(Multicurrency—Cross Border)
ISDA®
International Swap and Derivatives Association, Inc.
MASTER AGREEMENT
dated as of July 31, 2007
THE ROYAL BANK OF SCOTLAND PLC and XXXXX FARGO BANK, NATIONAL ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY AS SECURITIES
ADMINISTRATOR UNDER THE SALE AND SERVICING
AGREEMENT, ACTING AS AUCTION ADMINISTRATOR ON
BEHALF OF THE HOLDERS OF THE AUCTION NOTES
............................... ..................................................
("Party A") ("Party B")
have entered and/or anticipate entering into one or more transactions (each a "Transaction") that are or will
be governed by this Master Agreement, which includes the schedule (the "Schedule"), and the documents
and other confirming evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:—
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will have the meanings therein
specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the
other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency
between the provisions of any Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master
Agreement and all Confirmations form a single agreement between the parties (collectively referred to as
this "Agreement"), and the parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each Confirmation to be made by
it, subject to the other provisions of this Agreement.
(ii) Payments under this Agreement will be made on the due date for value on that date in the place
of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in the required currency. Where
settlement is by delivery (that is, other than by payment), such delivery will be made
for receipt on the due date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1)
the condition precedent that no Event of Default or Potential Event of Default with respect to the
other party has occurred and is continuing, (2) the condition precedent that no Early Termination
Date in respect of the relevant Transaction has occurred or been effectively designated and (3)
each other applicable condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for receiving a payment or delivery by
giving notice to the other party at least five Local Business Days prior to the scheduled date for
the payment or delivery to which such change applies unless such other party gives timely notice
of a reasonable objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:—
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make payment of any such amount
will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been
payable by one party exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate amount would have been
payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount will be determined in respect
of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of
whether such amounts are payable in respect of the same Transaction. The election may be made in the
Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions
identified as being subject to the election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date). This election may be made
separately for different groups of Transactions and will apply separately to each pairing of Offices through
which the parties make and receive payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any deduction or
withholding for or on account of any Tax unless such deduction or withholding is required by any
applicable law, as modified by the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that party ("X") will:—
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be deducted or withheld
(including the full amount required to be deducted or withheld from any additional amount
paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such
deduction or withholding is required or receiving notice that such amount has been assessed
against Y;
(3) promptly forward to Y an official receipt (or a certified copy), or other documentation
reasonably acceptable to Y, evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is
otherwise entitled under this Agreement, such additional amount as is necessary to ensure that
the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed
against X or Y) will equal the full amount Y would have received had no such deduction or
withholding been required. However, X will not be required to pay any additional amount to
Y to the extent that it would not be required to be paid but for:—
(A) the failure by Y to comply with or perform any agreement contained in
Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section 3(f) to
be accurate and true unless such failure would not have occurred but for (I) any action
taken by a taxing authority, or brought in a court of competent jurisdiction, on or
after the date on which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax
Law.
(ii) Liability. If:—
(1) X is required by any applicable law, as modified by the practice of any relevant
governmental revenue authority, to make any deduction or withholding in respect of which X
would not be required to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against X,
then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y
will promptly pay to X the amount of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any
payment obligation will, to the extent permitted by law and subject to Section 6(c), be required
to pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the
same currency as such overdue amount, for the period from (and including) the original due date for
payment to (but excluding) the date of actual payment, at the Default Rate. Such interest will be calculated
on the basis of daily compounding and the actual number of days elapsed. If, prior to the occurrence or
effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults
in the performance of any obligation required to be settled by delivery, it will compensate the other party
on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed to be repeated by each party
on each date on which a Transaction is entered into and, in the case of the representations in
Section 3(f), at all times until the termination of this Agreement) that:—
(a) Basic Representations.
(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.
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;
(2) the expiration or termination of such Credit Support Document or the failing or ceasing
of such Credit Support Document to be in full force and effect for the purpose
of this Agreement (in either case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each Transaction to which such Credit
Support Document relates without the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims, repudiates
or rejects, in whole or in part, or challenges the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation (other than a representation under Section 3(e) or (f))
made or repeated or deemed to have been made or repeated by the party or any Credit Support
Provider of such party in this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated or deemed to have been made
or repeated;
(v) Default under Specified Transaction. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party (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 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)(l), (3), (5), (6) or, to the extent analogous thereto, (8), and as
of the time immediately preceding the institution of the relevant proceeding or the presentation of the
relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section
5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of
it, notify the other party, specifying the nature of that Termination Event and each
Affected Transaction and will also give such other information about that Termination Event as the
other party may reasonably require.
(ii) Transfer to Avoid Termination Event. If either an Illegality under Section 5(b)(i)(l) or a Tax
Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the
Burdened Party is the Affected Party, the Affected Party will, as a condition to its
right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which
will not require such party to incur a loss, excluding immaterial, incidental expenses) to transfer
within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this
Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that
such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give notice to the
other party to that effect within such 20 day period, whereupon the other party may effect such
a transfer within 30 days after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the
prior written consent of the other party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into transactions with the transferee on the
terms proposed.
(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)( 1) or a Tax Event
occurs and there are two Affected Parties, each party will use all reasonable efforts to reach
agreement 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.
(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.
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 the purpose of this Section 8, it will be sufficient for a party to demonstrate
that it would have suffered a loss had an actual exchange or purchase been made.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties
with respect to its subject matter and supersedes all oral communication and prior writings with respect
thereto.
(b) Amendments. No amendment, modification or waiver in respect of this Agreement will be effective
unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the
parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the
parties under this Agreement will survive the termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and
privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies
and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in respect of it) may be
executed and delivered in counterparts (including by facsimile transmission), each of which will be
deemed an original.
(ii) The parties intend that they are legally bound by the terms of each Transaction from the moment
they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as
soon as practicable and may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange of electronic messages on
an electronic messaging system, which in each case will be sufficient for all purposes to evidence
a binding supplement to this Agreement. The parties will specify therein or through another effective
means that any such counterpart, telex or electronic message constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this
Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power
or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or
privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of reference only and are not
to affect the construction of or to be taken into consideration in interpreting this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction
through an Office other than its head or home office represents to the other party that, notwithstanding the
place of booking office or jurisdiction of incorporation or organisation of such party,
the obligations of such party are the same as if it had entered into the Transaction through its head or home
office. This representation will be deemed to be repeated by such party on each date on which a Transaction
is entered into.
(b) Neither party may change the Office through which it makes and receives payments or deliveries
for the purpose of a Transaction without the prior written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make
and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the
Office through which it makes and receives payments or deliveries with respect to a Transaction will be
specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all
reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by
reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but
not limited to, costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this Agreement may be given in any
manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given
by facsimile transmission or electronic messaging system) to the address or number or in accordance with
the electronic messaging system details provided (see the Schedule) and will be deemed effective as
indicated:—
(i) if in writing and delivered in person or by courier, on the date it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date that transmission is received by a responsible
employee of the recipient in legible form (it being agreed that the burden of proving receipt will be
on the sender and will not be met by a transmission report generated by the sender's facsimile
machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is delivered or its delivery is
attempted; or
(v) if sent by electronic messaging system, on the date that electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as applicable,
is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable,
after the close of business on a Local Business Day, in which case that communication shall be deemed given
and effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the address, telex or facsimile
number or electronic messaging system details at which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in accordance with the law
specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement
("Proceedings"), each party irrevocably:—
(i) submits to the jurisdiction of the English courts, if this Agreement
is expressed to be governed by English law, or to the non-exclusive jurisdiction of the courts of the
State of New York and the United States District Court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and
(ii) waives any objection which it may have at any time to the laying of venue of any Proceedings
brought in any such court, waives any claim that such Proceedings have been brought in an
inconvenient forum and further waives the right to object, with respect to such Proceedings, that
such court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction
(outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined
in Section 1(3) of the Civil Jurisdiction and Judgments Xxx 0000 or any modification, extension or
reenactment 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.
"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
been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or
group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that
would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each
applicable condition precedent) after that Early Termination Date is to be included. The Replacement
Transaction would be subject to such documentation as such party and the Reference Market-maker may, in
good faith, agree. The party making the determination (or its agent) will request each Reference
Market maker to provide its quotation to the extent reasonably practicable as of the same day and time
(without regard to different time zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if each party
is so obliged, after consultation with the other. If more than three quotations are provided, the Market
Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest
and lowest values. If exactly three such quotations are provided, the Market Quotation will be
the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than
one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded.
If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such
Terminated Transaction or group of Terminated Transactions cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost)
to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head or home office.
"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 meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether present or future,
contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction (including
an agreement with respect thereto) now existing or hereafter entered into between one party to this
Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and
the other party to this Agreement (or any Credit Support Provider of such other party or any applicable
Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions), (b) any combination of these
transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the
relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
"Tax" means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including
interest, penalties and additions thereto) that is imposed by any government or other taxing authority in
respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination Date (a) if resulting from a
Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions
(in either case) in effect immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount denominated in the Termination
Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other
than the Termination Currency (the "Other Currency"), the amount in the Termination Currency determined
by the party making the relevant determination as being required to purchase such amount of such Other
Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case
may be), is determined as of a later date, that later date, with the Termination Currency
at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below)
for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city
in which such foreign exchange agent is located) on such date as would be customary for the determination of
such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date
or that later date. The foreign exchange agent will, if only one party is obliged to make a
determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the
parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be
applicable, a Credit Event Upon Merger or an Additional Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the cost (without proof or
evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such
amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination Date, the aggregate of
(a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination
Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated
Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for
Section 2(a) (iii)) required to be settled by delivery to such party on or prior to
such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount
equal to the fair market value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the extent permitted
under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts
or obligations were or would have been required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be calculated on the basis of daily
compounding and the actual number of days elapsed. The fair market value of any obligation referred to in
clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e)
or, if each party is so obliged, it shall be the average of the Termination Currency Equivalents of the
fair market values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below
with effect from the date specified on the first page of this document.
THE ROYAL BANK OF SCOTLAND PLC XXXXX FARGO BANK, NATIONAL ASSOCIATION,
By: Greenwich Capital Markets, Inc., its agent
not in its individual capacity but solely as
Securities Administrator under the Sale and Servicing
Agreement, acting as Auction Administrator on behalf
of the Holders of the Auction Notes
By:/s/ Xxxxxxx Xxxxxxx By:/s/ Xxxxx X. Xxxxxx
Name:Xxxxxxx Xxxxxxx Name:Xxxxx X. Xxxxxx
Title:Vice President Title:Vice President
Date:July 31, 2007 Date:July 31, 2007
July 31, 2007
To Xxxxx Fargo Bank, N.A.
not in its individual capacity but solely as Securities Administrator under the Sale and
Servicing Agreement (defined below), acting solely as Auction Administrator on behalf of
the Holders of the Auction Notes
("Party B")
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Client Manager - Xxxxxxxxx 2007-3
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000 0000
From The Royal Bank of Scotland plc ("RBS" or "Party A")
RBS Reference No HG5F270
Swap Confirmation
The purpose of this communication (this "Confirmation") is to set forth the terms and conditions of the Swap Transaction entered into
between us on the Trade Date specified below (the "Transaction").
The definitions and provisions contained in the 2000 ISDA Definitions, as published by the International Swaps and Derivatives
Association, Inc., are incorporated into this Confirmation, and the version of the Annex to the 2000 ISDA Definitions that is
incorporated into this Confirmation is the June 2000 version (collectively, the "Definitions"). In the event of any inconsistency
between the Definitions and this Confirmation, this Confirmation will govern.
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 July 31, 2007, together with the Schedule thereto, as amended and supplemented from time to time (the
"Agreement"), between you and us. All provisions contained in the Agreement govern this Confirmation except as expressly modified
below.
Terms used and not defined herein shall have the respective meanings ascribed to such terms in the Auction Administration Agreement,
dated as of July 31, 2007 (the "Auction Administration Agreement") between RBS and Xxxxx Fargo Bank, N.A., not in its individual
capacity but solely as Securities Administrator under the Sale and Servicing Agreement, as auction administrator, and if not defined
therein, in the Sale and Servicing Agreement, dated as of July 1, 2007, among Structured Asset Mortgage Investments II Inc., as
Depositor, Xxxxxxxxx Mortgage Home Loans, Inc., as Initial Seller and Sponsor, Xxxxxxxxx Mortgage Funding, Inc., as Seller, Xxxxx
Fargo Bank, N.A., as Master Servicer and Securities Administrator (the "Securities Administrator"), LaSalle Bank National
Association, as Indenture Trustee and Custodian (the "Indenture Trustee"), and Xxxxxxxxx Mortgage Securities Trust 2007-3 (the
"Trust") (the "Sale and Servicing Agreement") with respect to the Xxxxxxxxx Mortgage Securities Trust 2007-3 Mortgage Backed-Notes,
Series 2007-3 or the Indenture dated as of July 1, 2007 (the "Indenture"), among the Trust, the Indenture Trustee and the Securities
Administrator. In the event of any inconsistency between the provisions of this Confirmation, the Definitions, the Agreement, the
Sale and Servicing Agreement and the Indenture, this earlier named document shall govern.
The terms of the Transaction to which this Confirmation relates are as follows:
1 General Terms:
Trade Date: July 25, 2007.
Effective Date: July 31, 2007.
Auction Payment Date: (a) With respect to the Class 1A-1 and the Class 1A-2
Notes, the Payment Date in July 2010 and (b) with
respect to the Class 2A-1, Class 2A-2 , Class 3A-1,
Class 3A-2 , Class 4A-1, Class 4A-2, Class 4A-3 and
Class 4A-4 Notes, the Payment Date in July 2012.
Termination Date: The earlier to occur of (i) the date on which the
aggregate Class Principal Amount of all the Reference
Obligations has been reduced to zero and (ii) the latest
Auction Payment Date.
Reference Obligations: The Class 1A-1, Class 1A-2, Class 2A-1, Class 2A-2 ,
Class 3A-1, Class 3A-2 , Class 4A-1, Class 4A-2, Class
4A-3 and Class 4A-4 Notes issued .on July 31, 2007,
pursuant to the Indenture.
2 Payments:
Party A Floating Amount: With respect to each Reference Obligation, the Auction
Deficiency Amount.
Party A Payment Date: The Auction Payment Date.
Party B Floating Amount: With respect to each Reference Obligation, the Auction
Excess Amount.
Party B Payment Date: The Auction Payment Date
Auction Deficiency Amount: With respect to each Auction Payment Date and each
related Reference Obligation, an amount in USD equal to
the excess, if any, of (a) the aggregate Par Price of
the Auction Notes constituting such Reference Obligation
over (b) the aggregate Auction Proceeds of the Auction
Notes constituting such Reference Obligation.
Auction Excess Amount: With respect to each Auction Payment Date and each
related Reference Obligation, the amount equal to the
excess, if any, of (a) the aggregate Auction Proceeds of
the Auction Notes constituting such Reference Obligation
over (b) the aggregate Par Price of the Auction Notes
constituting such Reference Obligation.
Calculation Agent: Party A
Business Days: New York and any other city in which the corporate trust
office of the Securities Administrator is located
Business Day Convention: Modified Following
3 Account Details; Additional Contact Information:
Please pay RBS at: JPMorgan Chase Bank
ABA # 000-000-000
A/C RBS
A/C # 0662-14335
We will pay Xxxxx Fargo Bank, N.A. at: Xxxxx Fargo Bank, N.A.
ABA # 021000248
A/C# 0000000000
A/C Name: Corporate Trust Clearing
For further credit: Xxxxxxxxx 0000-0, Xxxx Proceeds
Account # 00000000
For convenience, RBS may be reached as follows:
Front Office
Xxxxxxx Xxxxxxx
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Operations
Xxxxxx Xxxxxxxxxx
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Xxxxxxx Xxxxxxxx / Xxxxxxx Xxxxxxxx
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
4 Payment of Party B Floating Amount; Selection of Designee:
The parties agree that Party B shall pay or cause to be paid the Party B Floating Amount, if any, to RBS or its designee, the
name and account details of which, if any, shall be provided to Party B no later than the Business Day prior to the Auction
Payment Date.
5 Notices:
Please note that any notice in respect of any Transaction must be given as provided in Section 12 of the Agreement.
6 Governing Law
Performance and enforcement of obligations evidenced hereby shall be governed by, and interpreted in accordance with, the laws
of the State of New York without regard to its conflict of laws principles other than Sections 5-1401 and 5-1402 of the
General Obligations Law of the State of New York.
7 Limitation on Party B Payment Obligations
Notwithstanding any other provision of this Transaction or the Agreement, no amount shall be payable by Party B under this
Transaction or the Agreement unless and until the funds necessary to make such payment have been provided to Party B pursuant
to the Auction Administration Agreement.
8 Party B's Capacity
It is expressly understood and agreed by the parties hereto that insofar as this Confirmation is executed by Xxxxx Fargo Bank,
National Association ("Xxxxx Fargo"), (i) this Confirmation is executed and delivered by Xxxxx Fargo, not in its individual
capacity, but solely as Securities Administrator under the Sale and Servicing Agreement referred to herein, acting as Auction
Administrator for the benefit of the holders of the Auction Notes, in the exercise of the powers and authority conferred and
vested in it thereunder and under the Auction Administration Agreement referred to herein, (ii) each of the representation,
undertakings and agreements made herein or in the Agreement by Xxxxx Fargo are made on behalf of the holders of the Auction
Notes and intended not as personal representations of Xxxxx Fargo but is made and intended for the purpose of binding only the
Trust referred to in the Sale and Servicing Agreement and the Auction Notes and (iii) under no circumstances (other than fraud
or willful misconduct) shall Xxxxx Fargo 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 or the Agreement.
9 Agency Role of Greenwich Capital Markets, Inc.
In connection with this Confirmation, Greenwich Capital Markets, Inc., has acted as agent on behalf of Party A. Greenwich
Capital Markets, Inc., has not guaranteed and is not otherwise responsible for the obligations of Party A under this Agreement.
We are pleased to have completed this Transaction and look forward to dealing with you again in the near future.
THE ROYAL BANK OF SCOTLAND PLC
By: GREENWICH CAPITAL MARKETS, INC.,
its agent
By: /s/ Xxxxxxx Xxxxxxx
Name:Xxxxxxx Xxxxxxx
Title:Vice President
ACCEPTED AND CONFIRMED as of the date first written:
XXXXX FARGO BANK, N.A.
not in its individual capacity but solely as Securities Administrator under the Sale and Servicing Agreement, acting solely as
Auction Administrator on behalf of the Holders
of the Auction Notes
By: /s/ Xxxxx X. Xxxxxx
Authorized Signatory
Name:Xxxxx X. Xxxxxx
Title:Vice President
SCHEDULE
TO THE
MASTER AGREEMENT
DATED AS OF July 31, 2007,
between
THE ROYAL BANK OF SCOTLAND PLC,
a company limited by shares under the law of Scotland
("Party A")
and
XXXXX FARGO BANK, NATIONAL ASSOCIATION
not in its individual capacity but solely as Securities Administrator under the Sale and Servicing Agreement (as
defined herein), acting as Auction Administrator for the benefit of the Holders of the Auction Notes
("Party B")
Part 1 TERMINATION PROVISIONS
(a) "Specified Entity" means
in relation to Party A for the purpose of:
Section 5(a)(v) (Default under Specified Transaction) Not Applicable
Section 5(a)(vi) (Cross Default) Not Applicable
Section 5(a)(vii) (Bankruptcy) Not Applicable
Section 5(b)(iv) (Credit Event Upon Merger) Not Applicable
and in relation to Party B for the purpose of:
Section 5(a)(v) (Default under Specified Transaction) Not Applicable
Section 5(a)(vi) (Cross Default) Not Applicable
Section 5(a)(vii) (Bankruptcy) Not Applicable
Section 5(b)(iv) (Credit Event Upon Merger) Not Applicable
(b) "Specified Transaction" will have the meaning assigned in Section 14 of this Agreement.
(c) The "Cross-Default" provisions of Section 5(a)(vi)
will not apply to Party A.
will not apply to Party B.
(d) The "Credit Event Upon Merger" provisions of Section 5(b)(iv)
will not apply to Party A.
will not apply to Party B.
(e) The "Automatic Early Termination" provision of Section 6(a)
will not apply to Party A.
will not apply to Party B.
(f) Payments on Early Termination. For the purpose of Section 6(e) of this Agreement but subject to
Part 5 of this Schedule:
(i) Loss will apply.
(ii) The Second Method will apply.
(g) "Termination Currency" means United States Dollars.
(h) Additional Termination Events will apply.
(i) Regulation AB. (A) The Depositor still has a reporting obligation with respect to this
Transaction pursuant to Regulation AB and (B) Party A has not, within 15 Business Days after
receipt of a Hedge Disclosure Request complied with the provisions set forth in Part 5(r)(iv)
below (provided that if the significance percentage reaches 10% or 20%, as applicable, after a
Hedge Disclosure Request has been made to Party A, Party A must comply with the provisions set
forth in Part 5(r)(iv) below within 10 days (or such shorter time period as may be reasonably
requested by the Depositor in order to comply with the reporting requirements under Regulation AB)
of Party A being informed of the significance percentage reaching 10% or 20%, as applicable) or
has not, thereafter, complied with the provisions set forth in Part 5(r)(iv) below. For purposes
of this Additional Termination Event, Party A shall be the sole Affected Party.
(ii) Ratings Downgrade. If, Party A fails to comply with any of the provisions set forth in Part
5(o), then an Additional Termination Event shall have occurred with respect to Party A, and Party
A shall be the sole Affected Party with respect to such Additional Termination Event.
(i) The "Breach of Agreement" provisions of Section 5(a)(ii), the "Misrepresentation" provisions of
Section 5(a)(iv) and the "Default Under Specified Transaction" provisions of Section 5(a)(v)
will not apply to Party A.
will not apply to Party B.
(j) The "Bankruptcy" provisions of Section 5(a)(vii), the "Merger Without Assumption" provisions of
Section 5(a)(viii), the "Credit Support Default" provisions of Section 5(a)(iii), the "Tax Event"
provisions of Section 5(b)(ii) and the "Tax Event Upon Merger" provisions of Section 5(b)(iii)
will not apply to Party B.
Part 2 TAX REPRESENTATIONS
(a) Payer Tax Representation For the purpose of Section 3(e) of this Agreement, each party will make
with respect to itself 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
the 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 the Agreement, (ii) the satisfaction of the agreement contained in
Section 4(a)(i) or 4(a)(iii) of the 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 the Agreement and (iii)
the satisfaction of the agreement of the other party contained in Section 4(d) of the 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) of the
Agreement by reason of material prejudice to its legal or commercial position.
(b) Payee Tax Representations For the purposes of Section 3(f), each party makes the following
representations:
(i) The following representation will apply to Party A:
(A) Party A is a tax resident of the United Kingdom;
(B) Party A is a "foreign person" within the meaning of the applicable U.S. Treasury
Regulations concerning information reporting and backup withholding tax (as in
effect on January 1, 2001), unless Party A provides written notice to Party B
that it is no longer a foreign person;
(C) in respect of each Transaction Party A enters into through an office or
discretionary agent in the United States or which otherwise is allocated (in
whole or part) for United States federal income tax purposes to such United
States trade or business, each payment received or to be received by Party A
under such Transaction (or portion thereof, if applicable) will be effectively
connected with its conduct of a trade or business in the United States; and
(D) (D) in respect of all other Transactions or portions thereof, no such
payment received or to be received by Party A in connection with this Agreement
is attributable to a trade or business carried on by it through a permanent
establishment in the United States.
(ii) The following representation will apply to Party B:
It is a national banking association established under the laws of the United States and
its U.S. taxpayer identification number is 00-0000000.
Part 3 AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Section 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the following
documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are:
___________________________________________________________________________________________________________________
Party Required To Deliver Document Form / Document/ Certificate Date By Which To Be Delivered
___________________________________________________________________________________________________________________
Party A Any form or document required or Upon reasonable request.
reasonably requested to allow the
other party to make payments under
the Agreement without any deduction
or withholding for or on account of
any Tax, or with such deduction or
withholding at a reduced rate.
___________________________________________________________________________________________________________________
Party B Any form or document required or (i) Concurrently with the execution
reasonably requested to allow the and delivery of this Confirmation,
other party to make payments under and (ii) anytime when the document
the Agreement without any deduction last delivered is incorrect or
or withholding for or on account of out-of-date.
any Tax, or with such deduction or
withholding at a reduced rate.
___________________________________________________________________________________________________________________
(b) Other documents to be delivered are:
___________________________________________________________________________________________________________________
Party Required To Deliver Form / Document/ Date By Which To Be Covered By Section 3(d)
Document Certificate Delivered Representation
___________________________________________________________________________________________________________________
Party A & B Incumbency Certificate Concurrently with the Yes
(or, if available the execution and delivery of
current authorized this Agreement unless
signature book or previously delivered and
equivalent authorizing still in full force and
documentation) specifying effect.
the names, titles,
authority and specimen
signatures of the persons
authorized to execute the
Confirmation which sets
forth the specimen
signatures of each
signatory to the
Confirmation signing on
its behalf.
___________________________________________________________________________________________________________________
Party A its audited annual report As soon as possible after Yes
request.
___________________________________________________________________________________________________________________
Party B Copies of all statements On each Payment Date (as Yes
delivered to the Holders such term is defined in
of the Auction Notes the Sale and Servicing
under the Sale and Agreement).
Servicing Agreement.
___________________________________________________________________________________________________________________
Party B Executed copy of the Sale Concurrently with the Yes
and Servicing Agreement execution and delivery of
and the Indenture. this Agreement.
___________________________________________________________________________________________________________________
Party A & B Legal opinion(s) with Concurrently with the No
respect to such party execution and delivery of
relating to the this Agreement.
enforceability of the
party's obligations under
this Agreement that is
reasonably satisfactory
in form and substance to
the othr party.
___________________________________________________________________________________________________________________
Party A & B Such party's Credit Concurrently with the Yes
Support Documents, if any. execution and delivery of
this Agreement.
___________________________________________________________________________________________________________________
Part 4 MISCELLANEOUS
(a) Addresses For Notices For the purpose of Section 12(a) of this Agreement:-
(i) Notices or communications shall, with respect to a particular Transaction, be sent to
the address, telex number or facsimile number reflected in the Confirmation of that
Transaction. In addition (or in the event the Confirmation for a Transaction does not
provide relevant Addresses/information for notice), with respect to notices provided
pursuant to Section 5 and 6 of this Agreement, notice shall be provided to:
Address for notices or communications to Party A:
Address: 000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Legal Department - Derivatives Documentation
Phone No.: 000-000-0000/32
Facsimile No.: 000-000-0000/34
Address for notices or communications to Party B:
Address: Xxxxx Fargo Bank, National Association
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000 - 1951
Attention: Client Manager - Xxxxxxxxx 2007-3
Phone No.: (000) 000 0000
Facsimile No.: (000) 000 0000
(ii) 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 (it being agreed that the
sender shall verbally confirm receipt with an officer of the receiving party )".
(b) Process Agent For purposes of Section 13(c) of this Agreement:
Party A appoints as its Process Agent: Not applicable
Party B appoints as its Process Agent: Not applicable
(c) Offices The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party For purpose of Section 10(c) of this Agreement:
Party A is a Multibranch Party and may act through its London and New York Offices only.
Party B is not a Multibranch Party.
(e) Calculation Agent Party A; it being understood that, notwithstanding anything to the contrary in
this Agreement, Party A shall be the Calculation Agent irrespective of whether Party A is a
Defaulting Party or Affected Party. Notwithstanding Section 6(e) of the Agreement, Party A will
be the party entitled to determine Loss.
(f) Credit Support Documents Details of any Credit Support Documents:
In the case of Party A: Not Applicable.
In the case of Party B: Not Applicable.
(g) Credit Support Provider means
in relation to Party A: Not Applicable; and
in relation to Party B: Not Applicable
(h) Governing Law This Agreement will be governed by and construed in accordance with the laws of the
State of New York (without reference to conflicts of law doctrine other than New York General
Obligations Law Sections 5-1401 and 5-1402).
(i) Netting of Payments Sub-paragraph (ii) of Section 2(c) of this Agreement will apply to all
Transactions hereunder, unless otherwise provided in the relevant Confirmation(s).
(j) "Affiliate" will have the meaning specified in Section 14.
Part 5 OTHER PROVISIONS
(a) ISDA Definitions Incorporated by Reference The definitions and provisions contained in the 2000
ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc., are
incorporated herein, and the version of the Annex to the 2000 ISDA Definitions that is
incorporated herein is the June 2000 version (collectively, the "Definitions"). Any terms used
and not otherwise defined herein which are contained in the Definitions shall have the meaning set
forth therein. In the event of any conflict between the Definitions and any other ISDA-published
definitions referenced in a Confirmation, such Confirmation and the ISDA-published definitions
referred to therein shall control for purposes of the particular Transaction. For the avoidance
of doubt, any reference to a "Swap Transaction", if any, in the Definitions is deemed to be a
reference to a "Transaction" for the purpose of interpreting this Agreement or any Confirmation,
and any reference to a "Transaction" in this Agreement or any Confirmation is deemed to be a
reference to a "Swap Transaction" for the purpose of interpreting the Definitions.
(b) Other Defined Terms Terms used and not defined in this Agreement or in the Definitions, shall
have the respective meanings ascribed to such terms in the Auction Administration Agreement dated
as of July 31, 2007 (the "Auction Administration Agreement"), between Party A and Party B, as
Auction Administrator, and if not defined therein, in the Sale and Servicing Agreement dated as of
July 1, 2007, among Structured Asset Mortgage Investments II Inc., as Depositor, Xxxxxxxxx
Mortgage Home Loans, Inc., as Initial Seller and Sponsor, Xxxxxxxxx Mortgage Funding, Inc., as
Seller, Xxxxx Fargo Bank, N.A., as Master Servicer and Securities Administrator (the "Securities
Administrator"), LaSalle Bank National Association, as Indenture Trustee and Custodian (the
"Indenture Trustee"), and Xxxxxxxxx Mortgage Securities Trust 2007-3 (the "Trust"), (the "Sale
and Servicing Agreement") with respect to the Xxxxxxxxx Mortgage Securities Trust 2007-3 Mortgage
Backed-Notes, Series 2007-3 or the Indenture dated as of July 1, 2007 (the "Indenture"), among
the Trust, the Indenture Trustee and the Securities Administrator.
(c) No Set-Off Notwithstanding anything to the contrary in this Agreement, all payments shall be made
without any Set-Off.
(d) Condition Precedent The condition precedent specified in Section 2(a)(iii)(1) of this Agreement
does not apply to a payment or delivery owing by a party if the other party shall have satisfied
in full all its payment and delivery obligations under Section 2(a)(i) of this Agreement and shall
at the relevant time have no future payment or delivery obligations, whether absolute or
contingent, under Section 2(a)(i).
(e) Additional Representations Section 3 is hereby amended by adding at the end thereof the following
subparagraphs:
(g) "No Agency In case of Party A, it is entering into this Agreement, any Credit Support
Document and any other document relating to this Agreement and each Transaction
hereunder as principal and not as agent or in any capacity, fiduciary or otherwise, and
no other person has an interest herein, and in case of Party B, it is entering into this
Agreement, any Credit Support Document and any other document relating to this Agreement
and each Transaction hereunder solely as agent for the Holders of the Auction Notes (as
such term is defined in the Auction Administration Agreement and as authorized therein),
and no other person, other than the Holders of the Auction Notes, has an interest herein.
(h) Legal and Beneficial Owner It will be the legal and beneficial owner of any securities
it is required to deliver under this Agreement and any Transaction at the time of each
delivery, free from all liens, charges, equities, rights of pre-emption or other
security interests or encumbrances whatsoever, unless otherwise expressly provided in a
Confirmation for a Transaction, and such securities will not constitute "restricted
securities" or "control stock" under the Securities Act (as defined below).
(i) US Federal Securities Laws Each party represents to the other party that:
(i) It is a "qualified institutional buyer" as defined in Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"); and
(ii) It understands that certain Transactions under the Agreement may constitute the
purchase or sale of "securities" as defined in the Securities Act and
understands that any such purchase or sale of securities will not be registered
under the Securities Act and that any such Securities Transactions may not be
reoffered, resold, pledged, sub-participated or otherwise transferred except (x)
in accordance with the Agreement, (y) pursuant to an effective registration
statement under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act and (z) in accordance with any
applicable securities laws of any state of the United States.
(j) Financial Institution Status In the case of Party A, it is a "financial institution",
in that it engages, will engage and holds itself out as engaging in "financial
contracts," as a counterparty on both sides of one or more "financial markets" (as such
quoted terms are defined in Regulation EE of the US Federal Reserve Board, 12 C.F.R.
Part 231) and it fulfills at least one of the quantitative tests contained in such
Regulation EE (12 C.F.R. §231(a)(1) or (a)(2))."
(f) Swap Exemption Each party hereto represents to the other party on and as of the date hereof and
on each date on which a Transaction is entered into between them hereunder, that it is an
"eligible contract participant" as defined in Section 1a(12) of the Commodity Exchange Act, as
amended.
(g) Relationship between Parties In connection with the negotiation of, the entering into, of this
Agreement, and any other documentation relating to this Agreement to which it is a party or that
it is required by this Agreement to deliver, each party hereby represents and warrants, and, in
connection with the negotiation of, the entering into, and the confirming of the execution of each
Transaction, each party will be deemed to represent, to the other party as of the date hereof (or,
in connection with any Transaction, as of the date which it enters into such Transaction) that
(absent a written agreement between the parties that expressly imposes affirmative obligations to
the contrary for that Transaction and in accordance with Section 3(g)):
(i) Non-Reliance It is acting for its own account, and it has made its own independent
decisions to enter into that Transaction and as to whether that Transaction is
appropriate or proper for it based upon its own judgment and upon advice from such
advisers as it has deemed necessary. It is not relying on any communication (written or
oral) of the other party as investment advice or as a recommendation to enter into that
Transaction; it being understood that information and explanations related to the terms
and conditions of a Transaction 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 that 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. It has determined to its
satisfaction whether or not the rates, prices or amounts and other economic terms of
each Transaction and the indicative quotations (if any) provided by the other party
reflect those in the relevant market for similar transactions, and all trading decisions
have been the result of arm's length negotiations between the parties.
(iii) Status of Parties The other party is not acting as a fiduciary for or an adviser to it
in respect of that Transaction.
(iv) Related Transactions It is aware that each other party to this Agreement and its
Affiliates may from time to time (A) take positions in instruments that are identical or
economically related to a Transaction or (B) have an investment banking or other
commercial relationship with the issuer of an instrument underlying a Transaction.
(h) Additional Representations of Party B Party B hereby acknowledges and agrees that (i) with
respect to this Agreement and each Transaction, Party B will maintain, and be in full compliance
with, all operative and constituent documents of Party B, and (ii) each Transaction will also
comply in all respects with all applicable laws, rules, regulations, interpretations, guidelines,
procedures, and policies of applicable governmental and regulatory authorities affecting Party B
or the performance of its obligations hereunder.
(i) Confidential Information Each party may share any information concerning the other party with any
of its Affiliates.
(j) Waiver of Jury Trial EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION.
(k) Consent to Telephonic Recording Each party hereto consents to the monitoring or recording, at any
time and from time to time, by the other party of the telephone conversations of trading and
marketing personnel of the parties and their authorized representatives in connection with this
Agreement or any Transaction or potential Transaction; and the parties, waive any further notice
of such monitoring or recording and agree to give proper notice and obtain any necessary consent
of such personnel or any such monitoring or recording.
(l) Agency Role of Greenwich Capital Markets, Inc. In connection with this Agreement, Greenwich
Capital Markets, Inc. has acted as agent on behalf of Party A. Greenwich Capital Markets, Inc.
has not guaranteed and is not otherwise responsible for the obligations of Party A under this
Agreement.
(m) 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 any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under any federal or
state bankruptcy, dissolution or similar law, for a period of one year and one day (or, if longer,
the applicable preference period) following indefeasible payment in full of the Notes, provided
that nothing herein shall preclude, or be deemed to estop Party A from taking any action in any
case or proceeding voluntarily filed or commenced by or on behalf of Party B or in any involuntary
case or proceeding after it has been commenced. This provision will survive the termination of
this Agreement.
(n) Notice of Transfer or Amendment Party A and Party B acknowledge and agree to provide prior
written notice to the Rating Agencies (as such term is defined in the Pool and Servicing
Agreement) of any transfer or amendment of this Agreement or any Confirmation.
(o) Ratings Event
(i) (i) If (1) the short-term unsecured debt rating of Party A is at any time not at
least "P-1" (without regard to whether such rating may be on negative watch) by Xxxxx'x
Investors Service, Inc. ("Moody's"), (2) the long-term unsecured debt rating of Party A
is at any time not at least "A2" (without regard to whether such rating may be on
negative watch) by Moody's, (3) if Party A has a short-term unsecured debt rating from
Standard and Poor's Ratings Service, a division of The XxXxxx-Xxxx Companies, Inc.
("S&P"), such rating is at any time not at least "A-1" or (4) if Party A does not have a
short-term unsecured debt rating from S&P, the long-term unsecured debt rating of Party
A from S&P is at any time not at least "A+" (such occurrence, a "Ratings Event" and such
ratings the "Approved Ratings Threshold"), Party A shall within 30 days of such Ratings
Event, at its own cost and subject to the Rating Agency Condition, either (A) assign all
its rights and obligations under this Agreement to a substitute party selected by Party
A who meets or exceeds (or whose Credit Support Provider meets or exceeds) the Approved
Ratings Threshold, (B) obtain a guaranty of another person selected by Party A who meets
or exceeds the Approved Ratings Threshold or (C) deliver collateral, in an amount
sufficient to maintain the then-current ratings of the Auction Notes pursuant to a
Credit Support Annex.
(ii) (ii) Notwithstanding anything to the contrary in this Part 5(o), if (1) the
short-term unsecured debt rating of Party A is at any time not at least "P-2" (without
regard to whether such rating may be on negative watch) by Moody's, (2) the long-term
unsecured debt rating of Party A is at any time not at least "A3" (without regard to
whether such rating may be on negative watch) by Moody's, or (3) the long-term unsecured
debt rating of Party A is at any time not at least "BBB-" by S&P (or is withdrawn),
Party A shall at its own expenses and subject to the Rating Agency Condition, with
respect to S&P only, comply with clause (A) or (B) above of Part 5(o)(i) within ten (10)
days.
(iii) For purposes of this Agreement, "Rating Agency Condition" 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 Moody's and receive from S&P and Moody's a prior written
confirmation that the proposed action or inaction would not cause a downgrade or
withdrawal of the then-current rating of the Auction Notes.
(p) Transfer Notwithstanding Section 7 of this Agreement and subject to the Rating Agency Condition,
Party A and any applicable Credit Support Provider shall have the right to transfer their
respective rights and obligations hereunder to a substitute counterparty provided that such
substitute counterparty (or such substitute counterparty's Credit Support Provider) shall have a
credit rating of its long-term debt obligations no lower than the current rating of the long-term
debt obligations of Party A.
(q) Additional Information. Party A hereby agrees to cooperate in a commercially reasonable manner
with any requests from Party B to provide any information required pursuant to Regulation AB under
the Securities Act of 1933. The parties hereby agree, that if Party A, acting in a commercially
reasonable manner, cannot comply with a request by Party B for such additional information, Party
A shall transfer its rights and obligations hereunder to a transferee pursuant to Part 5(p) above.
(r) Compliance with Regulation AB.
(i) Party A acknowledges that for so long as there are reporting obligations with respect
to this Transaction under Regulation AB ("Regulation AB") under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Depositor is
required under Regulation AB, to disclose certain information set forth in Regulation AB regarding
Party A or its group of affiliated entities, if applicable, depending on the aggregate
"significance percentage" of this Agreement and any other derivative contracts between Party A or
its group of affiliated entities, if applicable, and Party B, as calculated from time to time in
accordance with Item 1115 of Regulation AB, such determination of the significance percentage
shall be in the Depositor's sole discretion, exercised reasonably and in good faith.
(ii) Subject to the provisions of clause (iii) below, and so long as there are reporting
obligations with respect to this Transaction under Regulation AB, if the Depositor determines,
reasonably and in good faith, that the aggregate significance percentage of this Agreement has
increased to nine (9) percent, then the Depositor may request from Party A (such request, a "Hedge
Disclosure Request") on the date of such determination from Party A the same information set forth
in Item 1115(b) of Regulation AB (such requested information, subject to the last sentence of this
paragraph, the "Hedge Financial Disclosure") that would have been required if the significance
percentage had in fact increased to ten (10) percent. Party B, the Depositor or any of its agents
shall provide Party A with the calculations and any other information reasonably requested by
Party A with respect to the Depositor's determination that led to the Hedge Disclosure Request.
The parties hereto further agree that the Hedge Financial Disclosure provided to meet the Hedge
Disclosure Request may be, solely at Party A's option, either the information set forth in Item
1115(b)(1) or Item 1115(b)(2) of Regulation AB.
(iii) So long as there are reporting obligations with respect to this Transaction under
Regulation AB, if the Depositor determines, reasonably and in good faith, that the aggregate
significance percentage of this Agreement has increased to eighteen (18) percent, then the
Depositor may make a Hedge Disclosure Request to Party A on the date of such determination from
Party A for Hedge Financial Disclosure that would have been required if the significance
percentage had in fact increased to twenty (20) percent (and, accordingly, consists of the
information set forth in Item 1115(b)(2) of Regulation AB). Party B, the Depositor or any of its
agents shall provide Party A with the calculations and any other information reasonably requested
by Party A with respect to the Depositor's determination that led to the Hedge Disclosure Request,
provided that such determination of the significance percentage shall be in the Depositor's sole
discretion, exercised reasonably and in good faith.
(iv) Upon the occurrence of a Hedge Disclosure Event, Party A, at its own expense, shall
(1)(a) either (i) provide to the Depositor the current Hedge Financial Disclosure in an XXXXX
compatible format (for example, such information may be provided in Microsoft Word® or Microsoft
Excel® format but not in .pdf format) or (ii) provide written consent to the Depositor to
incorporation by reference of such current Hedge Financial Disclosure that are filed with the
Securities and Exchange Commission in the reports of the Trust filed pursuant to the 1934 Act, (b)
if applicable, cause its outside accounting firm to provide its consent to filing or incorporation
by reference of such accounting firm's report relating to their audits of such current Hedge
Financial Disclosure in the 1934 Act Reports of the Depositor, and (c) provide to the Depositor
any updated Hedge Financial Disclosure with respect to Party A or any entity that consolidates
Party A within five Business Days of the release of any such updated Hedge Financial Disclosure;
(2) secure another entity to replace Party A as party to this Agreement on terms substantially
similar to this Agreement and subject to prior notification to the Rating Agencies, such entity
(or a guarantor therefor) meets or exceeds the Approved Rating Thresholds and satisfies the Rating
Agency Condition and such entity is able to comply with the requirements of Item 1115 of
Regulation AB, (3) obtain a guaranty of Party A's obligations under this Agreement, subject to
Rating Agency Condition, from an affiliate of Party A that is able to comply with the financial
information disclosure requirements of Item 1115 of Regulation AB, such that disclosure provided
in respect of the affiliate will satisfy any disclosure requirements applicable to Party A, and
cause such affiliate to provide Hedge Financial Disclosure, or (4) post collateral that will be
sufficient to reduce the "significance percentage" as defined under Item 1115 of Regulation AB
such that no information that would otherwise have constituted Hedge Financial Disclosure will be
required to be filed with, or incorporated by reference into, the 1934 Act reports of the
Depositor pursuant to Item 1115 of Regulation AB. If permitted by Regulation AB, any required
Hedge Financial Disclosure may be provided by incorporation by reference from reports filed
pursuant to the 1934 Act.
(v) The parties agree that the Depositor and Xxxxxxxxx Mortgage Home Loans, Inc. in its
capacity as sponsor, are third-party beneficiaries to Party A's undertakings under this paragraph
(r).
(s) Amendment. Notwithstanding any provision to the contrary in this Agreement, no amendment,
modification or waiver of either this Agreement or any Transaction under this Agreement shall be
permitted by either party unless each of the Rating Agencies has been provided prior written
notice of the same and S&P confirms in writing (including by facsimile transmission) that it will
not downgrade, withdraw or otherwise modify its then-current ratings of the Notes.
(t) Moody's Notifications. Notwithstanding any other provision of this agreement, this Agreement
shall not be amended, no Early Termination Date shall be effectively designated by Party B, and no
transfer of any rights or obligations under this Agreement shall be made unless Moody's has been
given prior written notice of such amendment, designation or transfer.
[Signature Page Immediately Follows]
In Witness Whereof, Party A and Party B have caused this Schedule to be duly executed as its act and deed as of
the date first written above.
THE ROYAL BANK OF SCOTLAND PLC
By: Greenwich Capital Markets, Inc., its agent
By /s/ Xxxxxxx Xxxxxxx
Name:Xxxxxxx Xxxxxxx
Title:Vice President
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Securities
Administrator under the Sale and Servicing Agreement, acting
as Auction Administrator on behalf of the Holders of the
Auction Notes
By /s/ Xxxxx X. Xxxxxx
Name:Xxxxx X. Xxxxxx
Title:Vice President
