate issued
by the
Trust while the Trust is in existence (i) shall represent or shall be deemed
to
represent that the purchase and holding of such certificate is in reliance
on at
least one of the Prohibited Transaction Class Exemptions of 00-00, 00-0,
00-00,
00-00 xx 00-00 xx (xx) shall provide an opinion of counsel which states
that
such purchase and holding is permissible under applicable law and will
not
result in a prohibited transaction under ERISA or Section 4975 of the
Code.”
|
(b)
|
Set-off.
Subject
to Section 2(c), Paragraphs 8(a) and 8(b) of the Credit Support
Annex and
Part 1(f)(ii)(8) hereof, notwithstanding any other provision
of this
Agreement or any other existing or future agreement, each party
irrevocably waives any and all rights it may have to set off,
net, recoup
or otherwise withhold, suspend or condition payment or performance
of any
obligation between it and the other party hereunder against any
obligation
between it and the other party under any other agreements. Section
6(e) is
hereby amended by the deletion of the following sentence at the
end of the
first paragraph thereof: “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.”
|
|
(c)
|
Confirmations.
Party A will deliver to Party B a Confirmation relating to each
Transaction.
|
|
(d)
|
Form
of Agreement.
The parties hereby agree that the text of the body of this Agreement
is
intended to be the printed form of 1992 ISDA Master Agreement
(Multicurrency—Cross Border) as published and copyrighted by the
International Swaps and Derivatives Association,
Inc.
|
|
(e)
|
Transfer,
Termination, Amendment and
Assignment.
|
|
(i)
|
This
Agreement may not be amended unless prior written notice is given
to
Moody’s and Rating Agency Confirmation from S&P and Fitch is
obtained.
|
|
(ii)
|
Notwithstanding
any other provision of this Agreement, no Early Termination Date
shall be
effectively designated by Party B (other than an Early Termination
Date
designated under Part 5(f)(ii)(3)) unless Moody’s has been given prior
written notice of such designation.
|
|
(iii)
|
Party
B may, with the prior written consent of Party A and subject
prior written
notice to Moody’s and Rating Agency Confirmation from S&P and Fitch,
assign, novate or transfer its rights and obligations under the
Agreement
to a third party. Notwithstanding Section 7 of this Agreement,
Party A
may, at its own discretion and at its own expense, subject to
giving
reasonable notice of transfer to Moody’s and subject to Rating Agency
Confirmation with respect to S&P and Fitch, assign, novate or transfer
its rights and obligations under this Agreement (including any
Transactions hereunder) to any third party including, without
limitation,
another of Party A’s offices, branches or affiliates (the “Transferee”),
provided that:
|
-28-
(1) such
third party agrees to be bound by, inter alia, the payment, transfer and
collateral terms of this Agreement (including any Transactions hereunder)
and
substantially all other terms as the party which it replaces;
(2) such
third party is an Eligible Replacement;
(3) a
Termination Event or an Event of Default does not occur under this Agreement
as
a result of such transfer;
(4) if
the
Transferee is domiciled in a different jurisdiction from both Party A and
Party
B, the rating of the Certificates assigned by S&P are not adversely
affected;
(5) as
of the
date of the transfer the Transferee will not, as a result of such transfer,
be
required to withhold or deduct on account of tax under this Agreement;
and
(6) as
of the
date of such transfer, neither the Transferee nor Party B will be required
to
withhold or deduct any increased amount on account of any Taxes under this
Agreement as a result of such transfer, unless, as of the date of such
transfer,
(x) Party B is entitled to additional amounts under Section 2(d)(i)(4)
on
account of any such Taxes required to be deducted or withheld by the Transferee
and (y) Party B is not required to pay Transferee additional amounts under
Section 2(d)(i)(4) on account of any such Taxes required to be deducted
or
withheld by Party B.
Following
such transfer, all references herein to Party A shall be deemed to be
references
to the Transferee.
|
(f)
|
Rating
Agency Downgrade.
|
|
(i)
|
Moody’s
First Tier Downgrade. In
the event the Relevant Entity is downgraded below the Moody’s First Tier
Required Swap Counterparty Ratings (a “Moody’s
First Tier Downgrade Event”)
then, within 30 Business Days after the occurrence of such Moody’s First
Tier Downgrade Event, Party A shall, at its option and at its
own expense,
either:
|
|
(A)
|
cause
an Eligible Replacement to replace Party A as party to this Agreement;
provided that if such Eligible Replacement or its Credit Support
Provider,
as applicable, is rated below the Moody’s First Tier Required Swap
Counterparty Rating, such Eligible Replacement shall immediately
Transfer
Eligible Credit Support to Party B pursuant to the Credit Support
Annex;
|
|
(B)
|
obtain
an Eligible Guarantee in respect of Party A’s obligations under this
Agreement that is provided by an entity with the Moody’s First Tier
Required Swap Counterparty Rating;
or
|
|
(C)
|
Transfer
Eligible Credit Support to Party B pursuant to the Credit Support
Annex.
|
|
(ii)
|
Moody’s
Second Tier Downgrade. (1)
In the event that no Relevant Entity has the Moody’s Second Tier Required
Swap Counterparty Rating (a “Moody’s Second Tier Downgrade Event”) then,
Party A shall, at its option and at its own expense, use commercially
reasonable efforts to as soon as reasonably practicable
either:
|
-29-
|
(A)
|
cause
an Eligible Replacement to replace Party A as party to this Agreement;
or
|
|
(B)
|
obtain
an Eligible Guarantee in respect of Party A’s obligations under this
Agreement that is provided by an entity with the Moody’s Second Tier
Required Swap Counterparty Rating.
|
(2)
If no
Eligible Replacement or Eligible Guarantee has been effected in accordance
with
Part 5(f)(ii)(1)(A) or (B) above within 30 Business Days of such Moody’s Second
Tier Downgrade Event then:
|
(A)
|
Party
A shall Transfer Eligible Credit Support to Party B pursuant
to the Credit
Support Annex until such replacement or Eligible Guarantee takes
effect
or, if sooner, no Moody’s Second Tier Downgrade Event is occurring;
and
|
|
(B)
|
without
prejudice to Party A’s right to continue to seek an Eligible Replacement
or an Eligible Guarantee pursuant to Part 5(f)(ii)(1)(A) and
(B), Party B
shall also have the right (but not the obligation) on any Business
Day
thereafter to obtain Firm Offers (such day a “Firm
Offer Solicitation Date”)
by giving Party A written notice of its intention to seek Firm
Offers no
later than 12:00 p.m., New York time, on the Business Day prior
to the
Firm Offer Solicitation Date. Such notice shall indicate the
day and time
as of which each Eligible Replacement will be requested to provide
its
Firm Offer; provided that Eligible Replacements shall not provide
Firm
Offers prior to 12:00 p.m. New York time, on the Firm Offer Solicitation
Date. Party B shall undertake to use reasonable efforts to seek
at least 5
Firm Offers and Party B shall request each entity providing a
Firm Offer
to do so to the extent reasonably practicable as of the same
day and time
(without regard to different time zones). If more than one Firm
Offer
remains capable of becoming legally binding upon acceptance,
Party B shall
accept the Firm Offer that constitutes (1) the highest Firm Offer
in the
case of a payment by an Eligible Replacement to Party B or (2)
the lowest
Firm Offer in the case of a payment by Party B to an Eligible
Replacement;
provided, however, if Party B fails to make such determination
promptly,
Party A shall have the right to make such determination. If only
one Firm
Offer is provided, Party B shall accept the single Firm Offer.
Party B
shall be obligated to accept the Firm Offer upon determination;
provided
however, prior to accepting such Firm Offer, Party B shall (1)
on a day
that is a Business Day, provide Party A with at least 24 hours
prior
written notice of its intent to accept such Firm Offer (which
acceptance,
in all cases, shall be on a Business Day) and (2) confirm that
Party A has
not identified an Eligible Replacement. If at anytime prior to
Party B’s
acceptance of a Firm Offer, Party A has identified an Eligible
Replacement
then, in its sole discretion, Party A may transfer its rights
and
obligations under this Agreement to such Eligible Replacement
and an Early
Termination Date will not occur. If a Firm Offer is accepted
by Party B,
then, notwithstanding Section 6 of the ISDA Master Agreement,
an Early
Termination Date in respect of all outstanding Transactions will
occur
immediately upon such acceptance by Party B and the Settlement
Amount will
equal the Firm Offer so accepted by Party
B.
|
(3)
Notwithstanding Part 5(f)(ii)(1) and (2) above, an Additional Termination
Event
under this Part 5(f)(ii) shall only occur with Party A as the sole Affected
Party if:
|
(A)
|
a
Moody’s Second Tier Downgrade Event has occurred and has been continuing
for 30 or more Business Days;
and
|
-30-
|
(B)
|
at
least one Eligible Replacement has made a Firm Offer in accordance
with
Part 5(f)(ii)(2)(B) above which remains capable of becoming legally
binding upon acceptance by the
offeree.
|
|
(iii)
|
S&P
First Tier Downgrade. (1) In
the event the Relevant Entity that is a Financial Institution
is
downgraded below the S&P First Tier Required Swap Counterparty Rating
(an “S&P
First Tier Downgrade Event”)
then Party A shall, at its option and at its own expense,
either:
|
|
(A)
|
subject
to Rating Agency Confirmation, within 60 calendar days after
the
occurrence of such S&P First Tier Downgrade Event, cause an Eligible
Replacement to replace Party A as party to this Agreement; provided
that
if such Eligible Replacement or its Credit Support Provider,
as
applicable, is a Financial Institution and is rated below the
S&P
First Tier Required Swap Counterparty Rating, such Eligible Replacement
shall immediately Transfer Eligible Credit Support to Party B
pursuant to
the Credit Support Annex;
|
|
(B)
|
subject
to Rating Agency Confirmation, within 60 calendar days after
the
occurrence of such S&P First Tier Downgrade Event, obtain an Eligible
Guarantee in respect of Party A’s obligations under this Agreement that is
provided by an entity with the S&P First Tier Required Swap
Counterparty Rating;
|
|
(C)
|
within
10 Business Days after the occurrence of such S&P First Tier Downgrade
Event, transfer Eligible Credit Support to Party B pursuant to
the Credit
Support Annex; or
|
|
(D)
|
subject
to Rating Agency Confirmation, take other steps, if any, to enable
Party B
to remedy a downgrade by S&P below the S&P First Tier Required
Swap Counterparty Rating.
|
(2) Pending
compliance with Part 5(f)(iii)(1), Party A shall Transfer Eligible Credit
Support to Party B pursuant to the Credit Support Annex within 10 Business
Days
after an S&P First Tier Downgrade Event.
For
the
avoidance of doubt, this Part 5(f)(iii) shall only be applicable to
Financial Institutions
|
(iv)
|
S&P
Second Tier Downgrade. (1)
In the event that no Relevant Entity has the S&P Second Tier Required
Swap Counterparty Rating (an “S&P
Second Tier Downgrade Event”)
then, Party A shall, at its option and at its own expense, use
commercially reasonable efforts to
either:
|
|
(A)
|
subject
to Rating Agency Confirmation, within 60 calendar days after
such S&P
Second Tier Downgrade Event, cause an Eligible Replacement to
replace
Party A as party to this Agreement; provided that if such Eligible
Replacement or its Credit Support Provider, as applicable, is
a Financial
Institution and is rated below the S&P First Tier Required Swap
Counterparty Rating, such Eligible Replacement shall immediately
Transfer
Eligible Credit Support to Party B pursuant to the Credit Support
Annex;
or
|
|
(B)
|
subject
to Rating Agency Confirmation, within 60 calendar days after
such S&P
Second Tier Downgrade Event, obtain an Eligible Guarantee in
respect of
Party A’s obligations under this Agreement that is provided by an entity
with the S&P First Tier Required Swap Counterparty Rating or the
S&P Second Tier Required Swap Counterparty Rating; provided
that if such Eligible Guarantor is a Financial Institution and
is rated
below the S&P First Tier Required Swap Counterparty Rating,
Party A shall immediately Transfer Eligible Credit Support to
Party B pursuant to the Credit Support
Annex;
|
-31-
(2)
Pending compliance with Part 5(f)(iv)(1)(A) or (B) Party A shall Transfer
Eligible Credit Support to Party B pursuant to the Credit Support Annex
within
10 Business Days after an S&P Second Tier Downgrade Event.
|
(v)
|
Fitch
First Tier Downgrade.
In the event no Relevant Entity has the Fitch First Tier Required
Swap
Counterparty Rating (a “Fitch
First Tier Downgrade Event”)
and such event is continuing then, within 30 Business Days after
the
occurrence of such Fitch First Tier Downgrade Event, Party A
shall, at its
option and at its own expense,
either:
|
|
(A)
|
cause
an Eligible Replacement to replace Party A as party to this
Agreement;
|
|
(B)
|
obtain
an Eligible Guarantee in respect of Party A’s obligations under this
Agreement that is provided by an entity with the Fitch First
Tier Required
Swap Counterparty Rating.
|
|
(C)
|
Transfer
Eligible Credit Support to Party B pursuant to the Credit Support
Annex;
or
|
|
(D)
|
take
other steps, if any, to enable Party B to remedy a downgrade
by Fitch
below the Fitch First Tier Required Swap Counterparty
Rating.
|
|
(vi)
|
Fitch
Second Tier Downgrade.
|
|
(1)
|
In
the event that the Relevant Entity is downgraded below the Fitch
Second
Tier Required Swap Counterparty Rating (a “Fitch
Second Tier Downgrade Event”)
and such event is continuing then Party A shall, at its option
and at its
own expense, use commercially reasonable efforts to as soon as
reasonably
practicable either:
|
|
(A)
|
cause
an Eligible Replacement to replace Party A as party to this Agreement;
or
|
|
(B)
|
obtain
an Eligible Guarantee in respect of Party A’s obligations under this
Agreement that is provided by an entity with the Fitch Second
Tier
Required Swap Counterparty Rating.
|
|
(2)
|
If
no Eligible Replacement or Eligible Guarantee has been effected
in
accordance with Part 5(f)(vi)(1)(A) or (B) within 30 Business
Days of such
Fitch Second Tier Downgrade Event, Party A shall Transfer Eligible
Credit
Support to Party B pursuant to the Credit Support Annex until
such
replacement or Eligible Guarantee takes effect or, if sooner,
no Fitch
Second Tier Downgrade Event is
occurring
|
|
(vii)
|
Failure
to act in accordance with this Part 5(f), including any failure
by Party A
to comply with or perform any obligation to be complied with
or performed
by Party A under the Credit Support Annex, shall constitute an
Additional
Termination Event with Party A as the sole Affected Party; provided
that,
failure by Party A to Transfer Eligible Credit Support to Party
B in
accordance with Part 5(f)(ii)(2) above shall constitute an Event
of
Default under Section 5(a)(iii)(“Credit Support Default”) if such failure
is not remedied on or before the third Business Day after notice
of such
failure is given to Party A.
|
-32-
|
(viii)
|
For
purposes of this Part 5(f), but subject to Part 5(f)(ii)(3),
Party A shall
be responsible for (1) posting collateral in accordance with
such Credit
Support Annex at its own cost; and (2) any cost incurred by it
in
complying with its obligations.
|
|
(g)
|
Rating
Agency Downgrade Definitions.
|
|
(i)
|
For
purposes of this Agreement,
|
“Eligible
Guarantee”
means an
unconditional and irrevocable guarantee, letter of credit or other arrangement
that is provided by a party as principal obligor rather than surety and
is
directly enforceable by Party B.
“Eligible
Replacement”
means an
entity (1) with the Moody’s First Tier Required Swap Counterparty Ratings and/or
the Moody’s Second Tier Required Swap Counterparty Ratings or whose present and
future obligations owing to Party B are supported pursuant to an Eligible
Guarantee provided by a party with the Moody’s First Tier Required Swap
Counterparty Ratings and/or the Moody’s Second Tier Required Swap Counterparty
Ratings, (2) with the S&P First Tier Required Swap Counterparty Ratings
and/or the S&P Second Tier Required Swap Counterparty Ratings or whose
present and future obligations owing to Party B are supported pursuant
to an
Eligible Guarantee provided by a party with the S&P First Tier Required Swap
Counterparty Ratings and/or the S&P Second Tier Required Swap Counterparty
Ratings and (3) with the Fitch First Tier Required Swap Counterparty
Ratings and/or the Fitch Second Tier Required Swap Counterparty Ratings
or whose
present and future obligations owing to Party B are supported pursuant to
an Eligible Guarantee provided by a party with the Fitch First Tier Required
Swap Counterparty Ratings and/or the Fitch Second Tier Required Swap
Counterparty Ratings; provided that no entity shall be an Eligible Replacement
unless (A) a legal opinion confirms that none of such Eligible Replacement’s
payments to Party B under this Agreement will be subject to deduction or
withholding for or on account of any Tax or (B) notwithstanding the definition
of “Indemnifiable Tax” in Section 14 of this Agreement, all Taxes in relation to
payments by such Eligible Replacement shall be Indemnifiable Taxes unless
such
Taxes (x) are assessed directly against Party B and not by deduction or
withholding by such Eligible Replacement or (y) arise as a result of a
Change in
Tax Law (in which case such Tax shall be an Indemnifiable Tax only if such
Tax
satisfies the definition of Indemnifiable Tax provided in Section
14).
“Financial
Institution” means
(i) Party A or any of its affiliates, with their respective obligations
guaranteed by Xxxxxx Xxxxxxx or (ii) a bank, broker/dealer, insurance
company, structured product investment vehicle, or derivative product company
or
a subsidiary of any such entity.
“Firm
Offer”
means
an offer which, when made, was capable of becoming legally binding upon
acceptance.
Fitch”
means
Fitch Ratings Limited and any successor to its rating business.
“Fitch
First Tier Required Swap Counterparty Rating”
means a
short-term senior, unsecured debt obligation rating, credit rating or other
similar rating (as the case may be, the “Short-Term
Rating”)
of at
least “F-1” by Fitch and a long-term senior, unsecured debt obligation rating,
credit rating or other similar rating (as the case may be, the “Long-Term
Rating”)
of at
least “A” by Fitch.
“Fitch
Second Tier Required Swap Counterparty Rating”
means a
Short-Term Rating of at least “F-3” by Fitch and a Long-Term Rating of at least
“BBB-” by Fitch.
-33-
“Moody’s”
means
Xxxxx’x Investor Services, Inc. and any successor to its rating
business.
“Moody’s
First Tier Required Swap Counterparty Rating”
means
(i) if such counterparty or entity has only Long-Term Rating by Moody’s, a
Long-Term Rating of at least “A1” by Moody’s or (ii) if such counterparty or
entity has both a Long-Term Rating and a Short-Term Rating by Moody’s, a
Long-Term Rating of at least “A2” by Moody’s and a Short-Term Rating of at least
“P-1” by Moody’s.
“Moody’s
Second Tier Required Swap Counterparty Rating”
means
(i) if such counterparty or entity has only a Long-Term Rating by Moody’s, a
Long-Term Rating of at least “A3” by Moody’s or (ii) if such counterparty or
entity has both a Long-Term Rating and a Short-Term Rating by Moody’s, a
Long-Term Rating of at least “A3” by Moody’s and a Short-Term Rating of at least
“P-2” by Xxxxx’x.
“Rating
Agencies”
means
Xxxxx’x, S&P and Fitch.
“Rating
Agency Confirmation”
means,
with respect to any particular proposed act or omission to act hereunder,
that
the party acting or failing to act must consult with S&P and Fitch and
receive from S&P and Fitch a prior written confirmation that the proposed
action or inaction would not cause a downgrade or withdrawal of the then
current
rating of the Certificates; provided that S&P and Fitch are then providing a
rating of the Certificates.
“Relevant
Entity”
means
Party A, Party A’s Credit Support Provider and any principal obligor under an
Eligible Guarantee in respect of Party A’s obligations under this
Agreement.
“S&P”
means
Standard and Poor’s Ratings Services, a division of the XxXxxx-Xxxx Companies,
Inc. and any successor to its rating business.
“S&P
First Tier Required Swap Counterparty Rating”
means,
if such counterparty or entity is a Financial Institution, (i) a Short-Term
Rating of at least “A-1” by S&P or (ii) if such counterparty or entity does
not have a Short-Term Rating by S&P, a Long-Term Rating of at least “A+” by
S&P. For the avoidance of doubt, the S&P First Tier Required Swap
Counterparty Rating shall not be applicable to entities other than Financial
Institutions.
“S&P
Second Tier Required Swap Counterparty Rating”
means
(A) if such counterparty or entity is a Financial Institution, (i) a Short-Term
Rating of at least “A-2” by S&P or (ii) if such counterparty or entity does
not have a Short-Term Rating from S&P, a Long-Term Rating of at least “BBB+”
by S&P or (B) if such counterparty or entity is not a Financial Institution,
(i) a Short-Term Rating of at least “A-1” by S&P or (ii) if such
counterparty or entity does not have a Short-Term Rating from S&P, a
Long-Term Rating of at least “A+” by S&P.
|
(h)
|
Severability.
If
any term, provision, covenant, or condition of this Agreement,
or the
application thereof to any party or circumstance, shall be held
to be
invalid or unenforceable (in whole or in part) for any reason,
the
remaining terms, provisions, covenants, and conditions hereof
shall
continue in full force and effect as if this Agreement had been
executed
with the invalid or unenforceable portion eliminated, so long
as this
Agreement as so modified continues to express, without material
change,
the original intentions of the parties as to the subject matter
of this
Agreement and the deletion of such portion of this Agreement
will not
substantially impair the respective benefits or expectations
of the
parties; provided, however, that nothing in this provision shall
adversely
affect the rights of each party under this Agreement; and provided
further
that this severability provision shall not be applicable if any
provision
of Section 1, 2, 5, 6, or 13 (or any definition or provision in
Section 14 to the extent it relates to, or is used in or connection
with any such Section) shall be so held to be invalid or unenforceable.
The parties shall endeavor to engage in good faith negotiations
to replace
any invalid or unenforceable term, provision, covenant or condition
with a
valid or enforceable term, provision, covenant or condition,
the economic
effect of which comes as close as possible to that of the invalid
or
unenforceable term, provision, covenant or
condition.
|
-34-
|
(i)
|
Consent
to Recording.
Each party hereto consents to the monitoring or recording, at
any time and
from time to time, by the other party of any and all communications
between trading and marketing personnel of the parties, waives
any further
notice of such monitoring or recording, and agrees to notify
its officers
and employees of such monitoring or
recording.
|
|
(j)
|
Proceedings.
Party A shall not institute against or cause any other person
to institute
against, or join any other person in instituting against, the
Trust or
Deutsche Bank National Trust Company, not individually, but solely
as
Trustee, any bankruptcy, reorganization, arrangement, insolvency
or
liquidation proceedings, or other proceedings under any federal
or state
bankruptcy or similar law for a period of one year and one day
(or, if
longer, the applicable preference period) following payment in
full of the
Certificates; provided, however, that this shall not restrict
or prohibit
Party A from joining in any bankruptcy, reorganization, arrangement,
insolvency, moratorium or liquidation proceedings or other analogous
proceedings under applicable laws. This
part 5(j) will survive termination of this
Agreement.
|
|
(k)
|
Regulation
AB. Upon
request by the Depositor, Party A may, at its option, but is
not required
to, (A) (a) provide the financial information required by Item
1115(b)(1)
or (b)(2) of Regulation AB (as specified by the Depositor to
Party A) with
respect to Party A (or any guarantor of Party A if providing
the financial
data of a guarantor is permitted under Regulation AB) and any
affiliated
entities providing derivative instruments to Party B (the “Company
Financial Information”), in a form appropriate for use in the Exchange Act
Reports and in an XXXXX-compatible form; (b) if applicable, cause
its
accountants to issue their consent to filing or incorporation
by reference
of such financial statements in the Exchange Act Reports of Party
B and
(c) within 5 Business Days of the release of any updated financial
information, provide current Company Financial Information as
required
under Item 1115(b) of Regulation AB to the Depositor in an
XXXXX-compatible form and, if applicable, cause its accountants
to issue
their consent to filing or incorporation by reference of such
financial
statements in the Exchange Act Reports of Party B or (B) assign
this
Agreement at its own cost to another entity that has agreed to
take the
actions described in clause (A) of this sentence with respect
to itself
(and which has the Required Swap Counterparty Rating and the
assignment to
which would satisfy the Rating Agency Condition). For the avoidance
of
doubt, Party A is not required to take any action pursuant to
this
paragraph and the failure of Party A to take any such action
will not
constitute an Event of Default under this
Agreement.
|
As
used
in this Agreement the following words shall have the following
meanings:
“Commission”
shall
mean the Securities and Exchange Commission.
“Depositor”
shall
mean Saxon Asset Securities Trust 2007-3.
“XXXXX”
shall
mean the Commission’s Electronic Data Gathering, Analysis and Retrieval
system.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder
-35-
“Exchange
Act Reports”
shall
mean all Distribution Reports on Form 10-D, Current Reports on Form 8-K
and
Annual Reports on Form 10-K that are to be filed with respect to Party
B
pursuant to the Exchange Act.
“Regulation
AB”
shall
mean the Asset Backed Securities Regulation AB, 17 C.F.R. §§229.1100-229.1123,
as such may be amended from time to time, and subject to such clarification
and
interpretation as have been provided by the Commission in the adopting
release
(Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg.
1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Commission, or as may
be
provided by the Commission or its staff from time to time.
|
(l)
|
Trustee
Capacity. It
is expressly understood and agreed by the parties hereto that
insofar as
this Agreement is executed by Deutsche Bank National Trust
Company (i)
this Agreement is executed and delivered by Deutsche Bank National
Trust
Company not in its individual capacity but solely as Trustee
under the PSA
in the exercise of the powers and authority conferred and vested
in it as
trustee thereunder, (ii) Deutsche Bank National Trust Company
has been
directed pursuant to the PSA to enter this Agreement and perform
its
obligations hereunder on behalf of the Trust, (iii) each of
the
representations, undertakings and agreements herein made on
behalf of
Party B is made and intended not as personal representations
of Deutsche
Bank National Trust Company but is made and intended for the
purpose of
binding only the Trust, (iv) except as expressly required by
the terms of
the PSA, nothing herein contained shall be construed as creating
any
liability on Deutsche Bank National Trust Company, individually
or
personally, to perform any covenant either expressed or implied
contained
herein (including, for the avoidance of doubt, any liability,
individually
or personally, for any failure or delay in making a payment
hereunder to
Party A due to any failure or delay in receiving amounts held
in the
account held by the Trust created pursuant to the PSA or any
inability to
provide any correct withholding certificate from a Certificateholder
provided to the Trustee), all such liability, if any, being
expressly
waived by the parties who are signatories to this Agreement
and by any
person claiming by, through or under such parties, and (v)
under no
circumstances shall Deutsche Bank National Trust Company in
its individual
capacity be personally liable for the payment of any indebtedness
or
expenses or be personally liable for the breach or failure
of any
obligation, representation, warranty or covenant made or undertaken
under
this Agreement, as to all of which recourse shall be had solely
to the
assets of the Supplemental Interest Trust. The Trustee acknowledges
that
Section 11.13 of the PSA provides that Party A is a third party
beneficiary of the PSA, including without limitation, for purposes
of the
standard of care under the PSA and the performance of obligations
required
to be performed by the Trustee under the
PSA.
|
|
(m)
|
Limited
Recourse; Non-Recourse.
Party A acknowledges and agrees that, notwithstanding any provision
in
this Agreement to the contrary, the obligations of Party B hereunder
are
limited recourse obligations of Party B, payable solely from
the
Supplemental Interest Trust and the proceeds thereof, in accordance
with
the priority of payments and other terms of the PSA and that
Party A will
not have any recourse to any of the directors, officers, agents,
employees, shareholders or affiliates of Party B with respect
to any
claims, losses, damages, liabilities, indemnities or other obligations
in
connection with any transactions contemplated hereby. In the
event that
the Supplemental Interest Trust and the proceeds thereof, should
be
insufficient to satisfy all claims outstanding and following
the
realization of the Supplemental Interest Trust and the proceeds
thereof,
any claims against or obligations of Party B under this Agreement
or any
other confirmation thereunder still outstanding shall be extinguished
and
thereafter not revive. This provision will survive the termination
of this
Agreement.
|
|
(n)
|
“Indemnifiable
Tax”
Notwithstanding the definition of “Indemnifiable Tax” in Section 14 of
this Agreement, in relation to payments by Party A, no Tax shall
be an
Indemnifiable Tax.
|
|
(o)
|
If
Party A consolidates or amalgamates with, merges with or into,
or
transfers all or substantially all its assets to, another entity,
where
such action does not constitute an event described in Section
5(a)(viii),
Party A shall either (A) provide a legal opinion that none of
Party A's
payments to Party B under this Agreement will be subject to deduction
or
withholding for or on account of any Tax or (B) notwithstanding
the
definition of “Indemnifiable Tax” in Section 14 of this Agreement, all
Taxes in relation to payments by Party A shall be Indemnifiable
Taxes
unless such Taxes (x) are assessed directly against Party B and
not by
deduction or withholding by such Eligible Replacement or (y)
arise as a
result of a Change in Tax Law (in which case such Tax shall be
an
Indemnifiable Tax only if such Tax satisfies the definition of
Indemnifiable Tax provided in Section
14).
|
-36-
IN
WITNESS WHEREOF,
the
parties have executed this Schedule by their duly authorized officers as
of the
date hereof:
|
XXXXXX
XXXXXXX CAPITAL SERVICES INC.
|
DEUTSCHE
BANK NATIONAL TRUST COMPANY, not individually, but solely as
Trustee on
behalf of the Supplemental Interest Trust with respect to Saxon
Asset
Securities Trust 2007-3, Mortgage Loan Asset Backed Certificates,
Series
2007-3
|
|
By: /s/
Xxxxxxxxx
Xxxxxx
Name:
Xxxxxxxxx Xxxxxx
Title:
Authorized Signatory
Date:
August 3, 2007
|
By: /s/
Xxxxxxx
Xxxxxxxxx
Name:
Xxxxxxx Xxxxxxxxx
Title:
Authorized Signer
Date:
August 3, 2007
|
EXHIBIT
A
Credit
Support Annex
Exh
A-1
EXECUTION
|
(Bilateral Form)
|
(ISDA
Agreements
Subject to New York Law
Only)
|
ISDA®
International
Swaps and Derivatives Association, Inc.
CREDIT
SUPPORT ANNEX
to
the
Schedule to the Master Agreement
dated
as
of August 3, 2007
between
|
XXXXXX
XXXXXXX CAPITAL SERVICES, INC.
|
and
|
DEUTSCHE
BANK NATIONAL TRUST COMPANY, a
national banking association, not individually, but solely as
Trustee on
behalf of the Supplemental Interest Trust (the “Trust”) with respect to
Saxon Asset Securities Trust 2007-3, Mortgage Loan Asset Backed
Certificates, Series 2007-3
|
|
(“Party
A”)
|
(“Party
B”)
|
This
Annex supplements, forms part of, and is subject to, the above-referenced
Agreement, is part of its Schedule and is a Credit Support Document under
this
Agreement with respect to each party.
Accordingly,
the parties agree as follows:
Paragraph
1. Interpretation
(a) Definitions
and Inconsistency.
Capitalized terms not otherwise defined herein or elsewhere in this Agreement
have the meanings specified pursuant to Paragraph 12, 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
13
and the other provisions of this Annex, Paragraph 13 will prevail.
(b) Secured
Party and Pledgor.
All
references in this Annex to the “Secured Party” will be to either party when
acting in that capacity and all corresponding references to the “Pledgor” will
be to the other party when acting in that capacity; provided, however,
that if
Other Posted Support is held by a party to this Annex, all references herein
to
that party as the Secured Party with respect to that Other Posted Support
will
be to that party as the beneficiary thereof and will not subject that support
or
that party as the beneficiary thereof to provisions of law generally relating
to
security interests and secured parties.
Paragraph
2. Security Interest
Each
party, as the Pledgor, hereby pledges to the other party, as the Secured
Party,
as security for its Obligations, and grants to the Secured Party a first
priority continuing security interest in, lien on and right of Set-off
against
all Posted Collateral Transferred to or received by the Secured Party hereunder.
Upon the Transfer by the Secured Party to the Pledgor of Posted Collateral,
the
security interest and lien granted hereunder on that Posted Collateral
will be
released immediately and, to the extent possible, without any further action
by
either party.
Paragraph
3. Credit Support Obligations
(a) Delivery
Amount.
Subject
to Paragraphs 4 and 5, upon a demand made by the Secured Party on or promptly
following a Valuation Date, if the Delivery Amount for that Valuation Date
equals or exceeds the Pledgor’s Minimum Transfer Amount, then the Pledgor will
Transfer to the Secured Party Eligible Credit Support having a Value as
of the
date of Transfer at least equal to the applicable Delivery Amount (rounded
pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13,
the
“Delivery
Amount”
applicable to the Pledgor 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 all Posted Credit Support held by the Secured
Party.
(b) Return
Amount.
Subject
to Paragraphs 4 and 5, upon a demand made by the Pledgor on or promptly
following a Valuation Date, if the Return Amount for that Valuation Date
equals
or exceeds the Secured Party’s Minimum Transfer Amount, then the Secured Party
will Transfer to the Pledgor Posted Credit Support specified by the Pledgor
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 13). Unless
otherwise specified in Paragraph 13, the “Return
Amount”
applicable to the Secured Party for any Valuation Date will equal the amount
by
which:
(i) the
Value
as of that Valuation Date of all Posted Credit Support held by the Secured
Party
exceeds
(ii) the
Credit Support Amount.
“Credit
Support Amount”
means,
unless otherwise specified in Paragraph 13, for any Valuation Date (i)
the
Secured Party’s Exposure for that Valuation Date plus (ii) the aggregate of all
Independent Amounts applicable to the Pledgor, if any, minus (iii) all
Independent Amounts applicable to the Secured Party, if any, minus (iv)
the
Pledgor’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.
2
Paragraph
4. Conditions Precedent, Transfer Timing, Calculations and
Substitutions
(a) Conditions
Precedent.
Each
Transfer obligation of the Pledgor under Paragraphs 3 and 5 and of the
Secured
Party under Paragraphs 3, 4(d)(ii), 5 and 6(d) is subject to the conditions
precedent that:
(i) no
Event
of Default, Potential Event of Default or Specified Condition has occurred
and
is continuing with respect to the other party; and
(ii) no
Early
Termination Date for which any unsatisfied payment obligations exist has
occurred or been designated as the result of an Event of Default or Specified
Condition with respect to the other party.
(b) Transfer
Timing.
Subject
to Paragraphs 4(a) and 5 and unless otherwise specified, if a demand for
the
Transfer of Eligible Credit Support or Posted Credit Support is made by
the
Notification Time, then the relevant Transfer will be made not later than
the
close of business on the next Local Business Day; if a demand is made after
the
Notification Time, then the relevant Transfer will be made not later than
the
close of business on the second Local Business Day thereafter.
(c) Calculations.
All
calculations of Value and Exposure for purposes of Paragraphs 3 and 6(d)
will be
made by the Valuation Agent as of the 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 6(d),
following the date of calculation).
Substitutions.
(i) Unless
otherwise specified in Paragraph 13, upon notice to the Secured Party specifying
the items of Posted Credit Support to be exchanged, the Pledgor may, on
any
Local Business Day, Transfer to the Secured Party substitute Eligible Credit
Support (the “Substitute
Credit Support”);
and
(ii) subject
to Paragraph 4(a), the Secured Party will Transfer to the Pledgor the items
of
Posted Credit Support specified by the Pledgor in its notice not later
than the
Local Business Day following the date on which the Secured Party receives
the
Substitute Credit Support, unless otherwise specified in Paragraph 13 (the
“Substitution
Date”);
provided, however, that the Secured Party will only be obligated to Transfer
Posted Credit Support with a Value as of the date of Transfer of that Posted
Credit Support equal to the Value as of that date of the Substitute Credit
Support.
Paragraph
5. Dispute Resolution
If
a
party (a “Disputing
Party”)
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
Posted
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 (X) the date
that the
demand is made under Paragraph 3 in the case of (I) above or (Y) the date
of
Transfer in the case of (II) above, (2) subject to Paragraph 4(a), the
appropriate party will Transfer the undisputed amount to the other party
not
later than the close of business on the Local Business Day following (X)
the
date that the demand is made under Paragraph 3 in the case of (I) above
or (Y)
the date of Transfer in the case of (II) above, (3) the parties will consult
with each other in an attempt to resolve the dispute and (4) if they fail
to
resolve the dispute by the Resolution Time, then:
3
(i) In
the
case of a dispute involving a Delivery Amount or Return Amount, unless
otherwise
specified in Paragraph 13, the Valuation Agent will recalculate the Exposure
and
the Value as of the Recalculation Date by:
(A) utilizing
any calculations of Exposure for the Transactions (or Swap Transactions)
that
the parties have agreed are not in dispute;
(B) calculating
the Exposure for the Transactions (or Swap 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 (or Swap Transaction), then fewer than four quotations may
be used
for that Transaction (or Swap Transaction); and if no quotations are available
for a particular Transaction (or Swap Transaction), then the Valuation
Agent’s
original calculations will be used for that Transaction (or Swap Transaction);
and
(C) utilizing
the procedures specified in Paragraph 13 for calculating the Value, if
disputed,
of Posted Credit Support.
(ii) In
the
case of a dispute involving the Value of any Transfer of Eligible Credit
Support
or Posted Credit Support, the Valuation Agent will recalculate the Value
as of
the date of Transfer pursuant to Paragraph 13.
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) not later
than the
Notification Time on the Local Business Day following the Resolution Time.
The
appropriate party will, upon demand following that notice by the Valuation
Agent
or a resolution pursuant to (3) above and subject to Paragraphs 4(a) and
4(b),
make the appropriate Transfer.
Paragraph
6. Holding and Using Posted Collateral
(a) Care
of Posted Collateral.
Without
limiting the Secured Party’s rights under Paragraph 6(c), the Secured Party will
exercise reasonable care to assure the safe custody of all Posted Collateral
to
the extent required by applicable law, and in any event the Secured Party
will
be deemed to have exercised reasonable care if it exercises at least the
same
degree of care as it would exercise with respect to its own property. Except
as
specified in the preceding sentence, the Secured Party will have no duty
with
respect to Posted Collateral, including, without limitation, any duty to
collect
any Distributions, or enforce or preserve any rights pertaining
thereto.
4
(b) Eligibility
to Hold Posted Collateral; Custodians.
(i) General.
Subject
to the satisfaction of any conditions specified in Paragraph 13 for holding
Posted Collateral, the Secured Party will be entitled to hold Posted Collateral
or to appoint an agent (a “Custodian”) to hold Posted Collateral for the Secured
Party. Upon notice by the Secured Party to the Pledgor of the appointment
of a
Custodian, the Pledgor’s obligations to make any Transfer will be discharged by
making the Transfer to that Custodian. The holding of Posted Collateral
by a
Custodian will be deemed to be the holding of that Posted Collateral by
the
Secured Party for which the Custodian is acting.
(ii) Failure
to Satisfy Conditions.
If the
Secured Party or its Custodian fails to satisfy any conditions for holding
Posted Collateral, then upon a demand made by the Pledgor, the Secured
Party
will, not later than five Local Business Days after the demand, Transfer
or
cause its Custodian to Transfer all Posted Collateral held by it to a Custodian
that satisfies those conditions or to the Secured Party if it satisfies
those
conditions.
(iii) Liability.
The
Secured Party will be liable for the acts or omissions of its Custodian
to the
same extent that the Secured Party would be liable hereunder for its own
acts or
omissions.
(c) Use
of Posted Collateral.
Unless
otherwise specified in Paragraph 13 and without limiting the rights and
obligations of the parties under Paragraphs 3, 4(d)(ii), 5, 6(d) and 8,
if the
Secured Party is not a Defaulting Party or an Affected Party with respect
to a
Specified Condition and no Early Termination Date has occurred or been
designated as the result of an Event of Default or Specified Condition
with
respect to the Secured Party, then the Secured Party will, notwithstanding
Section 9-207 of the New York Uniform Commercial Code, have the right
to:
(i) sell,
pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose
of,
or otherwise use in its business any Posted Collateral it holds, free from
any
claim or right of any nature whatsoever of the Pledgor, including any equity
or
right of redemption by the Pledgor; and
(ii) register
any Posted Collateral in the name of the Secured Party, its Custodian or
a
nominee for either.
For
purposes of the obligation to Transfer Eligible Credit Support or Posted
Credit
Support pursuant to Paragraphs 3 and 5 and any rights or remedies authorized
under this Agreement, the Secured Party will be deemed to continue to hold
all
Posted Collateral and to receive Distributions made thereon, regardless
of
whether the Secured Party has exercised any rights with respect to any
Posted
Collateral pursuant to (i) or (ii) above.
(d) Distributions
and Interest Amount.
(i) Distributions.
Subject
to Paragraph 4(a), if the Secured Party receives or is deemed to receive
Distributions on a Local Business Day, it will Transfer to the Pledgor
not later
than the following Local Business Day any Distributions it receives or
is deemed
to receive to the extent that a Delivery Amount would not be created or
increased by that Transfer, as calculated by the Valuation Agent (and the
date
of calculation will be deemed to be a Valuation Date for this
purpose).
5
(ii) Interest
Amount.
Unless
otherwise specified in Paragraph 13 and subject to Paragraph 4(a), in lieu
of
any interest, dividends or other amounts paid or deemed to have been paid
with
respect to Posted Collateral in the form of Cash (all of which may be retained
by the Secured Party), the Secured Party will Transfer to the Pledgor at
the
times specified in Paragraph 13 the Interest Amount to the extent that
a
Delivery Amount would not be created or increased by that Transfer, as
calculated by the Valuation Agent (and the date of calculation will be
deemed to
be a Valuation Date for this purpose). The Interest Amount or portion thereof
not Transferred pursuant to this Paragraph will constitute Posted Collateral
in
the form of Cash and will be subject to the security interest granted under
Paragraph 2.
Paragraph
7. Events of Default
For
purposes of Section 5(a)(iii)(1) of this Agreement, an Event of Default
will
exist with respect to a party if:
(i) that
party fails (or fails to cause its Custodian) to make, when due, any Transfer
of
Eligible Collateral, Posted Collateral or the Interest Amount, as applicable,
required to be made by it and that failure continues for two Local Business
Days
after notice of that failure is given to that party;
(ii) that
party fails to comply with any restriction or prohibition specified in
this
Annex with respect to any of the rights specified in Paragraph 6(c) and
that
failure continues for five Local Business Days after notice of that failure
is
given to that party; or
(iii) that
party fails to comply with or perform any agreement or obligation other
than
those specified in Paragraphs 7(i) and 7(ii) and that failure continues
for 30
days after notice of that failure is given to that party.
Paragraph
8. Certain Rights and Remedies
(a) Secured
Party’s Rights and Remedies.
If at
any time (1) an Event of Default or Specified Condition with respect to
the
Pledgor has occurred and is continuing or (2) an Early Termination Date
has
occurred or been designated as the result of an Event of Default or Specified
Condition with respect to the Pledgor, then, unless the Pledgor has paid
in full
all of its Obligations that are then due, the Secured Party may exercise
one or
more of the following rights and remedies:
(i) all
rights and remedies available to a secured party under applicable law with
respect to Posted Collateral held by the Secured Party;
(ii) any
other
rights and remedies available to the Secured Party under the terms of Other
Posted Support, if any;
6
(iii) the
right
to Set-off any amounts payable by the Pledgor with respect to any Obligations
against any Posted Collateral or the Cash equivalent of any Posted Collateral
held by the Secured Party (or any obligation of the Secured Party to Transfer
that Posted Collateral); and
(iv) the
right
to liquidate any Posted Collateral held by the Secured Party through one
or more
public or private sales or other dispositions with such notice, if any,
as may
be required under applicable law, free from any claim or right of any nature
whatsoever of the Pledgor, including any equity or right of redemption
by the
Pledgor (with the Secured Party having the right to purchase any or all
of the
Posted Collateral to be sold) and to apply the proceeds (or the Cash equivalent
thereof) from the liquidation of the Posted Collateral to any amounts payable
by
the Pledgor with respect to any Obligations in that order as the Secured
Party
may elect.
Each
party acknowledges and agrees that Posted Collateral in the form of securities
may decline speedily in value and is of a type customarily sold on a recognized
market, and, accordingly, the Pledgor is not entitled to prior notice of
any
sale of that Posted Collateral by the Secured Party, except any notice
that is
required under applicable law and cannot be waived.
(b) Pledgor’s
Rights and Remedies.
If at
any time an Early Termination Date has occurred or been designated as the
result
of an Event of Default or Specified Condition with respect to the Secured
Party,
then (except in the case of an Early Termination Date relating to less
than all
Transactions (or Swap Transactions) where the Secured Party has paid in
full all
of its obligations that are then due under Section 6(e) of this
Agreement):
(i) the
Pledgor may exercise all rights and remedies available to a pledgor under
applicable law with respect to Posted Collateral held by the Secured
Party;
(ii) the
Pledgor may exercise any other rights and remedies available to the Pledgor
under the terms of Other Posted Support, if any;
(iii) the
Secured Party will be obligated immediately to Transfer all Posted Collateral
and the Interest Amount to the Pledgor; and
(iv) to
the
extent that Posted Collateral or the Interest Amount is not so Transferred
pursuant to (iii) above, the Pledgor may:
(A) Set-off
any amounts payable by the Pledgor with respect to any Obligations against
any
Posted Collateral or the Cash equivalent of any Posted Collateral held
by the
Secured Party (or any obligation of the Secured Party to Transfer that
Posted
Collateral); and
(B) to
the
extent that the Pledgor does not Set-off under (iv)(A) above, withhold
payment
of any remaining amounts payable by the Pledgor with respect to any Obligations,
up to the Value of any remaining Posted Collateral held by the Secured
Party,
until that Posted Collateral is Transferred to the Pledgor.
7
(c) Deficiencies
and Excess Proceeds.
The
Secured Party will Transfer to the Pledgor any proceeds and Posted Credit
Support remaining after liquidation, Set-off and/or application under Paragraphs
8(a) and 8(b) after satisfaction in full of all amounts payable by the
Pledgor
with respect to any Obligations; the Pledgor in all events will remain
liable
for any amounts remaining unpaid after any liquidation, Set-off and/or
application under Paragraphs 8(a) and 8(b).
(d) Final
Returns.
When no
amounts are or thereafter may become payable by the Pledgor with respect
to any
Obligations (except for any potential liability under Section 2(d) of this
Agreement), the Secured Party will Transfer to the Pledgor all Posted Credit
Support and the Interest Amount, if any.
Paragraph
9. Representations
Each
party represents to the other party (which representations will be deemed
to be
repeated as of each date on which it, as the Pledgor, Transfers Eligible
Collateral) that:
(i) it
has
the power to grant a security interest in and lien on any Eligible Collateral
it
Transfers as the Pledgor and has taken all necessary actions to authorize
the
granting of that security interest and lien;
(ii) it
is the
sole owner of or otherwise has the right to Transfer all Eligible Collateral
it
Transfers to the Secured Party hereunder, free and clear of any security
interest, lien, encumbrance or other restrictions other than the security
interest and lien granted under Paragraph 2,
(iii) upon
the
Transfer of any Eligible Collateral to the Secured Party under the terms
of this
Annex, the Secured Party will have a valid and perfected first priority
security
interest therein (assuming that any central clearing corporation or any
third-party financial intermediary or other entity not within the control
of the
Pledgor involved in the Transfer of that Eligible Collateral gives the
notices
and takes the action required of it under applicable law for perfection
of that
interest); and
(iv) the
performance by it of its obligations under this Annex will not result in
the
creation of any security interest, lien or other encumbrance on any Posted
Collateral other than the security interest and lien granted under Paragraph
2.
Paragraph
10. Expenses
(a) General.
Except
as otherwise provided in Paragraphs 10(b) and 10(c), each party will pay
its own
costs and expenses in connection with performing its obligations under
this
Annex and neither party will be liable for any costs and expenses incurred
by
the other party in connection herewith.
(b) Posted
Credit Support.
The
Pledgor will promptly pay when due all taxes, assessments or charges of
any
nature that are imposed with respect to Posted Credit Support held by the
Secured Party upon becoming aware of the same, regardless of whether any
portion
of that Posted Credit Support is subsequently disposed of under Paragraph
6(c),
except for those taxes, assessments and charges that result from the exercise
of
the Secured Party’s rights under Paragraph 6(c).
8
(c) Liquidation/Application
of Posted Credit Support.
All
reasonable costs and expenses incurred by or on behalf of the Secured Party
or
the Pledgor in connection with the liquidation and/or application of any
Posted
Credit Support under Paragraph 8 will be payable, on demand and pursuant
to the
Expenses Section of this Agreement, by the Defaulting Party or, if there
is no
Defaulting Party, equally by the parties.
Paragraph
11. Miscellaneous
(a) Default
Interest.
A
Secured Party that fails to make, when due, any Transfer of Posted Collateral
or
the Interest Amount will be obligated to pay the Pledgor (to the extent
permitted under applicable law) an amount equal to interest at the Default
Rate
multiplied by the Value of the items of property that were required to
be
Transferred, from (and including) the date that Posted Collateral or Interest
Amount was required to be Transferred to (but excluding) the date of Transfer
of
that Posted Collateral or Interest Amount. This interest will be calculated
on
the basis of daily compounding and the actual number of days
elapsed.
(b) Further
Assurances.
Promptly
following a demand made by a party, the other party will execute, deliver,
file
and record any financing statement, specific assignment or other document
and
take any other action that may be necessary or desirable and reasonably
requested by that party to create, preserve, perfect or validate any security
interest or lien granted under Paragraph 2, to enable that party to exercise
or
enforce its rights under this Annex with respect to Posted Credit Support
or an
Interest Amount or to effect or document a release of a security interest
on
Posted Collateral or an Interest Amount.
(c) Further
Protection.
The
Pledgor will promptly give notice to the Secured Party of, and defend against,
any suit, action, proceeding or lien that involves Posted Credit Support
Transferred by the Pledgor or that could adversely affect the security
interest
and lien granted by it under Paragraph 2, unless that suit, action, proceeding
or lien results from the exercise of the Secured Party’s rights under Paragraph
6(c).
(d) 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.
(e) Demands
and Notices.
All
demands and notices made by a party under this Annex will be made as specified
in the Notices Section of this Agreement, except as otherwise provided
in
Paragraph 13.
(f) Specifications
of Certain Matters.
Anything
referred to in this Annex as being specified in Paragraph 13 also may be
specified in one or more Confirmations or other documents and this Annex
will be
construed accordingly.
9
As
used
in this Annex:
“Cash”
means
the lawful currency of the United States of America. “Credit
Support Amount”
has the
meaning specified in Paragraph 3. “Custodian”
has the
meaning specified in Paragraphs 6(b)(i) and 13. “Delivery
Amount”
has the
meaning specified in Paragraph 3(a). “Disputing
Party”
has the
meaning specified in Paragraph 5.
“Distributions”
means
with respect to Posted Collateral other than Cash, all principal, interest
and
other payments and distributions of cash or other property with respect
thereto,
regardless of whether the Secured Party has disposed of that Posted Collateral
under Paragraph 6(c). Distributions will not include any item of property
acquired by the Secured Party upon any disposition or liquidation of Posted
Collateral or, with respect to any Posted Collateral in the form of Cash,
any
distributions on that collateral, unless otherwise specified
herein.
“Eligible
Collateral”
means,
with respect to a party, the items, if any, specified as such for that
party in
Paragraph 13.
“Eligible
Credit Support”
means
Eligible Collateral and Other Eligible Support.
“Exposure”
means
for any Valuation Date or other date for which Exposure is calculated and
subject to Paragraph 5 in the case of a dispute, the amount, if any, that
would
be payable to a party that is the Secured Party by the other party (expressed
as
a positive number) or by a party that is the Secured Party to the other
party
(expressed as a negative number) pursuant to Section 6(e)(ii)(2)(A) of
this
Agreement as if all Transactions (or Swap Transactions) were being terminated
as
of the relevant Valuation Time; provided, however, that Market Quotation
will be
determined by the Valuation Agent 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 amount specified as such for that party in
Paragraph 13; if no amount is specified, zero.
“Interest
Amount”
means,
with respect to an Interest Period, the aggregate sum of the amounts of
interest
calculated for each day in that Interest Period on the principal amount
of
Posted Collateral in the form of Cash held by the Secured Party on that
day,
determined by the Secured Party for each such day as follows:
(x)
the
amount of that Cash on that day; multiplied by
(y)
the
Interest Rate in effect for that day; divided by
(z)
360.
“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 Posted Collateral in the form of Cash was
Transferred to or received by the Secured Party) to (but excluding) the
Local
Business Day on which the current Interest Amount is to be
Transferred.
10
“Interest
Rate”
means
the rate specified in Paragraph 13.
“Local
Business Day”
unless
otherwise specified in Paragraph 13, has the meaning specified in the
Definitions Section of this Agreement, except that references to a payment
in
clause (b) thereof will be deemed to include a Transfer under this
Annex.
“Minimum
Transfer Amount”
means,
with respect to a party, the amount specified as such for that party in
Paragraph 13; if no amount is specified, zero.
“Notification
Time”
has the
meaning specified in Paragraph 13.
“Obligations”
means,
with respect to a party, all present and future obligations of that party
under
this Agreement and any additional obligations specified for that party
in
Paragraph 13.
“Other
Eligible Support”
means,
with respect to a party, the items, if any, specified as such for that
party in
Paragraph 13.
“Other
Posted Support”
means
all Other Eligible Support Transferred to the Secured Party that remains
in
effect for the benefit of that Secured Party.
“Pledgor”
means
either party, when that party (i) receives a demand for or is required
to
Transfer Eligible Credit Support under Paragraph 3(a) or (ii) has Transferred
Eligible Credit Support under Paragraph 3(a).
“Posted
Collateral”
means
all Eligible Collateral, other property, Distributions, and all proceeds
thereof
that have been Transferred to or received by the Secured Party under this
Annex
and not Transferred to the Pledgor pursuant to Paragraph 3(b), 4(d)(ii)
or
6(d)(i) or released by the Secured Party under Paragraph 8. Any Interest
Amount
or portion thereof not Transferred pursuant to Paragraph 6(d)(ii) will
constitute Posted Collateral in the form of Cash.
“Posted
Credit Support”
means
Posted Collateral and Other Posted Support.
“Recalculation
Date”
means
the Valuation Date that gives rise to the dispute under Paragraph 5; provided,
however, that if a subsequent Valuation Date occurs under Paragraph 3 prior
to
the resolution of the dispute, then the “Recalculation Date” means the most
recent Valuation Date under Paragraph 3.
“Resolution
Time”
has the
meaning specified in Paragraph 13.
“Return
Amount”
has the
meaning specified in Paragraph 3(b).
“Secured
Party”
means
either party, when that party (i) makes a demand for or is entitled to
receive
Eligible Credit Support under Paragraph 3(a) or (ii) holds or is deemed
to hold
Posted Credit Support.
11
“Specified
Condition”
means,
with respect to a party, any event specified as such for that party in
Paragraph
13.
“Substitute
Credit Support”
has the
meaning specified in Paragraph 4(d)(i).
“Substitution
Date”
has the
meaning specified in Paragraph 4(d)(ii).
“Threshold”
means,
with respect to a party, the amount specified as such for that party in
Paragraph 13; if no amount is specified, zero.
“Transfer” means,
with respect to any Eligible Credit Support, Posted Credit Support or Interest
Amount, and in accordance with the instructions of the Secured Party, Pledgor
or
Custodian, as applicable:
(i) in
the
case of Cash, payment or delivery by wire transfer into one or more bank
accounts specified by the recipient;
(ii) in
the
case of certificated securities that cannot be paid or delivered by book-entry,
payment or delivery in appropriate physical form to the recipient or its
account
accompanied by any duly executed instruments of transfer, assignments in
blank,
transfer tax stamps and any other documents necessary to constitute a legally
valid transfer to the recipient;
(iii) in
the
case of securities that can be paid or delivered by book-entry, the giving
of
written instructions to the relevant depository institution or other entity
specified by the recipient, together with a written copy thereof to the
recipient, sufficient if complied with to result in a legally effective
transfer
of the relevant interest to the recipient; and
(iv) in
the
case of Other Eligible Support or Other Posted Support, as specified in
Paragraph 13.
“Valuation
Agent”
has the
meaning specified in Paragraph 13.
“Valuation
Date”
means
each date specified in or otherwise determined pursuant to Paragraph
13.
“Valuation
Percentage”
means,
for any item of Eligible Collateral, the percentage specified in Paragraph
13.
“Valuation
time”
has the
meaning specified in Paragraph 13.
“Value”
means
for any Valuation Date or other date for which Value is calculated and
subject
to Paragraph 5 in the case of a dispute, with respect to:
(i) Eligible
Collateral or Posted Collateral that is:
(A) Cash,
the
Amount thereof, and
12
(B) a
security, the bid price obtained by the Valuation Agent multiplied by the
applicable Valuation Percentage, if any;
(ii) Posted
Collateral that consists of items that are not specified as Eligible Collateral,
zero; and
(iii) Other
Eligible Support and Other Posted Support, as specified in Paragraph
13.
Paragraph
13. Elections
and Variables
|
(a)
|
Security
Interest for “Obligations”.
The term “Obligations”
as used in this Annex includes the following additional obligations
with
respect to Party A and Party B:
None.
|
|
(b)
|
Credit
Support Obligations.
|
|
(i)
|
“Delivery
Amount”
and “Return
Amount” each
has the meaning specified in Paragraph 3; provided that, in
the event that
Party A elects or is required to post collateral pursuant to
a ratings
downgrade by S&P and Xxxxx’x, (1) the Delivery Amount shall be
calculated by reference to the requirements set forth by the
rating agency
that would result in Party A transferring the greater amount
of Eligible
Credit Support and (2) the Return Amount shall be calculated
by reference
to the requirements set forth by the rating agency that would
result in
Party B transferring the least amount of Posted Credit Support;
provided
further
that, for purposes of calculating Delivery Amount and Return
Amount, in
the event that Party A elects or is required to post collateral
pursuant to an S&P Second Tier Downgrade Event, the definition of
Value shall be amended to insert the words “multiplied by the applicable
Valuation Percentage, if any” after the word “thereof” and before the
semicolon in clause (i)(A) thereof.
|
“Credit
Support Amount”
has the
meaning specified below:
|
(A)
|
in
the event Party A elects or is required to post collateral
pursuant to
Part 5(f)(iii), (v) or (vi) of the Schedule due to a ratings
downgrade or
withdrawal by S&P or Fitch as applicable, “Credit
Support Amount”
shall have the meaning specified in Paragraph 3;
and
|
|
(B)
|
in
the event Party A elects or is required to post collateral
pursuant to
Part 5(f)(iv) of the Schedule due to a ratings downgrade or
withdrawal by
S&P, “Credit
Support Amount”
shall mean 125% of the Secured Party’s Exposure;
and
|
|
(C)
|
in
the event Party A elects to post collateral pursuant to Part
5(f)(i) of
the Schedule due to a ratings downgrade by Xxxxx’x below the Xxxxx’x First
Tier Required Swap Counterparty Rating, “Credit
Support Amount”
shall have the meaning specified in Table 1A or Table 1B, as
applicable,
attached hereto; and
|
|
(D)
|
in
the event Party A is required to post collateral pursuant to
Part 5(f)(ii)
of the Schedule due to a ratings downgrade or withdrawal by
Xxxxx’x below
the Xxxxx’x Second Tier Required Swap Counterparty Rating, “Credit
Support Amount”
shall have the meaning specified in Table 2A or 2B, as applicable,
attached hereto.
|
13
|
(ii)
|
Eligible
Collateral.
|
|
(A)
|
In
the event Party A elects or is required to post collateral
pursuant to
Part 5(f)(iii) of the Schedule due to a ratings downgrade or
withdrawal by
S&P, (i) the items specified in Table 3 attached hereto will
qualify
as “Eligible
Collateral” for
Party A and (ii) the Valuation Percentage with respect any
item of
Eligible Collateral shall equal 100% divided by the Base
Overcollateralization Rate for such item of Eligible Collateral
specified
in Table 3 attached hereto.
|
|
(B)
|
In
the event Party A elects or is required to post collateral
pursuant to
Part 5(f)(iv) of the Schedule due to a ratings downgrade or
withdrawal by
S&P, (i) the items specified in Table 3 attached hereto will
qualify
as “Eligible
Collateral” for
Party A and (ii) the Valuation Percentage with respect any
item of
Eligible Collateral shall equal (1) 100% divided by (2) the
Base
Overcollateralization Rate for such item of Eligible Collateral
specified
in Table 3 attached hereto * 125%.
|
|
(C)
|
In
the event Party A elects to post collateral pursuant to Part
5(f)(i) of
the Schedule due to a ratings downgrade by Xxxxx’x below the Xxxxx’x First
Tier Required Swap Counterparty Rating, the items specified
in
Table 4 attached hereto will qualify as “Eligible
Collateral” for
Party A.
|
|
(D)
|
In
the event Party A is required to post collateral pursuant to
Part 5(f)(ii)
of the Schedule due to a ratings downgrade or withdrawal by
Xxxxx’x below
the Xxxxx’x Second Tier Required Swap Counterparty Rating, the items
specified in Table 5 attached hereto will qualify as “Eligible
Collateral” for
Party A.
|
|
(E)
|
In
the event Party A is required to post collateral pursuant to
Part 5(f)(v) or (vi) of the Schedule due to a ratings downgrade
or
withdrawal by Fitch below the Fitch First Tier Required Swap
Counterparty
Rating or the Fitch Second Tier Required Swap Counterparty
Rating, the
items specified in Table 6 attached hereto will qualify as
“Eligible
Collateral”
for Party A.
|
|
(iii)
|
Other
Eligible Support:
Not applicable.
|
|
(iv)
|
Thresholds.
|
|
(A)
|
“Independent
Amount”
means, with respect to Party A, (i) not applicable in the event Party
A elects or is required to post collateral pursuant to Part
5(f) of the
Schedule due to a ratings downgrade or withdrawal by S&P or Xxxxx’x
and (ii) the aggregate of any Transaction Independent Amounts in
respect of all Transactions outstanding at that time in the
event Party A
elects or is required to post collateral pursuant to Part 5(f) of the
Schedule due to a ratings downgrade or withdrawal by Fitch.
|
“Independent
Amount”
means,
with respect to Party B, zero.
14
“Transaction
Independent Amount”
shall
mean (unless otherwise agreed by Fitch) 1% of the Notional
Amount of each Transaction.
(B) “Threshold”
means with respect to Party A, (i) not
applicable in the event Party A elects or is required to post collateral
pursuant to Part 5(f) of the Schedule due to a ratings downgrade or withdrawal
by Xxxxx’x and (ii) zero in the event Party A elects or is required to post
collateral pursuant to Part 5(f) of the Schedule due to a ratings downgrade
or
withdrawal by S&P or Fitch.
“Threshold”
means
with respect to Party B: Infinite.
“Minimum
Transfer Amount”
means
with respect to Party A: USD 50,000; and with respect to Party B: USD
50,000;
provided, however, that if such party is a Defaulting Party at the time,
“Minimum
Transfer Amount”
shall
mean zero with respect to such party.
|
(C)
|
Rounding.
The Delivery Amount will be rounded up to the nearest multiple
of $1000
and the Return Amount will be rounded down to the nearest multiple
of
$1000.
|
|
(v)
|
“Exposure”
has the meaning specified in Paragraph 12, except that after
the word
“Agreement” in the fourth line thereof the words “(assuming, for this
purpose only, that Part 1(f)(ii) of the Schedule is deleted)” shall be
inserted.
|
|
(c)
|
Valuation
and Timing.
|
|
(i)
|
“Valuation
Agent”
means Party A.
|
|
(ii)
|
“Valuation
Date”
means (A) each and every Wednesday commencing on the first such date
following the date hereof or if any Wednesday is not a Local
Business Day,
the next succeeding Local Business Day and (B) any other Local
Business Day on which notice is made before 12:00 noon, New
York time on
the immediately preceding Local Business
Day.
|
|
(iii)
|
“Valuation
Time” means
the close of business in New York on the New York Banking Day
before the
Valuation Date or date of calculation, as applicable, or any
time on the
Valuation Date or date of calculation, as applicable; provided
that the calculations of Value and Exposure will be made as
of
approximately the same time on the same
date.
|
|
(iv)
|
“Notification
Time”
means 1:00 p.m., New York time, on a Local Business Day.
|
|
(v)
|
The
Valuation Agent’s calculations pursuant to the terms hereof shall be made
in accordance with standard market practice, using commonly
accepted third
party sources that comply with S&P’s criteria (e.g. Bloomberg, Bridge
Information Services, Reuters and
Telerate).
|
15
|
(d)
|
Conditions
Precedent and Secured Party’s Rights and
Remedies.
The following Termination Events will be a “Specified
Condition”
for the party specified (that party being the Affected Party
of the
Termination Event occurs with respect to that party): Not
Applicable.
|
|
(e)
|
Substitution.
|
|
(i)
|
“Substitution
Date” has
the meaning specified in Paragraph
4(d)(ii).
|
|
(ii)
|
Consent.
The Pledgor need not obtain the Secured Party's consent for
any
substitution pursuant to Paragraph
4(d).
|
|
(f)
|
Dispute
Resolution.
|
|
(i)
|
“Resolution
Time” means
1:00 p.m., New York time, on the Local Business Day following
the date on
which the notice of the dispute is given under Paragraph
5.
|
|
(ii)
|
Value.
For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value
of Posted
Credit Support or of any Transfer of Eligible Credit Support
or Posted
Credit Support, as the case may be, will be calculated by the
Valuation
Agent in accordance with standard market practice using third
party
sources (such as, by way of example only, Bloomberg or Reuters)
where
available.
|
|
(iii)
|
Alternative.
The provisions of Paragraph 5 will
apply.
|
|
(g)
|
Holding
and Using Posted Collateral.
|
|
(i)
|
Eligibility
to Hold Posted Collateral; Custodian.
|
Party B
and its Custodian will be entitled to hold Posted Collateral pursuant
to
Paragraph 6(b); provided
that the
following conditions applicable to it are satisfied:
|
(A)
|
Party B
is not a Defaulting Party.
|
|
(B)
|
Posted
Collateral may be held only in the following jurisdictions:
the United
States of America.
|
|
(C)
|
Party
B’s Custodian (or its parent) shall have a Long Term Rating by
S&P of
at least “A” and a Short Term Rating by S&P of at least “A-1” by
S&P.
|
|
(D)
|
Posted
Collateral may be held only in a segregated trust
account.
|
|
(E)
|
If
the account provider’s rating falls below “A-1”, the funds will be
transferred within 60 calendar days to another account provider
that is
rated at least “A-1.”
|
Initially,
the Custodian
for
Party B is the Trustee.
|
(ii)
|
Use
of Posted Collateral.
The provisions of Paragraph 6(c)(i) will not apply to Party
B, but the
provisions of Paragraph 6(c)(ii) will apply to Party B.
|
16
|
(h)
|
Distributions
and Interest Amount.
|
|
(i)
|
“Interest
Rate”.
The “Interest
Rate”
shall be the rate actually earned by Party B on Posted Collateral
in the
form of Cash.
|
|
(ii)
|
Transfer
of Interest Amount.
The Transfer of the Interest Amount will be made on the last
Local
Business Day of each calendar month and on any Local Business
Day that
Posted Collateral in the form of Cash is Transferred to the
Pledgor
pursuant to Paragraph 3(b).
|
|
(iii)
|
Alternative
to Interest Amount.
The provisions of Paragraph 6(d)(ii) will
apply.
|
|
(i)
|
Additional
Representation(s).
None.
|
|
(j)
|
Other
Eligible Support and Other Posted Support.“Value”
and “Transfer” with
respect to Other Eligible Support and Other Posted Support
each means: Not
applicable.
|
|
(k)
|
Demands
and Notices.
|
|
(i)
|
All
demands, specifications and notices to Party A under this Annex will
be made to:
|
Xxxxxx
Xxxxxxx Capital Services Inc.
0000
Xxxxxxxx
XXX
Xxxxxxxxxxx
Xxx
Xxxx,
XX 00000
Attn:
FID
Collateral Manager
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
Email:
xxxxxxxxx@xxxxxxxxxxxxx.xxx
and
all
demands, specifications and notices to Party B under this Annex will be
to:
Deutsche
Bank National Trust Company, as trustee of the Trust
0000
Xxxx
Xx. Xxxxxx Xxxxx
Xxxxx
Xxx, Xxxxxxxxxx 00000-0000
Attention:
Trust Administration - SX0703
Facsimile:
(000) 000-0000
Phone:
(000) 000-0000
;
provided
that any
demand, specification or notice may be made by telephone (“Telephone
Notice”)
between employees of each party if such Telephone Notice is confirmed
by a
subsequent written instruction (which may be delivered via facsimile
or email)
by the close of business on the same day that such Telephone Notice is
given.
|
(ii)
|
Demand
for Collateral.
Without prejudice to any provision of this Agreement, if a
Delivery Amount
for a Valuation Date equals or exceeds the Pledgor’s Minimum Transfer
Amount, then the Pledgor will, without prior demand by the
Secured Party,
Transfer to the Secured Party Eligible Credit Support in accordance
with
Paragraph 3(a).
|
17
|
(l)
|
Addresses
for Transfers.
|
Party A:
Cash:
CITIBANK,
New York
ABA
No.: 021
000
089
Account
No.: 4072
-
4601
Treasury
Securities
and
Agency Notes: Bank
of
New York, New York/Xxxxxx Xxxxxxx & Co. Incorporated
ABA
No.:
021000018
Other
Forms of Eligible Collateral: As provided by Party A.
Party B:
Cash:
Deutsche
Bank
ABA
No.:
000000000
Account
No.: 00000000
Account
Name:
NYLTD
Funds Control - Stars West
Ref:
Saxon
Asset Securities Trust 2007-3
DTC
Eligible Securities: As provided by Party B
|
(m)
|
Other
Provisions.
|
|
(i)
|
Notwithstanding
any other provision in this Agreement to the contrary, no full
or partial
failure to exercise and no delay in exercising, on the part
of
Party A or Party B, any right, remedy, power or privilege
permitted hereunder shall operate in any way as a waiver thereof
by such
party, including without limitation any failure to exercise
or any delay
in exercising to any or to the full extent of such party's
rights with
respect to transfer timing pursuant to Paragraph 4(b), regardless
of the
frequency of such failure or delay.
|
|
(ii)
|
In
all cases, in order to facilitate calculation of the Delivery
Amount and
the Return Amount for a particular Valuation Date in accordance
with
Paragraph 3 of this Annex:
|
|
(A)
|
Eligible
Collateral;
|
|
(B)
|
Exposure;
and
|
|
(C)
|
Posted
Collateral
|
shall
each be expressed in US Dollars. If any of these items are expressed
in a
currency other than US Dollars, then they shall be converted into US
Dollar
amounts at the spot exchange rate determined by the Valuation Agent on
that
Valuation Date.
18
|
(iii)
|
Form
of Annex.
The parties hereby agree that the text of the body of this
Annex is
intended to be the printed form of 1994 ISDA Credit Support
Annex
(Bilateral Form - ISDA Agreements Subject to New York Law Only
version) as
published and copyrighted by the International Swaps and Derivatives
Association, Inc.
|
|
(n)
|
Agreement
as to Single Secured Party and Pledgor.
Party A and Party B agree that, notwithstanding anything to the
contrary in the recital to this Annex, Paragraph 1(b) or Paragraph
2 or
the definitions of Paragraph 12, (a) the term “Secured
Party”
as used in this Annex shall mean only Party B, (b) the term
“Pledgor”
as used in this Annex shall mean only Party A, (c) only
Party A makes the pledge and grant in Paragraph 2, the
acknowledgement in the final sentence of Paragraph 8(a) and
the
representations in paragraph 9 and (d) only Party A will be
required to make Transfers of Eligible Credit Support
hereunder.
|
|
(o)
|
Events
of Default.
Paragraph 7(ii) and (iii) will not apply to Party
B.
|
|
(p)
|
Expenses.
For the avoidance of doubt, Party A shall be responsible for
posting
collateral in accordance with this Credit Support Annex at
its own cost
and any cost incurred by it in complying with its obligations
hereunder.
|
|
(q)
|
Additional
Definitions
|
“Agency
Notes”
means
U.S. Dollar-denominated fixed rate, non-amortising, non-mortgage-backed,
senior
debt securities of fixed maturity, rated Aaa by Xxxxx'x and AAA by S&P
issued by any of the Federal Home Loan Banks (including their consolidated
obligations issued through the Office of Finance of the Federal Home
Loan Bank
System), the Federal National Mortgage Association, the Federal Home
Loan
Mortgage Corporation or the Federal Farm Credit Bank.
“Commercial
Paper” means
U.S. Dollar-denominated, coupon-bearing, commercial paper issued by a
corporation, finance company, partnership or limited liability
company.
“Treasury
Securities”
means
U.S. Dollar-denominated, coupon-bearing, senior debt securities of the
United
States of America issued by the U.S. Treasury Department and backed by
the full
faith and credit of the United States of America.
|
(r)
|
Trustee
Capacity.
It is expressly understood and agreed by the parties hereto
that insofar
as this Annex is executed by Deutsche Bank National Trust Company
(i) this Annex is executed and delivered by Deutsche Bank National
Trust Company not in its individual capacity but solely as
Trustee under
the PSA in the exercise of the powers and authority conferred
and invested
in it as trustee thereunder, (ii) Deutsche Bank National Trust
Company has
been directed pursuant to the PSA to enter this Agreement and
perform its
obligations hereunder on behalf of the Trust, (iii) each of the
representations, undertakings and agreements herein made on
behalf of the
Trust is made and intended not as personal representations
of Deutsche
Bank National Trust Company but is made and intended for the
purpose of
binding only the Trust, (iv) except as expressly required by
the terms of
the PSA, nothing herein contained shall be construed as creating
any
liability on Deutsche Bank National Trust Company, individually
or
personally, to perform any covenant either expressed or implied
contained
herein, all such liability, if any, being expressly waived
by the parties
who are signatories to this Agreement and by any person claiming
by,
through or under such parties, and (v) under no circumstances
shall
Deutsche Bank National Trust Company in its individual capacity
be
personally liable for the payment of any indebtedness or expenses
or be
personally liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken under
this Annex,
as to all of which recourse shall be had solely to the assets
of the
Supplemental Interest Trust.
|
19
IN
WITNESS WHEREOF,
the
parties have executed this Credit Support Annex by their duly authorized
officers as of the date hereof.
XXXXXX
XXXXXXX CAPITAL SERVICES INC.
By:
/s/
Xxxxxxxxx
Xxxxxx
Name:
Xxxxxxxxx Xxxxxx
Title:
Authorized Signatory
Date:
August 3, 2007
DEUTSCHE
BANK NATIONAL TRUST COMPANY,
not
individually, but solely as Trustee on behalf of the Supplemental Interest
Trust
with respect to Saxon Asset Securities Trust 2007-3, Mortgage Loan Asset
Backed
Certificates, Series 2007-3
By:
/s/
Xxxxxxx
Xxxxxxxxx
Name:
Xxxxxxx Xxxxxxxxx
Title:
Authorized Signer
Date:
August 3, 2007
TABLE
1A
CREDIT
SUPPORT AMOUNT
DOWNGRADE
BY XXXXX’X BELOW XXXXX’X FIRST TIER REQUIRED
SWAP
COUNTERPARTY RATING
In
the
event Party A elects to post collateral pursuant to Part 5(f)(i) of the
Schedule
due to a ratings downgrade by Xxxxx’x below the Xxxxx’x First Tier Required Swap
Counterparty Rating:
“Credit
Support Amount”
means,
with respect to a Valuation Date, an amount equal to either:
(A)
The
greater of (1) zero and (2) the sum of (a) the MTM and (b) the lesser
of (x) 25
multiplied by DV01 and (y) 4% multiplied by the Notional Amount * 10;
or
(B)
The
greater of (1) zero and (2) the sum of (a) the MTM and (b) the Notional
Amount *
10 multiplied by the amount specified in Table 1B attached hereto.
Party
A
shall, in its sole discretion, have the option to determine the Credit
Support
Amount based upon either (A) or (B) above.
“DV01”
means
an estimate (as determined by the Valuation Agent in good faith and in
a
commercially reasonable manner) of the change in the Secured Party’s Exposure
resulting from a one basis point change in the swap curve.
“MTM”
means
the Secured Party’s Exposure for that Valuation Date.
TABLE
1B
|
Weighted
Average
Life
of Hedge
in
Years
|
|
|
1
|
0.25%
|
|
2
|
0.50%
|
|
3
|
0.70%
|
|
4
|
1.00%
|
|
5
|
1.20%
|
|
6
|
1.40%
|
|
7
|
1.60%
|
|
8
|
1.80%
|
|
9
|
2.00%
|
|
10
|
2.20%
|
|
11
|
2.30%
|
|
12
|
2.50%
|
|
13
|
2.70%
|
|
14
|
2.80%
|
|
15
|
3.00%
|
|
16
|
3.20%
|
|
17
|
3.30%
|
|
18
|
3.50%
|
|
19
|
3.60%
|
|
20
|
3.70%
|
|
21
|
3.90%
|
|
22
|
4.00%
|
|
23
|
4.00%
|
|
24
|
4.00%
|
|
25
|
4.00%
|
|
26
|
4.00%
|
|
27
|
4.00%
|
|
28
|
4.00%
|
|
29
|
4.00%
|
|
30
|
4.00%
|
TABLE
2A
CREDIT
SUPPORT AMOUNT
DOWNGRADE
BY XXXXX’X BELOW XXXXX’X SECOND TIER REQUIRED
SWAP
COUNTERPARTY RATING
In
the
event Party A is required to post collateral pursuant to Part 5(f)(ii)
of the
Schedule due to a ratings downgrade by Xxxxx’x below the Xxxxx’x Second Tier
Required Swap Counterparty Rating:
“Credit
Support Amount”
means,
with respect to a Valuation Date, an amount equal to either:
(A)
The
greatest of (1) zero, (2) the amount payable by Party A in respect of
the next
Floating Rate Payer Payment Date, and (3) the sum of (a) the MTM and
(b) the
lesser of (x) 60 multiplied by DV01 and (y) 9% multiplied by the Notional
Amount
* 10; or
(B)
The
greatest of (1) zero, (2) the amount payable by Party A in respect of
the next
Floating Rate Payer Payment Date, and (3) the sum of (a) the MTM and
(b) the
Notional Amount * 10 multiplied by the amount specified in Table 2B attached
hereto.
Party
A
shall, in its sole discretion, have the option to determine the Credit
Support
Amount based upon either (A) or (B) above.
“DV01”
means
an estimate (as determined by the Valuation Agent in good faith and in
a
commercially reasonable manner) of the change in the Secured Party’s Exposure
resulting from a one basis point change in the swap curve.
“MTM”
means
the Secured Party’s Exposure for that Valuation Date.
TABLE
2B
|
Weighted
Average
Life
of Hedge
in
Years
|
|
|
1
|
0.60%
|
|
2
|
1.20%
|
|
3
|
1.70%
|
|
4
|
2.30%
|
|
5
|
2.80%
|
|
6
|
3.30%
|
|
7
|
3.80%
|
|
8
|
4.30%
|
|
9
|
4.80%
|
|
10
|
5.30%
|
|
11
|
5.60%
|
|
12
|
6.00%
|
|
13
|
6.40%
|
|
14
|
6.80%
|
|
15
|
7.20%
|
|
16
|
7.60%
|
|
17
|
7.90%
|
|
18
|
8.30%
|
|
19
|
8.60%
|
|
20
|
9.00%
|
|
21
|
9.00%
|
|
22
|
9.00%
|
|
23
|
9.00%
|
|
24
|
9.00%
|
|
25
|
9.00%
|
|
26
|
9.00%
|
|
27
|
9.00%
|
|
28
|
9.00%
|
|
29
|
9.00%
|
|
30
|
9.00%
|
TABLE
3
ELIGIBLE
COLLATERAL
S&P
|
Eligible
Collateral
|
Base
Overcollateralization
Rate
|
||
|
Cash
|
100%
|
|
|
U.S.
treasuries (current coupon, constant maturity), ‘AAA’ U.S. agencies, ‘AAA’
covered bonds (floating), ‘AAA’ sovereign bonds (floating), ‘AAA’, ‘AA’
credit card ABS (floating), ‘AAA’, ‘AA’ auto ABS (floating), and ‘AAA’
U.S. student loan ABS (floating) with a remaining maturity
of less than 5
years
|
102%
|
|
|
U.S.
treasuries (current coupon, constant maturity), ‘AAA’ U.S. agencies, ‘AAA’
covered bonds (floating), ‘AAA’ sovereign bonds (floating), ‘AAA’, ‘AA’
credit card ABS (floating), ‘AAA’, ‘AA’ auto ABS (floating), and ‘AAA’
U.S. student loan ABS (floating) with a remaining maturity
of greater than
or equal to 5 years and less than or equal to 10 years
|
108%
|
|
|
‘AAA’
covered bonds (fixed), ‘AAA’ sovereign bonds (fixed), ‘A’ credit card ABS
(floating), ‘A’ auto ABS (floating), ‘AAA’ CMBS (floating), ‘AAA’ CDO
(floating) ‘AA’, ‘A’ U.S. student loan ABS (floating), and ‘AAA’, ‘AA’
corporate bonds (fixed or floating) with a remaining maturity
of less than
5 years
|
105%
|
|
|
‘AAA’
covered bonds (fixed), ‘AAA’ sovereign bonds (fixed), ‘A’ credit card ABS
(floating), ‘A’ auto ABS (floating), ‘AAA’ CMBS (floating), ‘AAA’ CDO
(floating), ‘AA’, ‘A’ U.S. student loan ABS (floating), and ‘AAA’, ‘AA’
U.S. and European corporate bonds (fixed or floating) with
a remaining
maturity of greater than or equal to 5 years and less than
or equal to 10
years
|
115%
|
|
Eligible
Collateral
|
Base
Overcollateralization
Rate
|
||
|
‘BBB’
credit card ABS (floating), ‘BBB’ auto ABS (floating), ‘AA’, ‘A’ CDO
(floating), ‘BBB’ U.S. student loan ABS (floating), and ‘A’ corporate
bonds (fixed or floating) with a remaining maturity of less
than 5
years
|
125%
|
|
|
‘BBB’
credit card ABS (floating), ‘BBB’ auto ABS (floating), ‘AA’, ‘A’ CDO
(floating), ‘BBB’ U.S. student loan ABS (floating), and ‘A’ corporate
bonds (fixed or floating) with a remaining maturity of greater
than or
equal to 5 years and less than or equal to 10 years
|
140%
|
TABLE
4
ELIGIBLE
COLLATERAL
DOWNGRADE
BY XXXXX’X BELOW XXXXX’X FIRST TIER REQUIRED
SWAP
COUNTERPARTY RATING
|
Eligible
Collateral
|
Valuation
Percentage
|
|
U.S.
Dollar Cash
|
100%
|
|
EURO
Cash
|
97%
|
|
Sterling
Cash
|
97%
|
|
Fixed-Rate
Negotiable Treasury Debt Issued by The U.S. Treasury Department
with
Remaining Maturity
|
|
|
<
1 Year
|
100%
|
|
1
to 2 Years
|
100%
|
|
2
to 3 Years
|
100%
|
|
3
to 5 Years
|
100%
|
|
5
to 7 Years
|
100%
|
|
7
to 10 Years
|
100%
|
|
10
to 20 Years
|
100%
|
|
>
20 Years
|
100%
|
|
Floating-Rate
Negotiable Treasury Debt issued by The U.S. Treasury
Department
|
|
|
All
Maturities
|
100%
|
|
Fixed-Rate
U.S. Agency Debentures with Remaining Maturity
|
|
|
<
1 Year
|
100%
|
|
1
to 2 Years
|
100%
|
|
2
to 3 Years
|
100%
|
|
3
to 5 Years
|
100%
|
|
5
to 7 Years
|
100%
|
|
7
to 10 Years
|
100%
|
|
10
to 20 Years
|
100%
|
|
>
20 Years
|
100%
|
|
Floating-Rate
U.S. Agency Debentures -
|
|
|
All
Maturities
|
100%
|
|
Fixed-Rate
Euro-Zone Government Bonds Rated Aa3
or
Above with Remaining Maturity
|
|
|
<
1 Year
|
97%
|
|
1
to 2 Years
|
97%
|
|
2
to 3 Years
|
97%
|
|
3
to 5 Years
|
97%
|
|
5
to 7 Years
|
97%
|
|
7
to 10 Years
|
97%
|
|
10
to 20 Years
|
97%
|
|
>
20 Years
|
97%
|
|
Floating-Rate
Euro-Zone Government Bonds Rated Aa3
or
Above
|
|
|
All
Maturities
|
97%
|
|
Fixed-Rate
United Kingdom Gilts with Remaining Maturity
|
|
|
<
1 Year
|
97%
|
|
1
to 2 Years
|
97%
|
|
2
to 3 Years
|
97%
|
|
3
to 5 Years
|
97%
|
|
5
to 7 Years
|
97%
|
|
7
to 10 Years
|
97%
|
|
10
to 20 Years
|
97%
|
|
>
20 Years
|
97%
|
|
Floating-Rate
United Kingdom Gilts
|
|
|
All
Maturities
|
97%
|
TABLE
5
ELIGIBLE
COLLATERAL
DOWNGRADE
BY XXXXX’X BELOW XXXXX’X SECOND TIER REQUIRED
SWAP
COUNTERPARTY RATING
|
Eligible
Collateral
|
Valuation
Percentage
|
|
U.S.
Dollar Cash
|
100%
|
|
EURO
Cash
|
93%
|
|
Sterling
Cash
|
94%
|
|
Fixed-Rate
Negotiable Treasury Debt Issued by The U.S. Treasury Department
with
Remaining Maturity
|
|
|
<
1 Year
|
100%
|
|
1
to 2 Years
|
99%
|
|
2
to 3 Years
|
98%
|
|
3
to 5 Years
|
97%
|
|
5
to 7 Years
|
95%
|
|
7
to 10 Years
|
94%
|
|
10
to 20 Years
|
89%
|
|
>
20 Years
|
87%
|
|
Floating-Rate
Negotiable Treasury Debt issued by The U.S. Treasury
Department
|
|
|
All
Maturities
|
99%
|
|
Fixed-Rate
U.S. Agency Debentures with Remaining Maturity
|
|
|
<
1 Year
|
99%
|
|
1
to 2 Years
|
98%
|
|
2
to 3 Years
|
97%
|
|
3
to 5 Years
|
96%
|
|
5
to 7 Years
|
94%
|
|
7
to 10 Years
|
93%
|
|
10
to 20 Years
|
88%
|
|
>
20 Years
|
86%
|
|
Floating-Rate
U.S. Agency Debentures -
|
|
|
All
Maturities
|
98%
|
|
Fixed-Rate
Euro-Zone Government Bonds Rated Aa3
or
Above with Remaining Maturity
|
|
|
<
1 Year
|
93%
|
|
1
to 2 Years
|
92%
|
|
2
to 3 Years
|
91%
|
|
3
to 5 Years
|
89%
|
|
5
to 7 Years
|
87%
|
|
7
to 10 Years
|
86%
|
|
10
to 20 Years
|
82%
|
|
>
20 Years
|
80%
|
|
Floating-Rate
Euro-Zone Government Bonds Rated Aa3
or
Above
|
|
|
All
Maturities
|
92%
|
|
Fixed-Rate
United Kingdom Gilts with Remaining Maturity
|
|
|
<
1 Year
|
93%
|
|
1
to 2 Years
|
92%
|
|
2
to 3 Years
|
91%
|
|
3
to 5 Years
|
90%
|
|
5
to 7 Years
|
89%
|
|
7
to 10 Years
|
88%
|
|
10
to 20 Years
|
84%
|
|
>
20 Years
|
82%
|
|
Floating-Rate
United Kingdom Gilts
|
|
|
All
Maturities
|
93%
|
TABLE 6
ELIGIBLE
COLLATERAL
FITCH
|
Eligible
Collateral
|
Party
A
|
Valuation
Percentage
|
|||
|
1.
|
Cash
|
X
|
100.0%
|
||
|
2.
|
Treasury
Securities with a remaining maturity of 52 weeks or less
|
X
|
98.5%
|
||
|
3.
|
Treasury
Securities with a remaining maturity of more than 52 weeks
but no more
than 5 years
|
X
|
93.6%
|
||
|
4.
|
Treasury
Securities with a remaining maturity of more than 5 years
but no more than
10 years
|
X
|
89.9%
|
||
|
5.
|
Treasury
Securities with a remaining maturity of more than 10 years
but no more
than 30 years
|
X
|
83.9%
|
||
|
6.
|
Agency
Notes with a remaining maturity of no more than 15 years
|
X
|
81.3%
|
||
|
7.
|
Agency
Notes with a remaining maturity of more than 15 years but
no more than 30
years
|
X
|
74.8%
|
||
|
8.
|
Commercial
Paper rated “A-1+” by S&P and “P-1” by Xxxxx’x, with a remaining
maturity of 180 days or less
|
X
|
98.0%
|
||
|
9.
|
Commercial
Paper rated “A-1” by S&P and P-1 by Xxxxx’x, with a remaining maturity
of 180 days or less
|
X
|
97.0%
|
||
|
10.
|
Commercial
Paper rated “A-1” by S&P and “P-1” by Xxxxx’x, with a remaining
maturity of more than 180 days or but no more than 360
days
|
X
|
94.0%
|
Notwithstanding
the above, Commercial Paper will qualify as Eligible Collateral for Party A
only if the aggregate amount of Commercial Paper Transferred as Eligible
Collateral under this Annex constitutes the obligations of 10 or more
issuers.
 |
EXECUTION
COPY
|
|
DATE:
|
August
3, 2007
|
|
TO:
|
Deutsche
Bank National Trust Company, not individually, but solely as Trustee
on
behalf of the Supplemental Interest Trust with respect to Saxon Asset
Securities Trust 2007-3, Mortgage Loan Asset Backed Certificates,
Series
2007-3
|
|
ATTENTION:
|
Trust
Administration - SX0703
|
|
TELEPHONE:
|
(000)
000-0000
|
|
FACSIMILE:
|
(000)
000-0000
|
|
FROM:
|
New
York Derivative Client Services Group
|
|
TELEPHONE:
|
(000)
000-0000
|
|
FACSIMILE:
|
(000)
000-0000
|
|
SUBJECT:
|
Fixed
Income Derivatives Confirmation
|
|
REFERENCE
NUMBER:
|
AACYY
|
The
purpose of this letter agreement (this “Confirmation”)
is to
confirm the terms and conditions of the Swap Transaction entered into on the
Trade Date specified below (the “Transaction”)
between Xxxxxx Xxxxxxx Capital Services Inc. (“Party
A”)
and
Deutsche Bank National Trust Company, not individually, but solely as Trustee
on
behalf of the Supplemental Interest Trust (the “Trustee”)
under
the Pooling and Servicing Agreement, dated and effective as of July 1, 2007,
among Saxon Asset Securities Company, as Depositor, Deutsche Bank National
Trust
Company, as Trustee, and Saxon Mortgage Services, Inc., as Servicer (the
“PSA”)
for
the Saxon Asset Securities Trust 2007-3, Mortgage Loan Asset Backed
Certificates, Series 2007-3 (“Party
B”).
The
definitions and provisions contained in the 2000 ISDA Definitions (the
“Definitions”),
as
published by the International Swaps and Derivatives Association, Inc., are
incorporated into this Confirmation. In the event of any inconsistency between
the Definitions and this Confirmation, this Confirmation will govern. Terms
capitalized but not defined in this Confirmation (including the Definitions)
have the meanings attributed to them in the PSA.
This
Confirmation constitutes a “Confirmation” as referred to in, and supplements,
forms part of and is subject to, the ISDA Master Agreement dated as of August
3,
2007, as amended and supplemented from time to time (the “Agreement”),
between Party A and Party B. All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.
|
1.
|
The
terms of the particular Transaction to which this Confirmation relates
are
as follows:
|
|
Notional
Amount:
|
With
respect to any Calculation Period, the notional amount set forth
for such
Calculation Period in Schedule I attached
hereto.
|
|
Trade
Date:
|
August
1, 2007
|
|
Effective
Date:
|
August
3, 2007
|
|
Termination
Date:
|
April
25, 2012, which for the purpose of the final Fixed Rate Payer II
Calculation Period is subject to No Adjustment, and for the purpose
of the
final Floating Rate Payer Calculation Period is subject to adjustment
in
accordance with the Business Day
Convention.
|
1
|
|
Fixed
Amounts I:
|
Fixed
Rate I Payer:
|
Party
A
|
|
Fixed
Rate I Payer Payment Dates:
|
August
3, 2007
|
|
Fixed
Amount I:
|
USD
5,142,782
|
Fixed
Amounts II:
|
Fixed
Rate II Payer:
|
Party
B
|
|
Fixed
Rate II Payer Payment Dates:
|
The
25th
calendar day of each month during the Term of this Transaction, commencing
August 25, 2007, subject to adjustment in accordance with the Business
Day
Convention.
|
|
Fixed
Rate II Payer Period End Dates:
|
The
25th
calendar day of each month during the Term of this Transaction, commencing
August 25, 2007, subject to No
Adjustment.
|
|
Fixed
Rate II:
|
5.35%
|
|
Fixed
Amount II:
|
To
be determined in accordance with the following
formula:
|
Fixed
Rate II * Notional Amount * Fixed Rate Day Count Fraction.
|
Fixed
Rate Day Count Fraction:
|
30/360
|
Floating
Amounts:
|
Floating
Rate Payer:
|
Party
A
|
Floating
Rate Payer Payment
|
Dates:
|
The
25th
calendar day of each month during the Term of this Transaction, commencing
August 25, 2007, subject to adjustment in accordance with the Business
Day
Convention.
|
Floating
Rate Payer Period End
|
Dates:
|
The
25th
calendar day of each month during the Term of this Transaction, commencing
August 25, 2007, subject to adjustment in accordance with the Business
Day
Convention.
|
|
Floating
Rate Option:
|
USD-LIBOR-BBA
|
|
Floating
Amount:
|
To
be determined in accordance with the following
formula:
|
Floating
Rate * Notional Amount * Floating Rate Day Count Fraction.
2
|
|
|
Designated
Maturity:
|
One
month
|
|
Floating
Rate Day Count Fraction:
|
Actual/360
|
|
Reset
Dates:
|
The
first day of each Calculation
Period.
|
|
Compounding:
|
Inapplicable
|
|
Business
Days:
|
New
York and Los Angeles
|
|
Business
Day Convention:
|
Following
|
|
2.
|
Account
Details and Settlement Information:
|
Payments
to Party A:
Citibank,
New York
ABA
No.:
021 000 089
Account
No.: 4072-4601
Account
Name: Xxxxxx Xxxxxxx Capital Services Inc.
Payments
to Party B:
Deutsche
Bank
ABA
No.:
000000000
Account
No: 00000000
Acct
Name: NYLTD Funds Control - Stars West
Ref:
Saxon Asset Securities Trust 2007-3 (swap)
|
3.
|
Trustee
Capacity. It
is expressly understood and agreed by the parties hereto that insofar
as
this Confirmation is executed by Deutsche Bank National Trust Company
(i)
this Confirmation is executed and delivered by Deutsche Bank National
Trust Company not in its individual capacity but solely as Trustee
on
behalf of the Supplemental Interest Trust under the PSA in the exercise
of
the powers and authority conferred and invested in it as trustee
thereunder, (ii) Deutsche Bank National Trust Company has been directed
pursuant to the PSA to enter this Agreement and perform its obligations
hereunder on behalf of the Trust, (iii) each of the representations,
undertakings and agreements herein made on behalf of Party B is made
and
intended not as personal representations of Deutsche Bank National
Trust
Company but is made and intended for the purpose of binding only
the
Supplemental Interest Trust, (iv) except as expressly required by
the
terms of the PSA, nothing herein contained shall be construed as
creating
any liability on Deutsche Bank National Trust Company, individually
or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the
parties
who are signatories to this Agreement and by any person claiming
by,
through or under such parties, and (v) under no circumstances shall
Deutsche Bank National Trust Company in its individual capacity be
personally liable for the payment of any indebtedness or expenses
or be
personally liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken under this
Confirmation, as to all of which recourse shall be had solely to
the
assets of the Supplemental Interest
Trust.
|
3
|
|
We
are
very pleased to have entered into this Transaction with you and we look forward
to completing other transactions with you in the near future.
Very
truly yours,
XXXXXX
XXXXXXX CAPITAL SERVICES INC.
By: /s/
Xxxxx X.
Xxxxx
Name:
Xxxxx X. Xxxxx
Title:
Vice President
Party
B,
acting through its duly authorized signatory, hereby agrees to, accepts and
confirms the terms of the foregoing as of the Trade Date.
DEUTSCHE
BANK NATIONAL TRUST COMPANY,
not
individually, but solely as Trustee on behalf of the Supplemental Interest
Trust
with respect to Saxon Asset Securities Trust 2007-3, Mortgage Loan Asset Backed
Certificates, Series 2007-3
|
By:
|
/s/
Xxxxxxx
Xxxxxxxxx
|
Name:
Xxxxxxx Xxxxxxxxx
Title:
Authorized Signer
4
|
|
SCHEDULE
I
|
Line
|
Calculation
Period
|
Notional
Amount ($)
|
||||
|
1
|
Effective
Date
|
8/25/2007
|
1,311,208,000.00
|
|||
|
2
|
8/25/2007
|
9/25/2007
|
1,266,411,824.42
|
|||
|
3
|
9/25/2007
|
10/25/2007
|
1,222,814,514.63
|
|||
|
4
|
10/25/2007
|
11/25/2007
|
1,180,342,222.35
|
|||
|
5
|
11/25/2007
|
12/25/2008
|
1,138,927,072.58
|
|||
|
6
|
12/25/2007
|
1/25/2008
|
1,098,507,926.11
|
|||
|
7
|
1/25/2008
|
2/25/2008
|
1,059,030,222.70
|
|||
|
8
|
2/25/2008
|
3/25/2008
|
1,020,445,805.23
|
|||
|
9
|
3/25/2008
|
4/25/2008
|
982,712,766.92
|
|||
|
10
|
4/25/2008
|
5/25/2008
|
945,796,133.24
|
|||
|
11
|
5/25/2008
|
6/25/2008
|
909,678,344.61
|
|||
|
12
|
6/25/2008
|
7/25/2008
|
874,334,658.56
|
|||
|
13
|
7/25/2008
|
8/25/2008
|
839,750,021.08
|
|||
|
14
|
8/25/2008
|
9/25/2008
|
805,925,635.82
|
|||
|
15
|
9/25/2008
|
10/25/2008
|
772,892,431.03
|
|||
|
16
|
10/25/2008
|
11/25/2008
|
741,082,035.54
|
|||
|
17
|
11/25/2008
|
12/25/2008
|
710,577,584.99
|
|||
|
18
|
12/25/2008
|
1/25/2009
|
681,198,904.27
|
|||
|
19
|
1/25/2009
|
2/25/2009
|
653,042,013.16
|
|||
|
20
|
2/25/2009
|
3/25/2009
|
626,199,238.85
|
|||
|
21
|
3/25/2009
|
4/25/2009
|
600,290,450.82
|
|||
|
22
|
4/25/2009
|
5/25/2009
|
575,639,217.52
|
|||
|
23
|
5/25/2009
|
6/25/2009
|
550,128,026.30
|
|||
|
24
|
6/25/2009
|
7/25/2009
|
441,228,657.44
|
|||
|
25
|
7/25/2009
|
8/25/2009
|
420,685,477.12
|
|||
|
26
|
8/25/2009
|
9/25/2009
|
403,773,457.56
|
|||
|
27
|
9/25/2009
|
10/25/2009
|
387,452,794.32
|
|||
|
28
|
10/25/2009
|
11/25/2009
|
371,892,301.80
|
|||
|
29
|
11/25/2009
|
12/25/2009
|
355,833,190.94
|
|||
|
30
|
12/25/2009
|
1/25/2010
|
292,728,325.15
|
|||
|
31
|
1/25/2010
|
2/25/2010
|
279,190,193.16
|
|||
|
32
|
2/25/2010
|
3/25/2010
|
268,223,511.09
|
|||
|
33
|
3/25/2010
|
4/25/2010
|
256,521,201.85
|
|||
|
34
|
4/25/2010
|
5/25/2010
|
246,331,394.60
|
|||
|
35
|
5/25/2010
|
6/25/2010
|
233,641,525.11
|
|||
|
36
|
6/25/2010
|
7/25/2010
|
175,787,955.31
|
|||
|
37
|
7/25/2010
|
8/25/2010
|
162,995,859.39
|
|||
|
38
|
8/25/2010
|
9/25/2010
|
156,927,315.32
|
|||
|
39
|
9/25/2010
|
10/25/2010
|
150,480,028.01
|
|||
|
40
|
10/25/2010
|
11/25/2010
|
144,815,775.85
|
|||
|
41
|
11/25/2010
|
12/25/2010
|
138,004,930.44
|
|||
|
42
|
12/25/2010
|
1/25/2011
|
115,239,849.63
|
|||
|
43
|
1/25/2011
|
2/25/2011
|
108,109,157.82
|
|||
|
44
|
2/25/2011
|
3/25/2011
|
104,251,493.73
|
|||
|
45
|
3/25/2011
|
4/25/2011
|
100,333,855.15
|
|||
|
46
|
4/25/2011
|
5/25/2011
|
96,732,385.00
|
|||
|
47
|
5/25/2011
|
6/25/2011
|
92,823,463.02
|
|||
|
48
|
6/25/2011
|
7/25/2011
|
83,927,101.10
|
|||
|
49
|
7/25/2011
|
8/25/2011
|
80,042,214.99
|
|||
|
50
|
8/25/2011
|
9/25/2011
|
77,246,182.89
|
|||
|
51
|
9/25/2011
|
10/25/2011
|
74,547,021.59
|
|||
|
52
|
10/25/2011
|
11/25/2011
|
71,941,403.39
|
|||
|
53
|
11/25/2011
|
12/25/2011
|
69,426,113.80
|
|||
|
54
|
12/25/2011
|
1/25/2012
|
66,998,047.78
|
|||
|
55
|
1/25/2012
|
2/25/2012
|
64,654,207.06
|
|||
|
56
|
2/25/2012
|
3/25/2012
|
62,391,693.37
|
|||
|
57
|
3/25/2012
|
Termination
Date
|
60,207,708.32
|
|||
I-1
