SCHEDULE
TO THE
MASTER AGREEMENT
DATED AS OF AUGUST 19, 1998
BETWEEN
XXXXXXX XXXXX CAPITAL SERVICES, INC., a corporation
organized under the laws of Delaware
("PARTY A")
and
NOVASTAR MORTGAGE FUNDING TRUST, SERIES 1998-2,
a Trust organized under the laws of Delaware
("PARTY B")
PART 1
TERMINATION PROVISIONS
In this Agreement:-
(a) "SPECIFIED ENTITY" means in relation to Party A for the
purpose of: -
Section 5(a) (v), Not Applicable
Section 5(a) (vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b) (iv), Not Applicable
in relation to Party B for the purpose of:-
Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b) (iv), Not Applicable
(b) "SPECIFIED TRANSACTION" will have the meaning specified in
Section 14 of this Agreement unless another meaning is specified
here: No change from Section 14.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will
apply to Party A and to Party B.
If such provisions apply: -
"SPECIFIED INDEBTEDNESS" will have the meaning specified in
Section 14 of this Agreement unless another meaning is specified
here: No change from Section 14.
"THRESHOLD AMOUNT" means, in respect of Party A, U.S. $35,000,000
or its equivalent in other currencies, and in respect of Party B,
U.S. $35,000,000 or its equivalent in other currencies.
(d) The "CREDIT EVENT UPON MERGER" provisions of Section
5(b)(iv) will apply to Party A and Party B. Notwithstanding
Section 5(b)(iv) of this Agreement, "Credit Event Upon Merger"
means that a Designated Event (as defined below) occurs with
respect to a parry, any Credit Support Provider of such party or
any Specified Entity of such party and such action does not
constitute an event described in Section 5(a) (viii) but that, in
the reasonable opinion of the other party, the creditworthiness
of the successor, surviving or transferee entity taking into
account any applicable Credit Support Document (which will be the
Affected Party) is materially weaker than that of its
predecessor, immediately prior to the occurrence of the
Designated Event. For purposes hereof, a Designated Event means
that, after the Trade Date of a Transaction:
(i) the party consolidates or amalgamates with, or
merges with or into, or transfers all or
substantially all its assets (or any substantial
part of the assets comprising the business
conducted by that party as of the Trade Date of
that Transaction) to, or receives all or
substantially all the assets and obligations of,
another entity;
(ii) any person or entity acquires directly or
indirectly the beneficial ownership of equity
securities having the power to elect a majority of
the board of directors of the party; or
(iii) the party enters into any agreement providing for
any of the foregoing.
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a)
will not apply to Party A or to Party B.
(f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section
6(e) of this Agreement: -
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means United States Dollars.
(h) ADDITIONAL TERMINATION EVENT will not apply.
PART 2
TAX REPRESENTATIONS
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of
this Agreement, Party A will make the following representation
and Party B will make the following representation:-
It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of
any Relevant Jurisdiction to make any deduction or
withholding for or on account of any Tax from any payment
(other than interest under Section 2(e), 6(d) (ii) or 6(e)
of this Agreement) to be made by it to the other party under
this Agreement. In making this representation, it may rely
on (i) the accuracy of any representations made by the other
party pursuant to Section 3(f) of this Agreement, (ii) the
satisfaction of the agreement contained in Section 4(a)(i)
or 4(a)(iii) of this Agreement and the accuracy and
effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a) (iii) of this Agreement
and (iii) the satisfaction of the agreement of the other
party contained in Section 4(d) of this Agreement, provided
that it shall not be a breach of this representation where
reliance is placed on clause (ii) and the other party does
not deliver a form or document under Section 4(a)(iii) by
reason of material prejudice to its legal or commercial
position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f) of
this Agreement, Party A and Party B make the representations
specified below:-
(i) The following representation WILL NOT apply to
Party A and WILL NOT apply to Party B:-
It is fully eligible for the benefits of the
"Business Profits" or "Industrial and Commercial
Profits" provision, as the case may be, the
"Interest" provision or the "Other Income"
provision (if any) of the Specified Treaty with
respect to any payment described in such
provisions and received or to be received by it in
connection with this Agreement and no such payment
is attributable to a trade or business carried on
by it through a permanent establishment in the
Specified Jurisdiction.
PART 3
DOCUMENTS TO BE DELIVERED
For the purpose of Sections 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:-
None.
(b) Other Documents to be delivered are: -
PARTY REQUIRED FORM/DOCUMENT/ DATE BY COVERED BY SECTION
TO DELIVER CERTIFICATE WHICH TO 3(D)REPRESENTATION
DOCUMENT BE DELIVERED
Party A/ Annual audited financial Promptly Yes.
Party B. statements (in the case of after request.
Party A, of its Credit Sup-
port Provider) prepared in
accordance with generally
accepted accounting
principles in the country
in which the party is
organized.
Party A/ Quarterly unaudited xxxxx- Promptly Yes.
Party B. cial statements (in the case after request.
of Party A, of its Credit
Support Provider) prepared in
accordance with generally
accepted accounting principles
in the country in which the
party is organized.
Party A/ A duly executed copy of the At execution No.
Party B. Credit Support Document hereof.
specified in Part 4 of the
Schedule.
Party A. Opinion of inside counsel At the execution No.
in respect of this Agree- of this Agreement.
ment and Party A's Credit
Support Document.
PART 4
MISCELLANEOUS
(a) ADDRESSES FOR NOTICES: For the purpose of Section 12(a) of
this Agreement:-
Address for notices or communications to Party A:-
Address: Xxxxxxx Xxxxx World Headquarters, World Financial
Center, North Tower, 22nd Floor, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Swap Group
Telex No.: 6716341 Answerback: MLB SCTR
Facsimile No.: 000 000-0000 Telephone No.: 000 000-0000
(For all purposes)
Additionally, a copy of all notices pursuant to Sections 5,6 and
7 as well as any changes to Party B's address, telephone number
or facsimile number should be sent to:
CICG Counsel
Xxxxxxx Xxxxx World Headquarters, World Financial Center,
North Tower, 23rd Floor
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Swaps Legal
Facsimile No.: 000 000-0000
Address for notices or communications to Party B:-
NovaStar Mortgage Funding Trust, Series 1998-2
c/o Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTN: Corporate Trust Administration
Facsimile: (000) 000-0000,
with copies to:
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx, XX 1179
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
ATTN: Corporate Trust Administration
Facsimile: (000) 000-0000; and
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
ATTN: Insured Portfolio Mgmt -SF (NovaStar Mortgage Funding
Trust, Series 1998-2)
Facsimile: (000) 000-0000
(For all purposes)
(b) PROCESS AGENT. For the purpose of Section 13(c):-
Party A appoints as its Process Agent: Not Applicable
Party B appoints as its Process Agent: Not Applicable
(c) OFFICES. The provisions of Section 10(a) will apply to this
Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of
this Agreement:
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A,
unless otherwise specified in a Confirmation in relation to the
relevant Transaction.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support
Document:-
Party A:- Guarantee of Xxxxxxx Xxxxx & Co., Inc. ("ML & Co.") in
the form attached hereto as Exhibit A.
Party B:- The Swap Policy (as defined below) and the Indenture,
dated as of August 19, 1998 (the "Indenture"), between Party B
and First Union National Bank, as Indenture Trustee.
(g) CREDIT SUPPORT PROVIDER.
Credit Support Provider means in relation to Party A, ML & Co.
Credit Support Provider means 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 choice of law doctrine.
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of
this Agreement will not apply to all Transactions under this
Agreement following 15 days prior notice from one party to the
other.
(j) "AFFILIATE" will have the meaning specified in Section 14 of
this Agreement.
PART 5
OTHER PROVISIONS
(1) Section 3 of the Agreement is hereby amended by adding at
the end thereof the following subsection (g):
"(g) ELIGIBLE SWAP PARTICIPANT. It is an "eligible swap
participant" within the meaning of Part 35.1 (b)(2) of the
General Regulations under the Commodity Exchange Act."
(2) Notwithstanding the provisions of Section 7, Party A may
assign and delegate its rights and obligations under any
Transaction to any subsidiary of ML & Co. organized under the
laws of any State of the United States of America effective upon
delivery to Party B of an assumption by such subsidiary and a
Guarantee of the obligations of such subsidiary in the form of
Exhibit A hereto.
(3) Without affecting the provisions of this Agreement requiring
the calculation of certain net payment amounts, all payments
under this Agreement will be made without setoff or counterclaim;
provided, however, that upon the designation or deemed
designation of any Early Termination Date, in addition to and not
in limitation of any other right or remedy (including any right
to setoff, counterclaim, or otherwise withhold payment) under
applicable law:
the non-Defaulting Party or non-Affected Party (in either
case, "X") may set off any sum or obligation arising under
this Agreement (whether matured or unmatured) owed or due by
the Defaulting Party or Affected Party (in either case, "Y")
to X against any sum or obligation arising under this
Agreement (whether matured or unmatured) owed or due by X
(the "Original Obligation") to Y, and, for this purpose, may
convert one currency into another. Any such setoff shall
automatically satisfy and discharge the Original Obligation
and the obligation so set off and, if the Original
Obligation exceeds the sum or obligation to be set off
against, the Original Obligation shall be novated and
replaced by an obligation to pay Y only the excess of the
Original Obligation over such sum or obligation.
(4) If by reason of the time difference between the cities in
which payments are to be made, it is not possible for
simultaneous payments to be made on any date on which both
parties are required to make payments hereunder, either party may
at its option and in its sole discretion notify the other party
that payments on that date are to be made in escrow. In this case
deposit of the payment due earlier on that date shall be made by
2:00 p.m. (local time at the place for the earlier payment) on
that date with an escrow agent selected by the notifying party,
accompanied by irrevocable payment instruction (i) to release the
deposited payment to the intended recipient upon receipt by the
escrow agent of the required deposit of the corresponding payment
from the other party on the same date accompanied by irrevocable
payment instructions to the same effect or (ii) if the required
deposit of the corresponding payment is not made on that same
date, to return the payment deposited to the party that paid it
in escrow. The party that elects to have payments made in escrow
shall pay the costs of the escrow arrangements and shall cause
those arrangements to provide that the intended recipient of the
payment due to be deposited first shall be entitled to interest
on that deposited payment for each day in the period of its
deposit at the rate offered by the escrow agent for that day for
overnight deposits in the relevant currency in the office where
it holds that deposited payment (at 11:00 a.m. local time on that
day) if that payment is not released by 5:00 p.m. local time on
the date it is deposited for any reason other than the intended
recipient's failure to make the escrow deposit it is required to
make hereunder in a timely fashion.
(5) Party B acknowledges and agrees that (i) Party A is acting
solely in the capacity of an arm's-length contractual
counterparty with respect to this Agreement and any Transaction
hereunder, (ii) Party A is not acting as a financial advisor or
fiduciary of Party B (or in any similar capacity) with respect to
this Agreement and any Transaction hereunder and (iii) any advice
given by Party A under or in connection with this Agreement or
any Transaction is and will be merely incidental to the provision
of Party A's services hereunder and does not and will not serve
as a primary basis of any investment decision by Party B. Party B
represents to Party A (which representation shall be deemed to be
repeated by Party B on each date on which a Transaction is
entered into) that its decision to enter into each Transaction
has been based solely on the independent evaluation of Party B
and its representatives.
PART 6
MBIA PROVISIONS
The following provisions shall apply to any Transactions to
which the Interest Rate Swap Insurance Policy issued on August
19, 1998 (the "Swap Policy") by MBIA Insurance Corporation
("MBIA"), for the account of Party B, as principal, and for the
benefit of Party A, as beneficiary, relates ("Insured
Transactions").
(i) Designation of Early Termination Date.
Notwithstanding anything to the contrary in
Section 6 of this Agreement, if any:
(A) Event of Default in respect of any Insured
Transaction under this Agreement occurs, or
(B) any Termination Event in respect of any
Insured Transaction under this Agreement
occurs (other than the Additional Termination
Event described at (iii) below),
then, in either case, neither Party A nor Party B shall designate
an Early Termination Date in respect of any such Insured
Transaction unless:
(Y) MBIA has failed to pay any payment due to
Party A under the terms and conditions of the
Swap Policy; or
(Z) MBIA has otherwise consented in writing to
such designation.
(ii) MBIA-directed termination. If any Event of Default
under this Agreement occurs with respect to Party
B as the Defaulting Party, then MBIA (so long as
it has not failed to pay any payment due to Party
A under the terms and conditions of the Swap
Policy) shall have the right (but not the
obligation) upon notice to Party A and Party B to
designate an Early Termination Date with respect
to Party B with the same effect as if such
designation were made by Party A. For purposes of
the foregoing sentence, an Event of Default with
respect to Party B shall be considered to be
continuing, notwithstanding any payment by MBIA
under the Swap Policy. The parties acknowledge
that, except as the Swap Policy may be otherwise
endorsed, unless MBIA designates an Early
Termination Date (as opposed to merely consenting
to such designation by one of the parties)
pursuant to its right to do so hereunder payments
due from Party B because an Early Termination Date
has been designated will not be insured.
(iii) Additional Termination Event. Additional
Termination Events will apply. The following shall
constitute an Additional Termination Event:
(A) MBIA fails to meet its payment obligations
under the Swap Policy and such failure is
continuing with respect to MBIA under the
Swap Policy; or
(B) MBIA fails at any time during the term of
this Agreement to have (a) a claim paying
ability rating of at least A- or higher from
Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc.
or (b) a financial strength rating of at
least A3 or higher from Xxxxx'x Investors
Service, Inc.; provided, however, that
additionally:
(X) an Event of Default has occurred or is
continuing with respect to Party B as
the Defaulting Party; or
(Y) a Termination Event has occurred or is
continuing with respect to Party B.
For the purpose of the foregoing Termination
Event, the "Affected Party" shall be Party B.
(C) The long-term senior unsecured debt rating of
Party A's Credit Support Provider from:
(a) S&P is withdrawn, suspended or falls to
or below "A-"; or
(b) Xxxxx'x is withdrawn, suspended or fails
to or below "A3"; and
Party A has not, within 30 days executed a
collateral agreement with Party B, MBIA and a
third-party collateral agent providing for the
collateralization of Party A's obligations under
the Agreement as measured by the estimated
Settlement Amount, such amount to be established
by Party A monthly and on demand, collateral to be
marked-to-market weekly; provided that the
collateral, collateral levels, collateral agent
and terms of such collateral agreement must all be
reasonably satisfactory to MBIA, it being
understood that cash and United States treasury
and agency securities shall be deemed reasonably
satisfactory to MBIA (a "Collateral Agreement").
For the purpose of the foregoing Termination
Event, the "Affected Party" shall be Party A.
(D) The long-term senior unsecured debt rating of
Party A's Credit Support Provider from (a)
S&P is withdrawn, suspended or falls to or
below "BBB+"; or (b) from Xxxxx'x is
withdrawn, suspended or falls to or below
"Baa1."
For the purpose of the foregoing Termination
Event, the "Affected Party" shall be Party A.
(iv) No suspension of payments. Notwithstanding Section
2(a)(iii) of this Agreement, Party A shall not
suspend any payments due under an Insured
Transaction under Section 2(a) (iii) unless:
(A) MBIA is in default in respect of any payment
obligations under the Swap Policy; or
(B) MBIA has not provided to Party A, in
accordance with the terms of this Agreement,
any ministerial notices (including, and
limited to, wire instructions for payments)
required by this Agreement to be provided by
Party B to Party A, which notices Party B has
failed to provide, and Party A has given
three (3) Business Days' notice to MBIA of
such failure.
(v) Collateral. If the long term senior unsecured debt
rating of Party A's Credit Support Provider from:
(a) S&P is withdrawn, suspended or falls to or
below "A-"; or
(b) Xxxxx'x is withdrawn, suspended or falls to
or below "A3"; and
then Party A will, within 30 days, execute a
Collateral Agreement with Party B, MBIA and a
third-party collateral agent.
(vi) Replacement. Party A agrees that if Party B or
MBIA has a right to designate an Early Termination
Date pursuant to Part 6 (iii) (C) or (D) above,
then, upon the request of MBIA or Party B with the
consent of MBIA, Party A shall procure a
replacement Transaction at its own expense (and at
no expense to Party B) with a swap counterparty on
the same terms as this Agreement mutatis mutandis,
or else with such amendments to the terms of this
Agreement as have been approved by S&P, Moody's
and MBIA.
(vii) Representations and agreements. Each party agrees
that each of its representations and agreements in
this Agreement is expressly made to and for the
benefit of MBIA.
(viii) Third-party beneficiary. Party A and Party B
hereby each acknowledge and agree that MBIA shall
be an express third-party beneficiary (and not
merely an incidental third-party beneficiary) of
this Agreement and the obligations of such party
under any Insured Transaction, and as such,
entitled to enforce the Agreement and the terms of
any such Insured Transaction against such party on
its own behalf and/or on behalf of the holders of
the Bonds (as defined in the Indenture referenced
above) and otherwise shall be afforded all
remedies available hereunder or otherwise afforded
by law against the parties hereto to redress any
damage or loss incurred by MBIA including, but not
limited to, fees (including professional fees),
costs and expenses incurred by MBIA which are
related to, or resulting from any breach by such
party of its obligations hereunder.
(ix) Policy coverage. Party A and Party B hereby each
acknowledge and agree that MBIA's obligation with
respect to Insured Transactions shall be limited
to the terms of the Swap Policy. Notwithstanding
Section 2(e) or any other provision of this
Agreement, MBIA shall not have any obligation to
pay interest on any amount payable by Party B
under this Agreement.
(x) Subrogation. Notwithstanding any other term of
this Agreement, Party A and Party B hereby
acknowledge that to the extent of payments made by
MBIA to Party A under the Swap Policy, MBIA shall
be fully subrogated to the rights of Party A
against Party B under the Insured Transaction to
which such payments relate, including, but not
limited to, the right to receive payment from
Party B and the enforcement of any remedies.
Notwithstanding any other term of this Agreement,
Party A hereby agrees to assign to MBIA its right
to receive payment from Party B under any Insured
Transactional the extent of any payment thereunder
by MBIA to Party A. Party B hereby acknowledges
and consents to the assignment by Party A to MBIA
of any rights and remedies that Party A has under
any Insured Transaction or any other document
executed in connection herewith.
(xi) Isolation of Insured Transactions in designating
an Early Termination Date. Notwithstanding Section
6 of this Agreement, any designation of an Early
Termination Date in respect of the Insured
Transactions by MBIA or by Party A with the
consent of MBIA pursuant to paragraph (i) above
shall apply only to the Insured Transactions and
not to any other Transaction under this Agreement,
unless Party A shall designate an Early
Termination Date in respect of such other
Transaction. Nothing contained in this paragraph
(xi) shall affect the rights of Party A under this
Agreement to designate an Early Termination Date
in respect of any Transaction other than the
Insured Transactions, which designation shall not
apply to the Insured Transactions unless expressly
provided in such designation and unless MBIA shall
have designated, or consented to the designation
by Party A of, an Early Termination Date in
respect of the Insured Transactions in accordance
with paragraph (i) above.
(xii) No netting. Notwithstanding Section 2(c) of this
Agreement, in no event shall either Party A or
Party B be entitled to net its payment obligations
in respect of the Insured Transactions against the
payment obligations of the other party in respect
of other Transactions under this Agreement if such
Transactions are not Insured Transactions, nor may
either Party A or Party B net the payment
obligations of the other party under Transactions
that are not Insured Transactions against the
payment obligations of such party under Insured
Transactions, it being the intention of the
parties that their payment obligations under
Insured Transactions be treated separate and apart
from all other Transactions. Section 6(e) of this
Agreement shall apply to all Insured Transactions
with the same effect as if the Insured
Transactions constituted a single master
agreement. Notwithstanding Section 6(e) of this
Agreement, the amount payable under Section 6(e)
of this Agreement upon the termination of any
Insured Transaction shall be determined without
regard to any Transactions other than the Insured
Transactions, it being the intention of the
parties that their payment obligations under the
Insured Transactions be treated separate and apart
from all other Transactions unless otherwise
specified in such other Transaction and agreed to
in writing by MBIA.
(xiii) No set-off or counterclaim. In no event shall
either Party A or Party B be entitled to:
(A) set-off its payment obligations in respect of
an Insured Transaction against the payment
obligations of the other party (whether by
counterclaim or otherwise) if such
obligations are not Insured Transactions, or
(B) net the payment obligations of the other
party that are not with respect to Insured
Transactions against the payment obligations
of such party under Insured Transactions,
it being the intention of the parties that
their payment obligations under Insured
Transactions be treated separate and apart
from all other obligations. Notwithstanding
Section 6(e) of this Agreement, the amount
payable under Section 6(e) of this Agreement
upon the termination of any Insured
Transaction shall be determined without
regard to any obligation other than those
under the Insured Transactions, it being the
intention of the parties that their payment
obligations under the Insured Transactions be
treated separate and apart from all other
obligations unless otherwise specified in
such other obligation and agreed to in
writing by MB IA.
(xiv) Expenses. Party B agrees to reimburse MBIA
immediately and unconditionally upon demand for
all reasonable expenses incurred by MBIA in
connection with the issuance of the Swap Policy
and the enforcement by MBIA of Party B's
obligations under this Agreement and any other
documents executed in connection with the
execution and delivery of this Agreement,
including, but not limited to, fees (including
professional fees), costs and expenses incurred by
MBIA which are related to, or resulting from any
breach by Party B of its obligations hereunder.
(xv) Transfers/Assignments. Notwithstanding Section 7
of the Agreement, no Insured Transaction may be
assigned by either Party A or Party B without the
prior written consent of MBIA. However Party A may
make such an assignment to an affiliate of Party A
without MBIA's prior written consent, if Party A
(or the entity currently guaranteeing the
obligations of Party A, if any) provides a
guaranty of the Swap, as assigned, acceptable to
MBIA (it being understood that a guaranty
substantially in the form of the guaranty
delivered to MBIA by Party A's Credit Support
Provider in connection with the execution of this
Agreement shall be acceptable).
(xvi) Amendments/waivers. Section 9(b) of the Agreement
is hereby amended by (A) adding the words "or any
Credit Support Document" after the word
"Agreement" in the first line thereof and (B)
adding the phrase "and MBIA" following the words
"parties" in the third line thereof.
(xvii) Notices. A copy of each notice or other
communication between the parties with respect to
this Agreement must be forwarded to MBIA.
(xviii) "Reference Market Makers." The definition of
"Reference Market-makers" set forth in Section 12
of the Agreement shall be amended in its entirety
to read as follows:
"Reference Market-makers" means four (4) leading
dealers in the relevant swap 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
dealers having an office in the same city. The
rating classification assigned to any outstanding
long-term senior debt securities issued by such
dealers shall be at least (1) "Aa" or higher as
determined by Xxxxx'x Investors Service Inc., (2)
"AA" or higher as determined by Standard & Poor's
Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc. or (3) an equivalent investment
grade rating determined by a nationally-recognized
rating service acceptable to both parties,
provided, however, that, in any case, if Market
Quotations cannot be determined by four (4) such
dealers, the party making the determination of the
Market Quotation may designate, with the consent
of the other party and MBIA, one (1) or more
leading dealers whose long-term senior debt bears
a lower investment grade rating.
GUARANTEE OF XXXXXXX XXXXX & CO., INC.
FOR VALUE RECEIVED, receipt of which is hereby
acknowledged, XXXXXXX XXXXX & CO., INC., a corporation duly
organized and existing under the laws of the State of Delaware
("ML & CO."), hereby unconditionally guarantees to NOVASTAR
MORTGAGE FUNDING TRUST, SERIES 1998-2 (the "Company"), its
successors and permitted assigns, the due and punctual payment of
any and all amounts payable by Xxxxxxx Xxxxx Capital Services,
Inc., a corporation organized under the laws of the State of
Delaware ("MLCS"), under the terms of the Master Agreement
between the Company and MLCS, dated as of August 19, 1998 (the
"Agreement"), including, in case of default, expenses of
collection, interest on any amount due, when and as the same
shall become due and payable, whether on the scheduled payment
dates, at maturity, upon declaration of termination or otherwise,
according to the terms thereof. In case of the failure of MLCS
punctually to make any such payment, ML & Co. hereby agrees to
make such payment, or cause such payment to be made, promptly
upon demand made by the Company to ML & Co.; provided, however,
that delay by the Company in giving such demand shall in no event
affect ML & Co.'s obligations under this Guarantee. This
Guarantee shall remain in full force and effect or shall be
reinstated (as the case may be) if at any time any payment
guaranteed hereunder, in whole or in part, is rescinded or must
otherwise be returned by the Company upon the insolvency,
bankruptcy or reorganization of MLCS or otherwise, all as though
such payment had not been made.
ML & Co. hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity
or enforceability of the Agreement; the absence of any action to
enforce the same; any waiver or consent by the Company concerning
any provisions thereof; the rendering of any judgment against
MLCS or any action to enforce the same; or any other
circumstances that might otherwise constitute a legal or
equitable discharge of a guarantor or a defense of a guarantor.
ML & Co. covenants that this guarantee will not be discharged
except by complete payment of the amounts payable under the
Agreement. This Guarantee shall continue to be effective if MLCS
merges or consolidates with or into another entity, loses its
separate legal identity or ceases to exist.
ML & Co. hereby waives diligence; presentment; protest;
notice of protest, acceleration, and dishonor; filing of claims
with a court in the event of insolvency or bankruptcy of MLCS;
all demands whatsoever, except as noted in the first paragraph
hereof; and any right to require a proceeding first against MLCS.
ML & Co. further waives any right of subrogation to the rights of
the Company until such time as all obligations of MLCS to the
Company under the Agreement have been discharged in full.
ML & Co. hereby certifies and warrants that this
Guarantee constitutes the valid obligation of ML & Co. and
complies with all applicable laws.
This Guarantee shall be governed by, and construed in
accordance with, the laws of the State of New York.
This Guarantee may be terminated at any time by notice
by ML & Co. to the Company given in accordance with the notice
provisions of the Agreement, effective upon receipt of such
notice by the Company or such later date as may be specified in
such notice; provided, however, that this Guarantee shall
continue in full force and effect with respect to any obligation
of MLCS under the Agreement entered into prior to the
effectiveness of such notice of termination.
This Guarantee becomes effective concurrent with the
effectiveness of the Agreement, according to its terms.
IN WITNESS WHEREOF, ML & Co. has caused this Guarantee
to be executed in its corporate name by its duly authorized
representative.
XXXXXXX XXXXX & CO., INC.
By: _______________________
Name:
Title:
Date: As of August 19, 1998
World Financial Center
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Telex: 671 6341 MLB SCTR
Debt Markets Division
XXXXXXX XXXXX Global Swap Group
Date: 18 AUGUST 1998
TO: NOVASTAR MORTGAGE FUNDING TRUST SERIES 1998-2
FROM: XXXXXXX XXXXX CAPITAL SERVICES, INC.
RE: TRANSACTION - REFERENCE 98DL2709
Dear Sirs:
The purpose of this communication is to set forth the terms
and conditions of the Transaction entered into between Xxxxxxx
Xxxxx Capital Services, Inc. (MLCS) and Novastar Mortgage Funding
Trust Series 1998-2 ("Counterparty"), on the Trade Date specified
below (the "Transaction"). This communication constitutes a
"Confirmation" as referred to in the Agreement specified below.
THIS FACSIMILE TRANSMISSION WILL BE THE ONLY WRITTEN
COMMUNICATION REGARDING THIS TRANSACTION EXCHANGE BETWEEN US,
UNLESS YOU REQUEST THAT WE SIGN HARD COPY VERSIONS OF THIS
CONFIRMATION. PLEASE CONTACT THE INDIVIDUAL INDICATED IN THE
LAST PARAGRAPH OF THIS LETTER TO RECEIVE SUCH COPIES.
PLEASE SIGN AND RETURN THIS CONFIRMATION AT YOUR EARLIEST
CONVENIENCE. BECAUSE OF THE IMPORTANCE OF CONFIRMING
TRANSACTIONS PROMPTLY AND ACCURATELY, WE REGRET THAT ANY
CONFIRMATIONS WHICH ARE NOT SIGNED AND RETURNED WITHIN TEN DAYS
MAY RESULT IN A DELAY IN PAYMENTS.
This Confirmation incorporates the definitions and
provisions contained in the 1991 ISDA Definitions, as published
by the International Swap Dealers Association, Inc. ("ISDA") (the
"Definitions"). The Definitions shall apply to this
communication even if the Agreement between the parties
incorporates the provisions of the 1985 ISDA Code of Swaps, the
1986 ISDA Code of Swaps, or the 1987 Interest Rate and Currency
Exchange Definitions. In the event of any inconsistency between
this Confirmation and the Agreement or the Definitions, the terms
of this Confirmation shall govern this Agreement.
1. This Confirmation supplements, forms part of, and is
subject to, the ISDA Master Agreement dated as of August 19,
1998, 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.
2. The terms of this particular Transaction to which this
Confirmation relates are as follows:
Type of Transaction: Rate Cap Transaction
Notional Amount: USD 60,000,000.00
Trade Date: 18 August 1998
Effective Date: 19 August 1998
Termination Date: 23 March 2001
Fixed Amounts:
Fixed Rate Payer: Counterparty
Fixed Rate Payer
Payment Dates: 23 March, 23 June, 23 September and
23 December in each year,
commencing on 23 September 1998,
and ending on the Termination Date,
inclusive, subject to adjustment in
accordance with the Modified
Following Business Day Convention
Fixed Rate Payer initial
Calculation Period: From and including 23 June 1998, to
but excluding 23 September 1998,
subject to adjustment in accordance
with the Modified Following
Business Day Convention
Fixed Rate: 0.3690%
Fixed Rate Day
Count Fraction: Actual/360
Floating Amounts:
Floating Rate Payer: MLCS
Cap Rate: 5.75%
Floating Rate Payer
Payment Dates: 23 March, 23 June, 23 September and
23 December in each year,
commencing on 23 September 1998,
and ending on the Termination Date,
inclusive, subject to adjustment in
accordance with the Modified
Following Business Day Convention
Floating Rate Payer initial
Calculation Period: From and including 23 June 1998, to
but excluding 23 September, 1998,
subject to adjustment in accordance
with the Modified Following
Business Day Convention
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: Three months
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Floating Rate
Payer Calculation Period
Rate Cut-off Dates: Inapplicable
Method of Averaging: Inapplicable
Compounding: Inapplicable
Calculation Agent: MLCS
Business Days: New York, London
3. Account Details
Payment to MLCS: BANKERS TRUST COMPANY, NEW YORK, NY
(FED. ABA: 000000000)
FAO: XXXXXXX XXXXX CAPITAL
SERVICES, INC.
DOLLAR SWAPS, NEW YORK, NY
A/C#: 00-000-000
Payments to
Counterparty: Please advise
Please confirm that the foregoing correctly sets forth the terms
of our agreement by executing this Confirmation and returning it
to us by facsimile transmission on (000) 000 0000, Attention:
Xxxxx Xxxxx, telephone: (000) 000 0000.
Very truly yours,
XXXXXXX XXXXX CAPITAL SERVICES, INC.
By: __________________________________
Authorized Signatory
Accepted and confirmed as
of the Trade Date written above:
NOVASTAR MORTGAGE FUNDING TRUST SERIES 1998-2
By: ________________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President
ACCOUNT DETAILS
Payments to NatWest For account of NatWest Bank Group
Swaps Book [SWIFT NWIB GP2P SWP]
with Chase Manhattan Bank, New York
Account Number 0011009156 CHIPS
273948 [XXXXX XXXX US 33]
Payments to Counterparty Please advise in return
Confirmation
OFFICES
The Office of Counterparty for the Transaction is Westwood,
Kansas.
The Office of NatWest for the Transaction is London.
Broker/Arranger Greenwich Capital Markets, Inc.
Representations and Warranties
To induce the other to enter into the Transaction, each party
represents and warrants to the other that (i) it is an "eligible
swap participant" as such term is defined in Section 35.1(b)(2)
of the Regulations (17 CFR 35) promulgated under the Commodity
Exchange Act, as amended and it has entered into this Transaction
in conjunction with its line of business (including financial
intermediation services) or the financing of business, (ii) it is
acting for its own account, and it has made its own independent
decisions to enter into this Transaction and as to whether this
Transaction is appropriate or proper for it based upon its own
judgement and upon advice from such advisers as it has deemed
necessary, (iii) it is not relying on any communication (written
or oral) of the other party as investment advice or as a
recommendation to enter into this Transaction (it being
understood that information and explanation related to the terms
and conditions of this Transaction shall not be considered
investment advice or a recommendation to enter into this
Transaction), (iv) 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 this Transaction, (v) it
is capable of assessing the merits of and understanding (on its
own behalf or through independent professional advice), and
understand and accepts, the terms, conditions and risks of this
Transaction, and it is capable of assuming, and assumes, the risk
of this Transaction, and (vi) the other party is not acting as
fiduciary for or an adviser to it in respect of this Transaction.
This Transaction has been entered into by Greenwich Capital
Markets, Inc., as agent for NatWest Capital Markets Limited,
regulated by the Securities and Futures Authority, which itself
acts as agent for National Westminster Bank PLC, regulated by
IMRO. Your transactions with National Westminster Bank PLC in
Schedule 5 instruments are at present exempt from the Financial
Services Xxx 0000 but are subject to the Bank of England's London
Code of Conduct.
NatWest Capital Markets Limited shall act as settlement agent on
behalf of National Westminster Bank Plc in respect of this
Transaction.
This Confirmation is in final form. No hard copy will follow.
Please ensure that you respond promptly to this Confirmation. If
you disagree with any part of it please telephone the sender so
that the discrepancy may be quickly resolved.
We are pleased to have completed this Rate Protection Transaction
and look forward to dealing with you again in the near future.
Please confirm that the foregoing correctly sets forth the terms
of our agreement by a return document to Greenwich Capital
Markets, Inc. substantially to the following effect:
"Re Our Xxx XX00000
We acknowledge receipt of your document dated 5 August 1998 with
respect to the above-referenced Transaction between National
Westminster Bank PLC and Novastar Mortgage Fund Trust 98-2. with
an Effective Date of 26 March 2001 and a Termination Date of 26
June 2003 and confirm that such document correctly sets forth the
terms of our agreement relating to the Transaction described
therein. Yours faithfully, Novastar Mortgage Fund Trust 98-2.,
by (specify name and title of authorised officer)."
Confirmed as of the Confirmed as of the
date first written date first written
Name: Xxxxxxxxx X. Xxxxxx Name:
Title: Vice President Title:
Greenwich Capital Markets, Inc. Novastar Mortgage Fund Trust
As Agent as stated above 98-2
World Financial Center
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Telex: 671 6341 MLB SCTR
Debt Markets Division
XXXXXXX XXXXX Global Swap Group
Date: 18 AUGUST 1998
TO: NOVASTAR MORTGAGE FUNDING TRUST SERIES 1998-2
FROM: XXXXXXX XXXXX CAPITAL SERVICES, INC.
RE: TRANSACTION - REFERENCE 98DL2708
Dear Sirs:
The purpose of this communication is to set forth the terms
and conditions of the Transaction entered into between Xxxxxxx
Xxxxx Capital Services, Inc. (MLCS) and Novastar Mortgage Funding
Trust Series 1998-2 ("Counterparty"), on the Trade Date specified
below (the "Transaction"). This communication constitutes a
"Confirmation" as referred to in the ISDA Master Agreement
specified below.
THIS FACSIMILE TRANSMISSION WILL BE THE ONLY WRITTEN
COMMUNICATION REGARDING THIS TRANSACTION EXCHANGED BETWEEN US,
UNLESS YOU REQUEST THAT WE SIGN HARD COPY VERSIONS OF THIS
CONFIRMATION. PLEASE CONTACT THE INDIVIDUAL INDICATED IN THE
LAST PARAGRAPH OF THIS LETTER TO RECEIVE SUCH COPIES.
PLEASE SIGN AND RETURN THIS CONFIRMATION AT YOUR EARLIEST
CONVENIENCE. BECAUSE OF THE IMPORTANCE OF CONFIRMING
TRANSACTIONS PROMPTLY AND ACCURATELY, WE REGRET THAT ANY
CONFIRMATIONS WHICH ARE NOT SIGNED AND RETURNED WITHIN TEN DAYS
MAY RESULT IN A DELAY IN PAYMENTS.
This Confirmation incorporates the definitions and
provisions contained in the 1991 ISDA Definitions, as published
by the International Swap Dealers Association, Inc. ("ISDA") (the
"Definitions"). The Definitions shall apply to this
communication even if the Agreement between the parties
incorporates the provisions of the 1985 ISDA Code of Swaps, the
1986 ISDA Code of Swaps, or the 1987 Interest Rate and Currency
Exchange Definitions. In the event of any inconsistency between
this Confirmation and the Agreement or the Definitions, the terms
of this Confirmation shall govern this Agreement.
1. This Confirmation supplements, forms part of, and is
subject to, the ISDA Master Agreement dated as of August 19,
1998, 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.
2. The terms of the particular Transaction to which this
Confirmation relates are as follows:
Type of Transaction: Rate Cap Transaction
Notional Amount: USD 40,000,000.00
Trade Date: 18 August 1998
Effective Date: 19 August 1998
Termination Date: 13 March 2001
Fixed Amounts:
Fixed Rate Payer: Counterparty
Fixed Rate Payer
Payment Dates: 13 March, 13 June, 13 September and
13 December in each year,
commencing on 13 September 1998,
and ending on the Termination Date,
inclusive, subject to adjustment in
accordance with the Modified
Following Business Day Convention
Fixed Rate Payer initial
Calculation Period: From and including 13 June 1998, to
but excluding 13 September 1998,
subject to adjustment in accordance
with the Modified Following
Business Day Convention
Fixed Rate: 0.36625%
Fixed Rate Day
Count Fraction: Actual/360
Floating Amounts:
Floating Rate Payer: MLCS
Cap Rate: 5.75%
Floating Rate Payer
Payment Dates: 13 March, 13 June, 13 September and
13 December in each year,
commencing on 13 September 1998,
and ending on the Termination Date,
inclusive, subject to adjustment in
accordance with the Modified
Following Business Day Convention
Floating Rate Payer initial
Calculation Period: From and including 13 June 1998, to
but excluding 13 September, 1998,
subject to adjustment in accordance
with the Modified Following
Business Day Convention
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: Three months
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Floating Rate
Payer Calculation Period
Rate Cut-off Dates: Inapplicable
Method of Averaging: Inapplicable
Compounding: Inapplicable
Calculation Agent: MLCS
Business Days: New York, London
3. Account Details
Payment to MLCS: BANKERS TRUST COMPANY, NEW YORK, NY
(FED ABA: 000000000)
FAO: XXXXXXX XXXXX CAPITAL
SERVICES, INC. -
DOLLAR SWAPS, NEW YORK, NY
A/C#: 00-000-000
Payments to
Counterparty: Please advise
Please confirm that the foregoing correctly sets forth the terms
of our agreement by executing this Confirmation and returning it
to us by facsimile transmission on (000) 000 0000, Attention:
Xxxxx Xxxxx, telephone: (000) 000 0000.
Very truly yours,
XXXXXXX XXXXX CAPITAL SERVICES, INC.
By: __________________________________
Authorized Signatory
Accepted and confirmed as
of the Trade Date written above:
NOVASTAR MORTGAGE FUNDING TRUST SERIES 1998-2
By: ________________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President
