Page 1 of 20
(THE BANK OF NEW YORK. LOGO)
Dated: June 12, 2006
RATE CAP TRANSACTION
RE: BNY REFERENCE NO. 37983
Ladies and Gentlemen:
The purpose of this letter agreement ("AGREEMENT") is to confirm the terms
and conditions of the rate Cap Transaction entered into on the Trade Date
specified below (the "TRANSACTION") between The Bank of New York ("BNY"), a
trust company duly organized and existing under the laws of the State of New
York, and the Xxxxxxx Xxxxx Mortgage Investors, Inc. Mortgage Loan Asset-Backed
Certificates, Series 2006-HE3 (the "COUNTERPARTY"), as represented by LaSalle
Bank National Association, not in its individual capacity, but solely as Trustee
under the Pooling and Servicing Agreement, dated and effective June 1, 2006,
among Xxxxxxx Xxxxx Mortgage Investors, Inc., as Depositor, Xxxxxxx Xxxxx
Mortgage Lending, Inc., as Sponsor and LaSalle Bank National Association, as
Trustee (the "POOLING AND SERVICING AGREEMENT"). This Agreement, which evidences
a complete and binding agreement between you and us to enter into the
Transaction on the terms set forth below, constitutes a "CONFIRMATION" as
referred to in the "ISDA FORM MASTER AGREEMENT" (as defined below), as well as a
"Schedule" as referred to in the ISDA Form Master Agreement.
1. FORM OF AGREEMENT. This Agreement is subject to the 2000 ISDA Definitions
(the "DEFINITIONS"), as published by the International Swaps and
Derivatives Association, Inc. ("ISDA"). You and we have agreed to enter
into this Agreement in lieu of negotiating a Schedule to the 1992 ISDA
Master Agreement (Multicurrency--Cross Border) form (the "ISDA FORM MASTER
AGREEMENT"). An ISDA Form Master Agreement, as modified by the Schedule
terms in Paragraph 4 of this Confirmation (the "MASTER AGREEMENT"), shall
be deemed to have been executed by you and us on the date we entered into
the Transaction. Except as otherwise specified, references herein to
Sections shall be to Sections of the ISDA Form Master Agreement and the
Master Agreement, and references to Paragraphs shall be to paragraphs of
this Agreement. Each party hereto agrees that the Master Agreement deemed
to have been executed by the parties hereto shall be the same Master
Agreement referred to in the agreement setting forth the terms of
transaction reference numbers 37981 and 37984. In the event of any
inconsistency between the provisions of this Agreement and the Definitions
or the ISDA Form Master Agreement, this Agreement shall prevail for
purposes of the Transaction. Capitalized terms not otherwise defined herein
or in the Definitions or the Master Agreement shall have the meaning
defined for such term in the Pooling and Servicing Agreement.
2. CERTAIN TERMS. The terms of the particular Transaction to which this
Confirmation relates are as follows:
Ref No. 37983
Page 2 of 20
Type of Transaction: Rate Cap
Notional Amount: With respect to any Calculation Period shall
equal the lesser of (1) the amount set forth for
such period on Schedule I attached hereto and
(2) the aggregate Certificate Balance of the
Class A Certificates as of the first day of the
Calculation Period. The Trustee shall make
available each month via the Trustee's website a
statement containing the aggregate Certificate
Balance of the Class A Certificates as of the
first day of such Calculation Period and shall
notify BNY at least five (5) Business Days prior
to the related Floating Rate Payer Payment Date
of the aggregate Certificate Balance of the
Class A Certificates as of the first day of such
Calculation Period and shall send such
notification to BNY provided, however, that if
the Trustee shall not provide such notification,
BNY is permitted to rely upon the statement of
Certificate Balance of the Class A Certificates
made available on the Trustee's website. The
Trustee's internet website shall initially be
located at xxx.xxxxxxxx.xxx and assistance in
using the website can be obtained by calling
Xxxxxxxx Xxxxx at 000-000-0000.
Trade Date: June 12, 2006
Effective Date: June 22, 2006
Termination Date: December 25, 2006, subject to adjustment in
accordance with the Modified Following Business
Day Convention.
FLOATING AMOUNTS
Floating Rate Payer: BNY
Cap Rate: For each Calculation Period, as set forth for
such period on Schedule I attached hereto.
Floating Rate for initial
Calculation Period: To be determined
Floating Rate Day Count
Fraction: Actual/360
Floating Rate Option: USD-LIBOR-BBA, provided, however, if the
Floating Rate Option for a Calculation Period is
greater than 10.50% then the Floating Rate
Option for such Calculation Period shall be
deemed equal to 10.50%.
Designated Maturity: One month
Page 3 of 20
Spread: Inapplicable
Floating Rate Payer
Period End Dates: The 25th day of each month, beginning on July
25, 2006 and ending on the Termination Date,
subject to adjustment in accordance with the
Modified Following Business Day Convention.
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The Floating
Rate Payer Payment Date shall be two (2)
Business Days preceding each Floating Rate Payer
Period End Date.
Reset Dates: The first day of each Calculation Period or
Compounding Period, if Compounding is
applicable.
Compounding: Inapplicable
Business Days for Payments
By both parties: New York
Calculation Agent: BNY
3. ADDITIONAL PROVISIONS:
1) RELIANCE. Each party hereto is hereby advised and acknowledges that
the other party has engaged in (or refrained from engaging in)
substantial financial transactions and has taken (or refrained from
taking) other material actions in reliance upon the entry by the
parties into the Transaction being entered into on the terms and
conditions set forth herein.
2) TRANSFER, AMENDMENT AND ASSIGNMENT. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall
be permitted by either party unless each of Standard & Poor's Ratings
Service, a division of The XxXxxx- Xxxx Companies, Inc ("S&P") and
Xxxxx'x Investors Service, Inc ("MOODY'S"), has been provided notice
of the same and confirms in writing (including by facsimile
transmission) that it will not downgrade, qualify, withdraw or
otherwise modify its then-current ratings on the Class A Certificates
issued under the Pooling and Servicing Agreement (the "CERTIFICATES").
4. PROVISIONS DEEMED INCORPORATED IN A SCHEDULE TO THE MASTER AGREEMENT:
1) NO NETTING BETWEEN TRANSACTIONS. The parties agree that subparagraph
(ii) of Section 2(c) will apply to any Transaction.
2) TERMINATION PROVISIONS. Subject to the provisions of Paragraph 4(10)
below, for purposes of the Master Agreement:
Page 4 of 20
(a) "SPECIFIED ENTITY" is not applicable to BNY or the Counterparty
for any purpose.
(b) The "BREACH OF AGREEMENT" provision of Section 5(a)(ii) will not
apply to BNY or the Counterparty.
(c) The "CREDIT SUPPORT DEFAULT" provisions of Section 5(a)(iii) will
not apply to BNY (except with respect to credit support furnished
pursuant to Paragraph 4 9) below or the Counterparty.
(d) The "MISREPRESENTATION" provisions of Section 5(a)(iv) will not
apply to BNY or the Counterparty.
(e) "DEFAULT UNDER SPECIFIED TRANSACTION" is not applicable to BNY or
the Counterparty for any purpose, and, accordingly, Section
5(a)(v) shall not apply to BNY or the Counterparty.
(f) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will not apply
to BNY or to the Counterparty.
(g) The "BANKRUPTCY" provisions of Section 5(a)(vii)(2) will not
apply to the Counterparty; the words "trustee" and "custodian" in
Section 5(a)(vii)(6) will not include the Trustee; and the words
"specifically authorized " are inserted before the word "action"
in Section 5(a)(vii)(9).
(h) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv)
will not apply to BNY or the Counterparty.
(i) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will
not apply to BNY or to the Counterparty.
(j) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e):
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(k) "TERMINATION CURRENCY" means United States Dollars.
(l) NO ADDITIONAL AMOUNTS PAYABLE BY COUNTERPARTY. The Counterparty
shall not be required to pay any additional amounts pursuant to
Section 2(d)(i)(4) or 2(d)(ii).
3) TAX REPRESENTATIONS.
Page 5 of 20
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e), BNY and
the Counterparty make the following representations:
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)) 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);
(ii) the satisfaction of the agreement contained in Section 4
(a)(i) or 4(a)(iii) and the accuracy and effectiveness of
any document provided by the other party pursuant to Section
4 (a)(i) or 4(a)(iii); and
(iii) the satisfaction of the agreement of the other party
contained in Section 4(d), provided that it shall not be a
breach of this representation where reliance is placed on
clause (ii) and the other party does not deliver a form or
document under Section 4(a)(iii) by reason of material
prejudice of its legal or commercial position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f), BNY and
the Counterparty make the following representations.
(i) The following representation will apply to BNY:
(x) It is a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of the United States Treasury
Regulations) for United States federal income tax purposes,
(y) it is a trust company duly organized and existing under
the laws of the State of New York, and (y) its U.S. taxpayer
identification number is 000000000.
(ii) The following representation will apply to the Counterparty:
It is a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of United States Treasury Regulations)
for United States federal income tax purposes.
4) DOCUMENTS TO BE DELIVERED. FOR THE PURPOSE OF SECTION 4(A):
(a) Tax forms, documents or certificates to be delivered are:
Page 6 of 20
PARTY REQUIRED TO DATE BY WHICH COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE TO BE DELIVERED 3(D) REPRESENTATION
----------------- ------------------------------------------ -------------------- -------------------
BNY and Any document required or reasonably Upon the execution Yes
Counterparty requested to allow the other party to make and delivery of this
payments under this Agreement without any Agreement
deduction or withholding for or on the
account of any tax.
(b) Other documents to be delivered are:
PARTY REQUIRED TO DATE BY WHICH COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE TO BE DELIVERED 3(D) REPRESENTATION
----------------- ------------------------------------------ -------------------- -------------------
BNY A certificate of an authorized officer of Upon the execution Yes
the party, as to the incumbency and and delivery of this
authority of the respective officers of Agreement
the party signing this Agreement, any
relevant Credit Support Document, or any
Confirmation, as the case may be.
Counterparty (i) a copy of the executed Pooling and Upon the execution Yes
Servicing Agreement, and (ii) an and delivery of this
incumbency certificate verifying the true Agreement
signatures and authority of the person or
persons signing this letter agreement on
behalf of the Counterparty.
BNY A copy of the most recent publicly Promptly after Yes
available regulatory call report. request by the other
party
BNY Legal Opinion as to enforceability of the Upon the execution Yes
Agreement. and delivery of this
Agreement.
Counterparty Certified copy of the Board of Directors Upon the execution Yes
resolution (or equivalent authorizing and delivery of this
documentation) which sets forth the Agreement.
authority of each signatory to the
Confirmation signing on its behalf and the
authority of such party to enter into
Transactions contemplated and performance
of its obligations hereunder.
Page 7 of 20
5) MISCELLANEOUS.
(a) ADDRESS FOR NOTICES: For the purposes of Section 12(a):
Address for notices or communications to BNY:
The Bank of New York
Swaps and Derivative Products Group
Global Market Division
00 Xxx Xxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
with a copy to:
The Bank of New York
Swaps and Derivative Products Group
00 Xxx Xxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Tele: 000-000-0000
Fax: 000-000-0000/5837
(For all purposes)
Address for notices or communications to the Counterparty:
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx
Reference: MLMI 2006 HE3
Tele: 000-000-0000
Fax: 000-000-0000
(b) PROCESS AGENT. For the purpose of Section 13 (c):
BNY appoints as its Process Agent: Not Applicable
The Counterparty appoints as its Process Agent: Not Applicable
(c) OFFICES. The provisions of Section 10(a) will not apply to this
Agreement; neither BNY nor the Counterparty have any Offices
other than as set forth in the Notices Section and BNY agrees
that, for purposes of Section 6(b), it shall not in future have
any Office other than one in the United States.
Page 8 of 20
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c):
BNY is not a Multibranch Party.
The Counterparty is not a Multibranch Party
(e) CALCULATION AGENT. The Calculation Agent is BNY.
(f) CREDIT SUPPORT DOCUMENT. Not applicable for either BNY (except
with respect to credit support furnished
pursuant to Paragraph 9) or the
Counterparty.
(g) CREDIT SUPPORT PROVIDER.
BNY: Not Applicable (except with respect to credit
support furnished pursuant to Paragraph 9)
Counterparty: Not Applicable
(h) GOVERNING LAW. The parties to this Agreement hereby agree that
the law of the State of New York shall govern their rights and
duties in whole, without regard to conflict of law provisions
thereof other than New York General Obligations Law Sections
5-1401 and 5-1402.
(i) SEVERABILITY. If any term, provision, covenant, or condition of
this Agreement, or the application thereof to any party or
circumstance, shall be held to be invalid or unenforceable (in
whole or in part) for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Agreement had been executed with
the invalid or unenforceable portion eliminated, so long as this
Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject
matter of this Agreement and the deletion of such portion of this
Agreement will not substantially impair the respective benefits
or expectations of the parties.
The parties shall endeavor to engage in good faith negotiations
to replace any invalid or unenforceable term, provision, covenant
or condition with a valid or enforceable term, provision,
covenant or condition, the economic effect of which comes as
close as possible to that of the invalid or unenforceable term,
provision, covenant or condition.
(j) RECORDING OF CONVERSATIONS. Each party (i) consents to the
recording of telephone conversations between the trading,
marketing and other relevant personnel of the parties in
connection with this Agreement or any potential Transaction, (ii)
agrees to obtain any necessary consent of, and give any necessary
notice of such recording to, its relevant personnel and (iii)
agrees,
Page 9 of 20
to the extent permitted by applicable law, that recordings may be
submitted in evidence in any Proceedings.
(k) WAIVER OF JURY TRIAL. Each party waives any right it may have to
a trial by jury in respect of any Proceedings relating to this
Agreement or any Credit Support Document.
(l) NON-RECOURSE. Notwithstanding any provision herein or in the ISDA
Form Master Agreement to the contrary, the obligations of the
Counterparty hereunder are limited recourse obligations of the
Counterparty, payable solely from the Trust Fund and the proceeds
thereof to satisfy the Counterparty's obligations hereunder. In
the event that the Trust Fund and proceeds thereof should be
insufficient to satisfy all claims outstanding and following the
realization of the Trust Fund and the distribution of the
proceeds thereof in accordance with the Pooling and Servicing
Agreement, any claims against or obligations of the Counterparty
under the ISDA Form Master Agreement or any other confirmation
thereunder, still outstanding shall be extinguished and
thereafter not revive. This provision shall survive the
expiration of this Agreement.
(m) LIMITATION ON INSTITUTION OF BANKRUPTCY PROCEEDINGS. BNY shall
not institute against or cause any other person to institute
against, or join any other person in instituting against the
Counterparty, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, under any of the laws of
the United States or any other jurisdiction, for a period of one
year and one day (or, if longer, the applicable preference
period) following indefeasible payment in full of the
Certificates. This provision shall survive the expiration of this
Agreement.
(n) REMEDY OF FAILURE TO PAY OR DELIVER. The ISDA Form Master
Agreement is hereby amended by replacing the word "third" in the
third line of Section 5(a)(i) by the word "second".
(o) "AFFILIATE" will have the meaning specified in Section 14 of the
ISDA Form Master Agreement, provided that the Counterparty shall
not be deemed to have any Affiliates for purposes of this
Agreement, including for purposes of Section 6(b)(ii).
(p) TRUSTEE'S CAPACITY. It is expressly understood and agreed by the
parties hereto that insofar as this Confirmation is executed by
the Trustee (i) this Confirmation is executed and delivered by
LaSalle Bank National Association, not in its individual capacity
but solely as Trustee pursuant to the Pooling and Servicing
Agreement in the exercise of the powers and authority conferred
and vested in it thereunder and pursuant to instruction set forth
therein (ii) each of the representations, undertakings and
Page 10 of 20
agreements herein made on behalf of the trust is made and
intended not as a personal representation, undertaking or
agreement of the Trustee but is made and intended for the purpose
of binding only the Counterparty, and (iii) under no
circumstances will LaSalle Bank National Association, 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.
(q) TRUSTEE'S REPRESENTATION. LaSalle Bank National Association, as
Trustee, represents and warrants that:
It has been directed under the Pooling and Servicing Agreement to
enter into this letter agreement as Trustee on behalf of the
Counterparty.
(r) AMENDMENT TO POOLING AND SERVICING AGREEMENT. Notwithstanding any
provisions to the contrary in the Pooling and Servicing
Agreement, none of the Depositor, the Servicer or the Trustee
shall enter into any amendment thereto which could have a
material adverse affect on BNY without the prior written consent
of BNY.
6) ADDITIONAL REPRESENTATIONS. Section 3 is hereby amended, by
substituting for the words "Section 3(f)" in the introductory sentence
thereof the words "Sections 3(f) and 3(i)" and by adding, at the end
thereof, the following Sections 3(g), 3(h) and 3(i):
"(g) RELATIONSHIP BETWEEN PARTIES.
(1) NONRELIANCE. It is not relying on any statement or
representation of the other party regarding the Transaction
(whether written or oral), other than the representations
expressly made in this Agreement or the Confirmation in
respect of that Transaction.
(2) EVALUATION AND UNDERSTANDING.
(i) Each Party acknowledges that LaSalle Bank National
Association, has been directed under the Pooling and
Servicing Agreement to enter into this Transaction as
Trustee on behalf of the Counterparty.
(ii) It is acting for its own account and has the capacity
to evaluate (internally or through independent
professional advice) the Transaction and has made its
own decision to enter into the Transaction; it is, not
relying on any communication (written or oral) of the
other party as
Page 11 of 20
investment advice or as a recommendation to enter into
such transaction; it being understood that information
and explanations related to the terms and conditions of
such transaction shall not be considered investment
advice or a recommendation to enter into such
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
the transaction; and
(iii) It understands the terms, conditions and risks of the
Transaction and is willing and able to accept those
terms and conditions and to assume (and does, in fact
assume) those risks, financially and otherwise.
(3) PRINCIPAL. The other party is not acting as a fiduciary or
an advisor for it in respect of this Transaction.
(h) EXCLUSION FROM COMMODITIES EXCHANGE ACT. (A) It is an "eligible
contract participant" within the meaning of Section la(12) of the
Commodity Exchange Act, as amended; (B) this Agreement and each
Transaction is subject to individual negotiation by such party;
and (C) neither this Agreement nor any Transaction will be
executed or traded on a "trading facility" within the meaning of
Section la(33) of the Commodity Exchange Act, as amended.
(i) ERISA (PENSION PLANS). It is not a pension plan or employee
benefits plan and it is not using assets of any such plan or
assets deemed to be assets of such a plan in connection with this
Transaction.
7) SET-OFF. Notwithstanding any provision of this Agreement or any other
existing or future agreement (but without limiting the provisions of
Section 2(c) and Section 6, except as provided in the next sentence),
each party irrevocably waives any and all rights it may have to set
off, net, recoup or otherwise withhold or suspend or condition payment
or performance of any obligation between it and the other party
hereunder against any obligation between it and the other party under
any other agreements. The last sentence of the first paragraph of
Section 6(e) shall not apply for purposes of this Transaction.
8) ADDITIONAL TERMINATION EVENTS. The following Additional Termination
Events will apply, in each case with respect to the Counterparty as
the sole Affected Party (unless otherwise provided below):
(i) DOWNGRADE. BNY fails to comply with the Downgrade Provisions as
set forth in Paragraph 4(9). BNY shall be the sole Affected
Party.
Page 12 of 20
(ii) TERMINATION OF TRUST FUND. The Trust Fund shall be terminated
pursuant to any provision of the Pooling and Servicing Agreement.
The Early Termination Date shall be the Distribution Date upon
which final payment is made in respect of the Certificates.
(iii) FAILURE TO PROVIDE INFORMATION REQUIRED BY REGULATION AB. If the
Depositor under the Pooling and Servicing Agreement still has a
reporting obligation with respect to this Transaction pursuant to
Regulation AB under the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended ("REGULATION AB")
and BNY has not, within 30 days after receipt of a Swap
Disclosure Request complied with the provisions set forth below
in this Paragraph 4(8)(iii) (provided that if the significance
percentage reaches 10% after a Swap Disclosure Request has been
made to BNY, BNY must comply with the provisions set forth below
in this Section 4(8)(iii) within 10 days of BNY being informed of
the significance percentage reaching 10%), then an Additional
Termination Event shall have occurred with respect to BNY and BNY
shall be the sole Affected Party with respect to such Additional
Termination Event.
BNY acknowledges that for so long as there are reporting
obligations with respect to this Transaction under Regulation AB,
the Depositor is required under Regulation AB to disclose certain
information set forth in Regulation AB regarding BNY or its group
of affiliated entities, if applicable, depending on the aggregate
"significance percentage" of this Agreement and any other
derivative contracts between BNY or its group of affiliated
entities, if applicable, and the Counterparty, as calculated from
time to time in accordance with Item 1115 of Regulation AB.
If the Depositor determines, reasonably and in good faith, that
the significance percentage of this Agreement has increased to
nine (9) percent, then the Depositor may request on a Business
Day after the date of such determination from BNY the same
information set forth in Item 1115(b) of Regulation AB that
would have been required if the significance percentage had in
fact increased to ten (10) percent (such request, a "SWAP
DISCLOSURE REQUEST" and such requested information, subject to
the last sentence of this paragraph, is the "SWAP FINANCIAL
DISCLOSURE"). The Counterparty or the Depositor shall provide BNY
with the calculations and any other information reasonably
requested by BNY with respect to the Depositor's determination
that led to the Swap Disclosure Request. The parties hereto
further agree that the Swap Financial Disclosure provided to meet
the Swap Disclosure Request may be, solely at BNY's option,
either the information set forth in Item 1115(b)(l) or Item
1115(b)(2) of Regulation AB.
Upon the occurrence of a Swap Disclosure Request, BNY, at its own
expense, shall (x) provide the Depositor with the Swap Financial
Page 13 of 20
Disclosure, or (y) subject to Rating Agency Confirmation, secure
another entity to replace BNY as party to this Agreement on terms
substantially similar to this Agreement which entity is able to
provide the Swap Financial Disclosure. If permitted by Regulation
AB, any required Swap Financial Disclosure may be provided by
incorporation by reference from reports filed pursuant to the
Securities Exchange Act.
9) PROVISIONS RELATING TO DOWNGRADE OF BNY DEBT RATINGS.
(i) CERTAIN DEFINITIONS.
(A) "RATING AGENCY CONDITION" means, with respect to any
particular proposed act or omission to act hereunder, that
the Trustee shall have received prior written confirmation
from each of the applicable Rating Agencies, and shall have
provided notice thereof to BNY, that the proposed action or
inaction would not cause a downgrade or withdrawal of their
then-current ratings of the Certificates.
(B) "QUALIFYING RATINGS" means, with respect to the debt of any
assignee or guarantor under Paragraph 4(9)(ii) below,
(x) a short-term unsecured and unsubordinated debt rating of
"P-1" (not on watch for downgrade), and a long-term
unsecured and unsubordinated debt of "Al" (not on watch for
downgrade) (or, if it has no short-term unsecured and
unsubordinated debt rating, a long term rating of "Aa3" (not
on watch for downgrade) by Xxxxx'x, and
(y) a short-term unsecured and unsubordinated debt rating of
"A-1" by S&P, and
(z) a short-term unsecured and unsubordinated debt rating of
"F-1" by Fitch.
(C) A "COLLATERALIZATION EVENT" shall occur with respect to BNY
(or any applicable credit support provider) if:
(x) its short-term unsecured and unsubordinated debt rating
is reduced to "P-l" (and is on watch for downgrade) or
below, and its long-term unsecured and unsubordinated debt
is reduced to "Al" (and is on watch for downgrade) or below
(or, if it has no short-term unsecured and unsubordinated
debt rating, its long term rating is reduced to "Aa3" (and
is on watch for downgrade) or below) by Xxxxx'x, or
(y) its short-term unsecured and unsubordinated debt rating
is reduced below "A-l" by S&P; or
(z) its short-term unsecured and unsubordinated debt rating
is reduced below "F-l" by Fitch.
Page 14 of 20
(D) A "RATINGS EVENT" shall occur with respect to BNY (or any
applicable credit support provider) if:
(x) its short-term unsecured and unsubordinated debt rating
is withdrawn or reduced to "P-2" or below by Xxxxx'x and its
long-term unsecured and unsubordinated debt is reduced to
"A3" or below (or, if it has no short-term unsecured and
unsubordinated debt rating, its long term rating is reduced
to "A2" or below) by Xxxxx'x, or
(y) its long-term unsecured and unsubordinated debt rating
is withdrawn or reduced below "BBB-" by S&P, or
(z) its long-term unsecured and unsubordinated debt rating
is withdrawn or reduced below "BBB-" by Fitch.
For purposes of (C) and (D) above, such events include those occurring in
connection with a merger, consolidation or other similar transaction by BNY
or any applicable credit support provider, but they shall be deemed not to
occur if, within 30 days (or, in the case of a Ratings Event, 10 Business
Days) thereafter, each of the applicable Rating Agencies has reconfirmed
the ratings of the Certificates, as applicable, which were in effect
immediately prior thereto. For the avoidance of doubt, a downgrade of the
rating on the Certificates could occur in the event that BNY does not post
sufficient collateral.
(ii) ACTIONS TO BE TAKEN UPON OCCURRENCE OF EVENT. Subject, in each case
set forth in (A) and (B) below, to satisfaction of the Rating Agency
Condition:
(A) COLLATERALIZATION EVENT. If a Collateralization Event occurs with
respect to BNY (or any applicable credit support provider), then
BNY shall, at its own expense, within thirty (30) days of such
Collateralization Ratings Event:
(1) post collateral under agreements and other instruments
approved by the Counterparty, such approval not to be
unreasonably withheld, which will be sufficient to
restore the immediately prior ratings of the
Certificates,
(2) assign the Transaction to a third party, the ratings of
the debt of which (or of the guarantor of which) meet
or exceed the Qualifying Ratings, on terms
substantially similar to this Confirmation, which party
is approved by the Counterparty, such approval not to
be unreasonably withheld,
(3) obtain a guaranty of, or a contingent agreement of,
another person, the ratings of the debt of which (or of
the guarantor of which) meet or exceed the Qualifying
Ratings, to honor BNY's obligations under this
Agreement, provided that such other person is approved
by the Counterparty, such approval not to be
unreasonably withheld, or
Page 15 of 20
(4) establish any other arrangement approved by the
Counterparty, such approval not to be unreasonably
withheld, which will be sufficient to restore the
immediately prior ratings of their Certificates.
(B) RATINGS EVENT. If a Ratings Event occurs with respect to BNY (or
any applicable credit support provider), then BNY shall, at its
own expense, within ten (10) Business Days of such Ratings Event:
(1) assign the Transaction to a third party, the ratings of
the debt of which (or of the guarantor of which) meet
or exceed the Qualifying Ratings, on terms
substantially similar to this Confirmation, which party
is approved by the Counterparty, such approval not to
be unreasonably withheld,
(2) obtain a guaranty of, or a contingent agreement of,
another person, the ratings of the debt of which (or of
the guarantor of which) meet or exceed the Qualifying
Ratings, to honor BNY's obligations under this
Agreement, provided that such other person is approved
by the Counterparty, such approval not to be
unreasonably withheld, or
(3) establish any other arrangement approved by the
Counterparty, such approval not to be unreasonably
withheld, which will be sufficient to restore the
immediately prior ratings of the Certificates.
10) ADDITIONAL PROVISIONS. Notwithstanding the terms of Sections 5 and 6
of the ISDA Form Master Agreement, if the Counterparty has satisfied
its payment obligations under Section 2(a)(i) of the ISDA Form Master
Agreement, and shall, at the time, have no future payment or delivery
obligation, whether absolute or contingent, then unless BNY is
required pursuant to appropriate proceedings to return to the
Counterparty or otherwise returns to the Counterparty upon demand of
the Counterparty any portion of such payment, (a) the occurrence of an
event described in Section 5(a) of the ISDA Form Master Agreement with
respect to the Counterparty shall not constitute an Event of Default
or Potential Event of Default with respect to the Counterparty as the
Defaulting Party and (b) BNY shall be entitled to designate an Early
Termination Date pursuant to Section 6 of the ISDA Form Master
Agreement only as a result of a Termination Event set forth in either
Section 5(b)(i) or Section 5(b)(ii) of the ISDA Form Master Agreement
with respect to BNY as the Affected Party or Section 5(b)(iii) of the
ISDA Form Master Agreement with respect to BNY as the Burdened Party.
11) RETURN OF AMOUNTS RECEIVED BY MLML OR ITS AFFILIATES. Xxxxxxx Xxxxx
Mortgage Lending, Inc. ("MLML") agrees and acknowledges that amounts
paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any
of its affiliates. If MLML or any
Page 16 of 20
of its affiliates receives any such amounts, it will promptly remit
(or, if such amounts are received by an affiliate of MLML, MLML hereby
agrees that it will cause such affiliate to promptly remit) such
amounts to the Trustee, whereupon such Trustee will promptly remit
such amounts to BNY. MLML further agrees to provide notice to BNY upon
any remittance to the Trustee.
12) BNY PAYMENTS TO BE MADE TO TRUSTEE. BNY will, unless otherwise
directed by the Trustee, make all payments hereunder to the Trustee.
Payment made to the Trustee at the account specified herein or to
another account specified in writing by the Trustee shall satisfy the
payment obligations of BNY hereunder to the extent of such payment.
5. ACCOUNT DETAILS AND SETTLEMENT INFORMATION:
Payments to BNY:
The Bank of New York
Derivative Products Support Department
00 Xxx Xxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
ABA #000000000
Account #000-0000-000
Reference: Interest Rate Swap
Payments to Counterparty:
LaSalle Bank N.A.
ABA #000000000
LaSalle CHGO/ CTR/BNF/LaSalle Trust
Ref Trust Acct#: 723786.2
Attn: Xxx Xxxxx, 000-000-0000
Page 17 of 20
6. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this agreement and returning it via facsimile to
Derivative Products Support Dept., Attn: Xxxxx Xx-Xxxxx at 000-000-0000/5837.
Once we receive this we will send you two original confirmations for execution.
Page 18 of 20
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
THE BANK OF NEW YORK
By: /s/ XXXXXX XXXXXXXX
---------------------------------
Name: XXXXXX XXXXXXXX
Title: Assistant Vice President
Page 19 of 20
The Counterparty, acting through its duly authorized signatory, xxxxxx agrees
to, accepts and confirms the terms of the foregoing as of the Trade Date.
XXXXXXX XXXXX MORTGAGE INVESTORS, INC. MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-HE3
BY: LASALLE BANK NATIONAL ASSOCIATION, NOT INDIVIDUALLY, BUT SOLELY AS TRUSTEE
ON BEHALF OF XXXXXXX XXXXX MORTGAGE INVESTORS, INC. MORTGAGE LOAN ASSET-BACKED
CERTIFICATES, SERIES 2006-HE3
By: /s/ XXXXX X. XXXX
---------------------------------
Name: XXXXX X. XXXX
Title: ASSISTANT VICE PRESIDENT
Solely with respect to Paragraph 4(11)
XXXXXXX XXXXX MORTGAGE LENDING, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Page 20 of 20
SCHEDULE I
All dates subject to adjustment in accordance with the Modified Following
Business Day Convention.
Accrual Start Dates Accrual End Dates Notional Amount (in USD) Cap Rate (%)
------------------- ----------------- ------------------------ ------------
6/22/2006 7/25/2006 427,819,000 7.302
7/25/2006 8/25/2006 424,188,840 7.773
8/25/2006 9/25/2006 419,357,202 7.775
9/25/2006 10/25/2006 413,330,692 8.034
10/25/2006 11/25/2006 406,111,104 7.775
11/25/2006 12/25/2006 397,715,914 8.035
