SCHEDULE
TO THE
MASTER AGREEMENT
DATED AS OF APRIL 30, 1998
BETWEEN
XXXXXXX XXXXX CAPITAL SERVICES, INC., a corporation
organized under the laws of Delaware
("PARTY A")
and
NOVASTAR MORTGAGE FUNDING TRUST, SERIES 1998-1, 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 party, 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 Date by Covered by Section
to deliver Form/Document/ which to be 3(d)
Document Certificate Delivered Representation
Party A/ Annual audited financial Promptly after Yes.
Party B. statements (in the case of request.
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/ Quarterly unaudited financial Promptly after Yes.
Party B. statements (in the case of request.
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 in At the No.
respect of this Agreement and execution of
Party A's Credit Support this
Document. Agreement.
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 1998-1
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 1998-1)
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 April 1, 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 April 30, 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 falls 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 MBIA.
(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.
Attachment A
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 1998-1 (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 April 30, 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:_________________________
Attachment B
FAX: 000 000 0000
DATE: APRIL 30, 1998
TO: NOVASTAR MORTGAGE FUNDING TRUST, SERIES 1998-1 C/O
WILMINGTON TRUST COMPANY
ATTENTION: XXXXXX XXXXXX
FROM: XXXXXXX XXXXX CAPITAL SERVICES, INC.
RE: CAP TRANSACTION - REFERENCE 98DL1431
Dear Sirs:
The purpose of this communication is to confirm the terms
and conditions of the transaction entered into between Xxxxxxx
Xxxxx Capital Services, Inc. ("MLCS") and NovaStar Mortgage
Funding Trust, Series 1998-1 ("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 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.
The definitions and provisions contained in the 1991 ISDA
Definitions, as published by the International Swaps and
Derivatives Association, Inc. (the "Definitions") are
incorporated into this Confirmation. For these purposes, all
references in those Definitions to a "Swap Transaction" shall be
deemed to apply to the Transaction referred to herein. In the
event of any inconsistency between the Definitions and this
Confirmation, the terms of this Confirmation shall govern.
1. This Confirmation supplements, forms part of, and is
subject to, the ISDA Master Agreement dated as of April 30, 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 45,000,000.00
Trade Date: 30 April 1998
Effective Date: 30 April 1998
Termination Date: 3 April 2001
Fixed Amounts:
Fixed Rate Payer: Counterparty
Fixed Rate Payer
Payment Dates: 3 January, 3 April, 3 July and 3
October in each year, commencing on
3 July 1998, and ending on the
Termination Date, inclusive,
subject to adjustment in accordance
with the Modified Following
Business Day Convention
Fixed Rate: 0.74% per annum
Fixed Rate Day
Count Fraction: Actual/360
Floating Amounts:
Floating Rate Payer: MLCS
Cap Rate: 6.5% per annum
Floating Rate for
initial Calculation
Period: 5.70703%
Floating Rate Payer
Payment Dates: 3 January, 3 April, 3 July and 3
October in each year, commencing on
3 July 1998, and ending on the
Termination Date, inclusive,
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
Compounding Dates: Inapplicable
Calculation Agent: MLCS
Business Days: New York and London
3. Account Details:
Payments to MLCS: Bankers Trust Company
New York, NY
ABA: 000000000
A/C #00-000-000
Ref: Xxxxxxx Xxxxx Capital
Services, Inc.
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
(212) 449 - 6219, attention: Xxxxx Xxxxx, telephone: (212)
000-0000.
Yours sincerely,
XXXXXXX XXXXX CAPITAL SERVICES, INC.
By:________________________________
Authorized Signatory
Accepted and confirmed as
of the Trade Date written above:
NOVASTAR MORTGAGE FUNDING TRUST, SERIES 1998-1
BY WILMINGTON TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Attachment C
FAX: 000 000 0000
DATE: APRIL 30, 1998
TO: NOVASTAR MORTGAGE FUNDING TRUST, SERIES 1998-1 C/O
WILMINGTON TRUST COMPANY
ATTENTION: XXXXXX XXXXXX
FROM: XXXXXXX XXXXX CAPITAL SERVICES, INC.
RE: CAP TRANSACTION - REFERENCE 98DL1432
Dear Sirs:
The purpose of this communication is to confirm the terms
and conditions of the transaction entered into between Xxxxxxx
Xxxxx Capital Services, Inc. ("MLCS") and NovaStar Mortgage
Funding Trust, Series 1998-1 ("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 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.
The definitions and provisions contained in the 1991 ISDA
Definitions, as published by the International Swaps and
Derivatives Association, Inc. (the "Definitions") are
incorporated into this Confirmation. For these purposes, all
references in those Definitions to a "Swap Transaction" shall be
deemed to apply to the Transaction referred to herein. In the
event of any inconsistency between the Definitions and this
Confirmation, the terms of this Confirmation shall govern.
1. This Confirmation supplements, forms part of, and is
subject to, the ISDA Master Agreement dated as of April 30, 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 30,000,000.00
Trade Date: 30 April 1998
Effective Date: 30 April 1998
Termination Date: 21 April 2001
Fixed Amounts:
Fixed Rate Payer: Counterparty
Fixed Rate Payer
Payment Dates: 21 January, 21 April, 21 July and
21 October in each year, commencing
on 21 July 1998, and ending on the
Termination Date, inclusive,
subject to adjustment in accordance
with the Modified Following
Business Day Convention
Fixed Rate: 1.01% per annum
Fixed Rate Day
Count Fraction: Actual/360
Floating Amounts:
Floating Rate Payer: MLCS
Cap Rate: 6% per annum
Floating Rate for
initial Calculation
Period: 5.6875%
Floating Rate Payer
Payment Dates: 21 January, 21 April, 21 July and
21 October in each year, commencing
on 21 July 1998, and ending on the
Termination Date, inclusive,
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
Compounding Dates: Inapplicable
Calculation Agent: MLCS
Business Days: New York and London
3. Account Details:
Payments to MLCS: Bankers Trust Company
New York, NY
ABA: 000000000
A/C #00-000-000
Ref: Xxxxxxx Xxxxx Capital
Services, Inc.
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 (212) 449 - 6219, attention:
Xxxxx Xxxxx, telephone: (000) 000-0000.
Yours sincerely,
XXXXXXX XXXXX CAPITAL SERVICES, INC.
By:________________________________
Authorized Signatory
Accepted and confirmed as
of the Trade Date written above:
NOVASTAR MORTGAGE FUNDING TRUST, SERIES 1998-1
BY WILMINGTON TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
