ISDA® International Swaps and Derivatives Association, Inc. SCHEDULE to the Master Agreement dated as of August 25, 2006 between
Execution
version
(Multicurrency
- Cross Border)
ISDA®
International
Swaps and Derivatives Association, Inc.
SCHEDULE
to
the
Master
Agreement
dated
as
of August
25, 2006
between
|
HSBC
BANK USA, NATIONAL
ASSOCIATION
|
and
|
SUPPLEMENTAL
INTEREST TRUST,
STRUCTURED
ASSET INVESTMENT LOAN
TRUST
2006-BNC3
|
|
(“Party
A”)
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(“Party
B”)
|
Part
1. Termination Provisions.
|
(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
and
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.
|
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(c)
|
Certain
Events of Default.
The following Events of Default will apply to the parties as specified
below, and the definition of “Event of Default” in Section 14 is deemed to
be modified accordingly:
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Section
5(a)(i) (Failure
to Pay or Deliver)
will
apply to Party A and Party B.
Section
5(a)(ii) (Breach
of Agreement)
will
not apply to Party A or Party B.
Section
5(a)(iii) (Credit
Support Default)
will
not apply to Party A or Party B.
Section
5(a)(iv) (Misrepresentation)
will
not apply to Party A or Party B.
Section
5(a)(v) (Default
under Specified Transaction)
will
not apply to Party A or Party B.
Section
5(a)(vi) (Cross
Default)
will
not apply to Party A or Party B.
Section
5(a)(vii) (Bankruptcy)
will
apply to Party A and Party B; provided
that
clause (2) thereof shall not apply to Party B.
1
Section
5(a)(viii) (Merger
without Assumption)
will
apply to Party A and Party B.
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(d)
|
Termination
Events.
The following Termination Events will apply to the parties as specified
below:
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Section
5(b)(i) (Illegality)
will
apply to Party A and Party B.
Section
5(b)(ii) (Tax
Event)
will
apply to Party A and Party B.
Section
5(b)(iii) (Tax
Event upon Merger)
will
apply to Party A and Party B.
Section
5(b)(iv) (Credit
Event upon Merger)
will
not apply to Party A or Party B.
|
(e)
|
The
“Automatic
Early Termination”
provision of Section 6(a) of this Agreement will not apply to Party
A and
will not apply to Party B.
|
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(f)
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Payments
on Early Termination.
For the purpose of Section 6(e) of this
Agreement:
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(i) Market
Quotation will apply.
(ii) The
Second Method will apply.
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(g)
|
“Termination
Currency”
means United States Dollars.
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(h)
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Additional
Termination Events.
The following Additional Termination Events will apply, in each
case with
respect to Party B as the sole Affected Party (unless otherwise
provided
below):
|
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(i)
|
Party
A fails to comply with the Downgrade Provisions as set forth in
Part 5(b),
after giving effect to all grace or cure periods therein. For all
purposes
of this Agreement, Party A shall be the sole Affected Party with
respect
to the occurrence of a Termination Event described in this Part
1(h)(i).
|
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(ii)
|
Party
B or the Trust Fund (as defined in the Trust Agreement, dated as
of August
1, 2006, among ▇▇▇▇▇ Fargo Bank, N.A. as securities administrator
(in such
capacity, the Securities
Administrator),
U.S. Bank National Association (the Trustee),
Aurora Loan Services LLC, Risk Management Group, LLC and Structured
Asset
Securities Corporation (the Trust
Agreement))
is terminated.
|
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(iii)
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The
Trust Agreement is amended or modified without the prior written
consent
of Party A, where such consent is required under the terms of the
Trust
Agreement.
|
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(iv)
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The
Class Principal Amounts of the Offered Certificates and the Class
B
Certificates are reduced to zero.
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(v)
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Notice
of the Master Servicer’s or, the NIMS Insurer’s intention to exercise its
option to purchase the Mortgage Loans pursuant to Section 7.01
of the
Trust Agreement is given by the Trustee to Certificateholders pursuant
to
Section 7.02 of the Trust Agreement, provided
that the Early Termination Date may not be earlier than the date
on which
the Certificates are redeemed pursuant to Section 7.02 of the Trust
Agreement.
|
Notwithstanding
anything in Section 6 of the Agreement to the contrary, any amounts due as
result of the occurrence of an Additional Termination Event described in
Part
1(h)(ii) and Part 1(h)(v) of this Schedule may be calculated prior to the
Early
Termination Date and shall be payable on the Early Termination
Date.
2
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) of this Agreement by reason of material prejudice to its legal
or
commercial position.
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(b)
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Payee
Representations.
For the purpose of Section 3(f) of this Agreement, Party A and
Party B
make the representations specified below, if
any:
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(i)
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Party
A represents that is a national banking association organized under
the
laws of the United States.
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(ii)
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Party
B represents that it is a trust created under an agreement governed
by New
York law.
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3
Part
3. Agreement to Deliver Documents.
For
the
purpose of Sections 4(a)(i) and (ii) of this Agreement, each party agrees
to
deliver the following documents, as applicable:
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(a)
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Tax
forms, documents or certificates to be delivered
are:—
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Party
required to
deliver
document
|
Form/Document/Certificate
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Date
by which to be delivered
|
||
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Party
A and Party B
|
Subject
to Section 4(a)(iii), any document required or reasonably requested
to
allow the other party to make payments under this Agreement without
any
deduction or withholding on account of any Tax.
|
(i)
promptly upon reasonable demand by Party B, and (ii) promptly upon
learning that any such Form previously provided by Party A has
become
obsolete or incorrect.
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(b)
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Other
documents to be delivered are:—
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Party
required to
deliver
document
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Form/Document/Certificate
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Date
by which to be
delivered
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Covered
by §3(d)
Representation
|
|||
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Party
B
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Certified
copy of the Board of Directors resolution (or equivalent authorizing
documentation) which sets forth the authority of each signatory
to this
Agreement and each Credit Support Document (if any) signing on
its behalf
and the authority of such party to enter into Transactions contemplated
and performance of its obligations hereunder.
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Concurrently
with the execution and delivery of this Agreement.
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Yes
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Party
A and Party B
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Incumbency
Certificate (or, if available the current authorized signature
book or
equivalent authorizing documentation) specifying the names, titles,
authority and specimen signatures of the persons authorized to
execute
this Agreement which sets forth the specimen signatures of each
signatory
to this Agreement, each Confirmation and each Credit Support Document
(if
any) signing on its behalf.
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Concurrently
with the execution and delivery of this Agreement unless previously
delivered and still in full force and effect.
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Yes
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|||
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Party
A and Party B
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An
executed copy of the Disclosure Agreement relating to the Preliminary
Prospectus Supplement or Free Writing Prospectus, as applicable
(each as
defined in the Trust Agreement)
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On
the date of such Preliminary Prospectus Supplement or Free Writing
Prospectus, as applicable.
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Yes
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4
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Party
required to
deliver
document
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Form/Document/Certificate
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Date
by which to be
delivered
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Covered
by §3(d)
Representation
|
|||
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Party
A and B
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An
executed copy of the Disclosure Agreement relating to the Prospectus
Supplement (as defined in the Trust Agreement)
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Concurrently
with the execution and delivery of this Agreement unless previously
delivered and still in full force and effect.
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Yes
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|||
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Party
A and B
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An
opinion of counsel to such party reasonably satisfactory in form
and
substance to the other party, and, in the case of Party B, opinions
of
counsel relating to the Trust Agreement reasonably satisfactory
in form
and substance to the Party A.
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Concurrently
with the execution and delivery of the Confirmation unless previously
delivered and still in full force and effect.
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No
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|||
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Party
B
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An
executed copy of the Trust Agreement.
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Within
30 days after the date of this Agreement.
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No
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Party
B
|
Each
material amendment, supplement or waiver of the Trust Agreement,
as
proposed from time to time, or any other amendment or modification
of the
Trust Agreement that requires the written consent of Party A under
the
terms of the Trust Agreement.
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Promptly
upon learning of any proposed amendment, supplement or
waiver.
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No
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Part
4. Miscellaneous.
|
(a)
|
Addresses
for Notices.
For the purposes of Section 12(a) of this Agreement:
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(i)
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Addresses
for notices or communications to Party A:
-
|
HSBC
Bank USA, National Association
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
Legal Department
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(ii)
|
Addresses
for notices or communications to Party
B:
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U.S.
Bank National Association
▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Structured Finance - SAIL 2006-BNC3
Telephone
No.: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile
No: (▇▇▇)
▇▇▇-▇▇▇▇
5
With
a
copy to:
▇▇▇▇▇
Fargo Bank, N.A. as Securities Administrator
▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Service Manager - SAIL 2006-BNC3
Telephone
No.: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Aurora
Loan Services LLC, as Master Servicer
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
Facsimile
No.: (▇▇▇)
▇▇▇-▇▇▇▇
Telephone
No.: (▇▇▇)
▇▇▇-▇▇▇▇
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(b)
|
Process
Agent. For
the purposes of Section 13(c) of this
Agreement:
|
Party
A
appoints as its Process Agent, not applicable.
Party
B
appoints as its Process Agent, not applicable.
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(c)
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Offices.
The provisions of Section 10(a) will not apply to this
Agreement.
|
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(d)
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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.
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(e)
|
Calculation
Agent.
The Calculation Agent is Party A.
|
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(f)
|
Credit
Support Document.
Credit Support Document means
|
With
respect to Party A, not applicable.
With
respect to Party B, the Trust Agreement.
|
(g)
|
Credit
Support Provider.
|
Credit
Support Provider means in relation to Party A, not applicable.
Credit
Support Provider means in relation to Party B, not applicable.
|
(h)
|
|
(i)
|
Netting
of Payments.
Subparagraph (ii) of Section 2(c) of this Agreement will apply
to all
Transactions (in each case starting from the date of this
Agreement).
|
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(j)
|
“Affiliate”
will have the meaning specified in Section 14 of this Agreement,
provided
that Party A and Party B shall be deemed to have no
Affiliates.
|
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(k)
|
Jurisdiction.
Section 13(b) is hereby amended by: (i) deleting in the second
line of
subparagraph (i) thereof the word “non-”: and (ii) deleting the final
paragraph thereof.
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(l)
|
Waiver
of Jury Trial.
Each party waives, to the fullest extent permitted by applicable
law, any
right it may have to a trial by jury in respect of any suit, action
or
proceeding relating to this Agreement or any Credit Support Document.
Each
party certifies (i) that no representative, agent or attorney of
the other
party or any Credit Support Provider has represented, expressly
or
otherwise, that such other party would not, in the event of such
a suit,
action or proceeding, seek to enforce the foregoing waiver and
(ii)
acknowledges that it and the other party have been induced to enter
into
this Agreement and provide for any Credit Support Document, as
applicable,
by, among other things, the mutual waivers and certifications in
this
Section.
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6
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(m)
|
Consent
to Recording.
Each party consents to the recording of the telephone conversations
of
trading and marketing personnel of the parties and their Affiliates
in
connection with this Agreement or any potential transaction.
|
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(n)
|
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
illegal, 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 illegal, 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 to this Agreement.
|
Part
5. Other Provisions.
|
(a)
|
Definitions.
This Agreement, including each Confirmation and each Swap Transaction,
is
subject to the 2000 ISDA Definitions, as amended, supplemented,
updated,
and superseded from time to time (the “Definitions”), as published by the
International Swaps and Derivatives Association, Inc. (“ISDA”) and will be
governed in all respects by the Definitions (except that references
to
“Swap Transactions” shall be deemed to be references to “Transactions”).
The Definitions are incorporated by reference in, and made part
of, this
Agreement and each Confirmation as if set forth in full in this
Agreement
and such Confirmations. In the event of any inconsistency between
the
provisions of this Agreement and the Definitions, this Agreement
will
prevail (and, in the event of any inconsistency between any Confirmation
and the Definitions, the Confirmation will control). Any reference
in a
Confirmation to any Definitions which are amended or supplemented
in this
Schedule shall be deemed to be a reference to such Definitions
as so
amended or supplemented, unless the Confirmation states, by specific
reference to any such amendment or supplement, that such amendment
or
supplement will not apply in respect of the Transaction to which
such
Confirmation relates.
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(b)
|
Downgrade
Provisions.
|
|
(1)
|
It
shall be a collateralization event (“Collateralization
Event”)
if (A) either (i) the unsecured, long-term senior debt obligations of
Party A are rated below “A1” by ▇▇▇▇▇’▇ Investors Service, Inc.
(“Moody’s”)
or are rated “A1” by Moody’s and such rating is on watch for possible
downgrade to below “A1” (but only for so long as it is on watch for
possible downgrade) or (ii) the unsecured, short-term debt
obligations of Party A are rated below “P-1” by Moody’s or are rated
“P-1” by Moody’s and such rating is on watch for possible downgrade to
below “P-1” (but only for so long as it is on watch for possible
downgrade), (B) no short-term rating is available from Moody’s and the
unsecured, long-term senior debt obligations of Party A are rated
below “Aa3” by Moody’s or are rated “Aa3” by Moody’s and such rating is on
watch for possible downgrade to below “Aa3” (but only for so long as it is
on watch for possible downgrade), (C) or either (i) the unsecured,
short-term debt obligations of Party A are rated below “A-1” by
Standard & Poor’s Rating Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. (“S&P”)
or (ii) if Party A does not have a short-term rating from S&P,
the unsecured, long-term senior debt obligations of Party A are rated
below “A+” by S&P, or (D) the unsecured, long-term senior debt
obligations or financial strength ratings of Party A are rated
below “A”
by Fitch, Inc. (“Fitch”).
For the avoidance of doubt, the parties hereby acknowledge and
agree that
notwithstanding the occurrence of a Collateralization Event, this
Agreement and each Transaction hereunder shall continue to be as
a Swap
Agreement and Cap Agreement (as applicable) for purposes of the
Trust
Agreement. Within 30 days from the date a Collateralization Event
has
occurred and
so long as such Collateralization Event is continuing, Party A shall,
at its sole expense, either (i) post collateral according to the
terms of
an ISDA 1994 New York Law Credit Support Annex, which shall receive
prior
written confirmation from each of the Rating Agencies (as defined
in the
Trust Agreement) that their then-current ratings of the Offered
Certificates and the Class B Certificates will not be downgraded
or
withdrawn by such Rating Agency (the “Rating
Agency Condition”),
or (ii) obtain a substitute counterparty that (a) is reasonably
acceptable
to Party B and satisfies the Rating Agency Condition, (b) satisfies
the Hedge Counterparty Ratings Requirement (as defined herein)
and (c)
assumes the obligations of Party A under this Agreement (through an
assignment and assumption agreement in form and substance reasonably
satisfactory to Party B) or replaces the outstanding Transactions
hereunder with transactions on identical terms, except that Party A
shall be replaced as counterparty, provided
that such substitute counterparty, as of the date of such assumption
or
replacement, will not, as a result thereof, be required to withhold
or
deduct on account of tax under the Agreement or the new transactions,
as
applicable, and such assumption or replacement will not lead to
a
termination event or event of default occurring under the Agreement
or new
transactions, as applicable.
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7
|
(2)
|
It
shall be a ratings event (“Ratings
Event”)
if at any time after the date hereof Party A shall fail to satisfy
the Hedge Counterparty Ratings Threshold or Party A is no longer
rated by
S&P. Hedge
Counterparty Ratings Threshold
shall mean (A) the unsecured, long-term senior debt obligations
of
Party A are rated at least “BBB-” by S&P, (B) either (i) the
unsecured, long-term senior debt obligations of Party A are rated at
least “A2” by Moody’s (and such rating is not on watch for possible
downgrade to below “A2”) and the unsecured, short-term debt obligations of
Party A are rated at least “P-1” by Moody’s
(and such rating is not on watch for possible downgrade to below
“P-1”) or
(ii) if Party A does not have a short-term rating from Moody’s, the
unsecured, long-term senior debt obligations of Party A are rated at
least “A1” by Moody’s,
and (C)
either (i) the unsecured, senior debt obligations or financial
strength
ratings of Party A , are rated at least “A” by Fitch or (ii) the
unsecured, short-term debt obligations (if any) of Party A , are
rated at least “F1” by Fitch. For the avoidance of all doubts, the parties
hereby acknowledge and agree that notwithstanding the occurrence
of a
Ratings Event, this Agreement and each Transaction hereunder shall
continue to be a Swap Agreement for purposes of the Trust Agreement.
Within 30 days (or, in the case of a failure to meet the requirements
of
subparagraph (A) of the definition of “Hedge Counterparty Ratings
Threshold” or Party A is no longer rated by S&P, within 10 business
days) from the date a Ratings Event has occurred and
so long as such Ratings Event is continuing, Party A shall, at its
sole expense, (i) obtain a substitute counterparty that (A) satisfies
the
Rating Agency Condition, (B) satisfies the Hedge Counterparty Ratings
Requirement (as defined below) and (C) assumes the obligations
of
Party A under this Agreement (through an assignment and assumption
agreement in form and substance reasonably satisfactory to Party B)
or replaces the outstanding Transactions hereunder with transactions
on
identical terms, except that Party A shall be replaced as
counterparty, provided
that such substitute counterparty, as of the date of such assumption
or
replacement, will not, as a result thereof, be required to withhold
or
deduct on account of tax under the Agreement or the new transactions,
as
applicable, and such assumption or replacement will not lead to
a
termination event or event of default occurring under the Agreement
or new
transactions, as applicable, and (ii) on or prior to the expiration
of
such period, be required to post collateral according to the terms
of an
ISDA 1994 New York Law Credit Support Annex, which shall satisfy
the
Rating Agency Condition.
|
Notwithstanding
anything contained herein to the contrary, if Party A is required to transfer
its rights and obligations under this Agreement pursuant to this Part 5(b)(2)
as
a result of a rating issued by S&P, Party A shall, prior to such transfer,
be required to post collateral in accordance with (i) the terms of an ISDA
1994
New York Law Credit Support Annex, which shall satisfy the Rating Agency
Condition or (ii) an agreement with Party B providing for the posting of
collateral, which agreement shall satisfy the Rating Agency Condition and
require Party A to post the required collateral.
8
Hedge
Counterparty Ratings Requirement
shall
mean (a) either (i) the unsecured, short-term debt obligations of the substitute
counterparty (or its Credit Support Provider) are rated at least “A-1” by
S&P or (ii) if the substitute counterparty does not have a short-term rating
from S&P, the unsecured, long-term senior debt obligations of the substitute
counterparty (or its Credit Support Provider) are rated at least “A+” by
S&P, (b) either (i) the unsecured, long-term senior debt obligations of such
substitute counterparty (or its Credit Support Provider) are rated at least
“A1”
by Moody’s (and if rated “A1” by Moody’s, such rating is not on watch for
possible downgrade to below “A1”) and the unsecured, short-term debt obligations
of such substitute counterparty (or its Credit Support Provider) are rated
at
least “P-1” by Moody’s (and if rated “P-1” by Moody’s, such rating is not on
watch for possible downgrade and remaining on watch for possible downgrade),
or
(ii) if such substitute counterparty (or its Credit Support Provider) does
not
have a short-term debt rating from Moody’s, the unsecured, long-term senior debt
obligations of such substitute counterparty (or its Credit Support Provider)
are
rated at least “Aa3” by Moody’s (and if rated “Aa3” by Moody’s, such rating is
not on watch for possible downgrade to below “Aa3”), and (c) either (i) the
unsecured, long-term senior debt obligations of such substitute counterparty
(or
its Credit Support Provider) are rated at least “A” by Fitch or (ii) the
unsecured, short-term debt obligations of such substitute counterparty (or
its
Credit Support Provider) are rated at least “F1” by Fitch. For the purpose of
this definition, no direct or indirect recourse against one or more shareholders
of the substitute counterparty (or against any Person in control of, or
controlled by, or under common control with, any such shareholder) shall
be
deemed to constitute a guarantee, security or support of the obligations
of the
substitute counterparty.
|
(c)
|
Section
3(a) of this Agreement is hereby amended to include the following
additional representations after paragraph
3(a)(v):
|
|
(vi)
|
Eligible
Contract Participant.
It
is an “eligible contract participant” as defined in the U.S. Commodity
Exchange Act.
|
|
(vii)
|
Individual
Negotiation.
This Agreement and each Transaction hereunder is subject to individual
negotiation by the parties.
|
|
(viii)
|
Relationship
between Party A and Party B.
Each of Party A and Party B will be deemed to represent to the
other on
the date on which it enters into a Transaction or an amendment
thereof
that (absent a written agreement between Party A and Party B that
expressly imposes affirmative obligations to the contrary for that
Transaction):
|
|
(1)
|
Principal.
It
is acting as principal and not as agent when entering into this
Agreement
and each Transaction.
|
|
(2)
|
Non-Reliance.
|
(a)
With
respect to Party A: It is acting for its own account and it has made its
own
independent decisions to enter into that Transaction and as to whether that
Transaction is appropriate or proper for it based upon its own judgment and
upon
advice from such advisors as it has deemed necessary. It is not relying on
any
communication (written or oral) of the other party as investment advice or
as a
recommendation to enter into that Transaction; it being understood that
information and explanations related to the terms and conditions of a
Transaction shall not be considered investment advice or a recommendation
to
enter into that Transaction. No communication (written or oral) received
from
the other party shall be deemed to be an assurance or guarantee as to the
expected results of that Transaction.
9
(b)
With
respect to Party B: It is acting not in its individual capacity, but solely
as
Trustee and has been directed to enter in the Swap Transaction.
|
(3)
|
Evaluation
and Understanding. It
is capable of evaluating and understanding (on its own behalf or
through
independent professional advice), and understands and accepts,
the terms,
conditions and risks of this Agreement and each Transaction hereunder.
It
is also capable of assuming, and assumes, all financial and other
risks of
this Agreement and each Transaction hereunder.
|
|
(4)
|
Status
of Parties. The
other party is not acting as a fiduciary or an advisor for it in
respect
of that Transaction.
|
|
(d)
|
Section
4 is hereby amended by adding the following new agreement:
|
(f)
Actions
Affecting Representations. Party
B
agrees not to take any action during the term of this Agreement or any
Transaction hereunder that renders or could render any of the representations
and warranties in this Agreement untrue, incorrect, or incomplete, and if
any
event or condition occurs that renders or could render any such representation
untrue, incorrect, or incomplete, Party B will immediately give written notice
thereof to Party A.
|
(e)
|
Section
1(c). For
purposes of Section 1(c) of the Agreement, the Transactions evidenced
by
the Confirmations with Reference ID: 405303HN, and Reference ID:
405309HN,
each dated August 25, 2006, between Party A and Party B, as amended
from
time to time, shall be the sole Transactions under the
Agreement.
|
|
(f)
|
Transfer.
Section
7 is hereby amended to read in its entirety as
follows:
|
Except
as
stated under Section 6(b)(ii), in this Section 7, and Part 5(b) of the Schedule,
neither Party A nor Party B is permitted to assign, novate or transfer (whether
by way of security or otherwise) as a whole or in part any of its rights,
obligations or interests under this Agreement or any Transaction without
the
prior written consent of the other party; provided,
however,
that
(i) Party A may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of
substantially all of its assets to, another entity, or an incorporation,
reincorporation or reconstitution, and (ii) Party A may transfer this Agreement
to any Person, including, without limitation, another of Party A’s offices,
branches or affiliates (any such Person, office, branch or affiliate, a
“Transferee”) on at least five Business Days’ prior written notice to Party B
and the Trustee; provided that, with respect to clause (ii), (A) as of the
date
of such transfer the Transferee will not be required to withhold or deduct on
account of a Tax from any payments under this Agreement unless the Transferee
will be required to make payments of additional amounts pursuant to Section
2(d)(i)(4) of this Agreement in respect of such Tax (B) a Termination Event
or
Event of Default does not occur under this Agreement as a result of such
transfer; (C) such notice is accompanied by a written instrument pursuant
to
which the Transferee acquires and assumes the rights and obligations of Party
A
so transferred; and (D) Party A will be responsible for any costs or expenses
incurred in connection with such transfer. Party B will execute such
documentation as is reasonably deemed necessary by Party A for the effectuation
of any such transfer. Notwithstanding the foregoing, no such transfer or
assignment (including a transfer or assignment made pursuant to Section
6(b)(ii)) shall be made unless the transferring party obtains a written
acknowledgment from each of the Rating Agencies that, notwithstanding such
transfer or assignment, the then-current ratings of the Offered Certificates
and
the Class B Certificates will not be reduced or withdrawn.
Except
as
specified otherwise in the documentation evidencing a transfer, a transfer
of
all the obligations of Party A made in compliance with this Section 7 will
constitute an acceptance and assumption of such obligations (and any related
interests so transferred) (including an acceptance and assumption of the
Disclosure Agreements by the transferor) by the Transferee, a novation of
the
transferee in place of Party A with respect to such obligations (and any
related
interests so transferred), and a release and discharge by Party B of Party
A
from, and an agreement by Party B not to make any claim for payment, liability,
or otherwise against Party A with respect to, such obligations from and after
the effective date of the transfer.
10
|
(g)
|
Trustee
Capacity. It
is expressly understood and agreed by the parties hereto that (i)
this
Agreement is executed and delivered by the Trustee not individually
or
personally but solely as the trustee of the Supplemental Interest
Trust,
Structured Asset Investment Loan Trust 2006-BNC3, in the exercise
of the
powers and authority conferred and vested in it under the Trust
Agreement,
(ii) each of the representations, undertakings and agreements herein
made
on the part of Supplemental Interest Trust, Structured Asset Investment
Loan Trust 2006-BNC3 is made and intended not as personal representations,
undertakings and agreements by the Trustee but is made and intended
for
the purpose of binding only the Supplemental Interest Trust, Structured
Asset Investment Loan Trust 2006-BNC3, (iii) nothing herein contained
shall be construed as creating any liability on the part of the
Trustee,
individually or personally, to perform any covenant either expressed
or
implied contained herein, all such liability, if any, being expressly
waived by the parties hereto and by any Person claiming by, through
or
under the parties hereto and (iv) under no circumstances shall
the Trustee
be personally liable for the payment of any indebtedness or expenses
of
the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by Supplemental
Interest Trust, Structured Asset Investment Loan Trust 2006-BNC3
under
this Agreement or any other related
documents.
|
|
(h)
|
Proceedings.
Party A shall not institute against or cause any other person to
institute
against, or join any other person in instituting against Structured
Asset
Investment Loan Trust 2006-BNC3 any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings
under any federal or state bankruptcy, dissolution or similar law,
for a
period of one year and one day following indefeasible payment in
full of
the Certificates.
Nothing shall preclude, or be deemed to stop, Party A (i) from
taking any
action prior to the expiration of the aforementioned one year and
one day
period, or if longer the applicable preference period then in effect,
in
any case or proceeding voluntarily filed or commenced by Party
B, or (ii)
from commencing against Party B or any of the Collateral any legal
action
which is not a bankruptcy, reorganization, arrangement, insolvency,
moratorium, liquidation or similar proceeding.
|
|
(i)
|
Amendment
to Events of Default. The
“Failure to Pay or Deliver” provision in Section 5(a)(i) of the Agreement
is hereby amended by deleting the word “third” in the third line thereof
and inserting the word “first” in place
thereof.
|
|
(j)
|
Change
of Account.
Section 2(b) of this Agreement is hereby amended by the addition
of the
following after the word “delivery” in the first line
thereof:-
|
“to
another account in the same legal and tax jurisdiction as the original
account”
|
(k)
|
Trust
Agreement.
|
|
(1)
|
Capitalized
terms used in this Agreement that are not defined herein and are
defined
in the Trust Agreement shall have the respective meanings assigned
to them
in the Trust Agreement.
|
|
(2)
|
Party
B will provide at least ten days’ prior written notice to Party A of any
proposed amendment or modification to the Trust
Agreement.
|
|
(l)
|
Set-off.
Notwithstanding
any provision of this Agreement or any other existing or future
agreements, each of Party A and Party B irrevocably waives as to
itself
any and all contractual rights it may have to set off, net, recoup
or
otherwise withhold or suspend or condition its payment or performance
of
any obligation to the other party under this Agreement against
any
obligation of one party hereto to the other party hereto arising
outside
of this Agreement (which Agreement includes without limitation,
the Master
Agreement to which this Schedule is attached, this Schedule and
the
Confirmation, and if applicable, any Credit Support Annex hereto).
|
11
|
(m)
|
Notice
of Certain Events or Circumstances.
Each party agrees, upon learning of the occurrence or existence
of any
event or condition that constitutes (or that with the giving of
notice or
passage of time or both would constitute) an Event of Default or
Termination Event with respect to such party, promptly to give
the other
party notice of such event or condition (or, in lieu of giving
notice of
such event or condition in the case of an event or condition that
with the
giving of notice or passage of time or both would constitute an
Event of
Default or Termination Event with respect to the party, to cause
such
event or condition to cease to exist before becoming an Event of
Default
or Termination Event); provided
that failure to provide notice of such event or condition pursuant
to this
Part 5(n) shall not constitute an Event of Default or a Termination
Event.
|
|
(n)
|
Regarding
Party A.
Party
B acknowledges and agrees that Party A has had and will have no
involvement in and, accordingly Party A accepts no responsibility
for: (i)
the establishment, structure, or choice of assets of Party B; (ii)
the
selection of any person
performing services for or acting on behalf of Party B; (iii) the
selection of Party A as the Counterparty;
(iv) the terms of the Certificates; (v) other than as provided
in the
Disclosure Agreements, the preparation of or passing on the disclosure
and
other information contained in any offering circular or offering
document
for the Certificates, the Trust Agreement, or any other agreements
or
documents used by Party B or any other party in connection with
the
marketing and sale of the Certificates; (vi) the ongoing operations
and
administration of Party B, including the furnishing of any information
to
Party B which is not specifically required under this Agreement
or the
Disclosure Agreements; or (vii) any other aspect of Party B’s
existence.
|
|
(o)
|
Regarding
Party B.
The liability of Party B under this Agreement is limited in recourse
to
the assets of the Trust Fund and the Supplemental Interest Trust
(each
term, as defined in the Trust Agreement), and to distributions
of interest
proceeds and principal proceeds thereon applied in accordance with
the
terms of the Trust Agreement. Upon application of and exhaustion
of all of
the assets of the Trust Fund and the Supplemental Interest Trust
(and
proceeds thereof) in accordance with the Trust Agreement, Party
A shall
not be entitled to take any further steps against Party
B or any other person or
recover any sums due but still unpaid hereunder or thereunder,
all claims
in respect of which shall be extinguished. Notwithstanding the
foregoing
or anything herein to the contrary, Party A shall not be precluded
from
declaring an Event of Default or from exercising any other right
or remedy
as set forth in this Agreement or the Trust
Agreement.
|
|
(p)
|
Rating
Agency Condition.
This Agreement will not be amended unless the Rating Agency Condition
is
satisfied.
|
[Signature
page follows]
12
IN
WITNESS WHEREOF,
the
parties have executed this document by their duly authorized officers with
effect from the date so specified on the first page hereof.
|
HSBC
BANK USA, NATIONAL
ASSOCIATION
|
SUPPLEMENTAL
INTEREST TRUST,
STRUCTURED
ASSET INVESTMENT LOAN
TRUST
2006-BNC3
|
|
|
By:
U.S. Bank National Association, not in its individual capacity,
but solely
as Trustee
|
||
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Title:
Vice President
|
Title:
Vice Preident
|
|
|
Date:
August 25, 2006
|
Date:
August 25, 2006
|
13
HSBC
Bank USA, National Association
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
DATE:
|
August
25, 2006
|
|
TO:
|
Supplemental
Interest Trust,
|
|
Structured
Asset Investment Loan Trust 2006-BNC3
|
|
|
c/o
U.S. Bank National Association
|
|
|
▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
|
|
|
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Attention:
Structured Finance - SAIL 2006-BNC3
|
|
|
("Party B")
|
|
|
FROM:
|
HSBC
BANK USA, NATIONAL ASSOCIATION
|
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
|
|
|
("Party
A")
|
|
|
RE:
|
Interest
Rate Cap Transaction
|
Dear
Sir
or Madam:
The
purpose of this letter agreement (this “Confirmation”) is to confirm the terms
and conditions of the Transaction entered into between us on the Trade Date
specified below (the “Transaction”).
The
definitions and provisions contained in the 2000 ISDA Definitions as published
by the International Swaps and Derivatives Association, Inc. are incorporated
into this Confirmation. In the event of any inconsistency between those
definitions and provisions and this Confirmation, this Confirmation will
govern.
This
Confirmation constitutes a “Confirmation” as referred to in, and supplements,
forms part of and is subject to, the ISDA Master Agreement dated as of August
25, 2006, as amended and supplemented from time to time (the “Agreement”)
between Party A and Party B. All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.
Reference
Number: 405309HN
1
|
1.
|
The
Cap Transaction to which this Confirmation relates is a Rate Cap
Transaction, the terms of which are as follow:
|
|
|
General
Terms:
|
||
|
Trade
Date:
|
August
17, 2006
|
|
|
Effective
Date:
|
July
25, 2007
|
|
|
Termination
Date:
|
August
25, 2011, subject to adjustment in accordance with the Following
Business
Day Convention
|
|
|
Notional
Amount:
|
See
Amortization Schedule, Schedule A
|
|
|
Floating
Amounts:
|
||
|
Floating
Rate Payer:
|
Party
A
|
|
|
Floating
Rate:
|
The
greater of (a) 0% and (b) USD-LIBOR-BBA with a Designated Maturity
of one
month minus
the Strike Rate (as set forth in Schedule A).
|
|
|
Floating
Rate Payer Period End Dates:
|
The
25th
day of each month of each year, commencing on August 25, 2007 to
and
including the Termination Date, subject to adjustment in accordance
with
the Following Business Day Convention.
|
|
|
Floating
Rate Payer Payment Dates:
|
Early
Payment, one (1) Business Day preceding each Floating Rate Payer
Period
End Date.
|
|
|
Spread:
|
None
|
|
|
Floating
Rate Day Count Fraction:
|
Actual/360
|
|
|
Reset
Dates:
|
The
first day of each Calculation Period.
|
|
|
Compounding:
|
Inapplicable
|
|
|
Business
Days:
|
Any
day other than (i) a Saturday or a Sunday, or (ii) a day on which
banking
institutions in (1) the city in which the Corporate Trust Office
is
located or (2) the States of New York, Massachusetts, Maryland,
Minnesota
or Colorado are closed.
|
|
|
Fixed
Amounts
|
||
|
Fixed
Rate Payer:
|
Party
A
|
|
|
Fixed
Rate Payer Upfront Payment:
|
[[
]] (to be paid by Party A to ▇▇▇▇▇▇ Brothers Inc. on or before
August 25, 2006, subject to adjustment in accordance with the Following
Business Day Convention in consideration for this Rate Cap Transaction
with Reference ID: 405309HN and Rate Swap Transaction with Reference
ID:
405303HN).
|
|
Reference
Number: 405309HN
2
|
2.
|
Procedural
Terms:
|
|
|
Calculation
Agent:
|
Party
A
|
|
|
Offices:
|
The
Office of Party A for this Cap Transaction is New York. The Office
of
Party B for this Cap Transaction is Boston, Massachusetts.
|
|
|
Account
Details:
|
||
|
Payments
to Party A:
|
HSBC
BANK USA, National Association
ABA
: ▇▇▇-▇▇▇-▇▇▇
Swift:
▇▇▇▇▇▇▇▇
Account
Number: 000049298
HSBC
Derivative Products Group
|
|
|
Payments
to Party B:
|
U.S.
Bank Corporate Trust Services
ABA
# ▇▇▇▇▇▇▇▇▇
DDA
# 173103321118
A/C
# 104478003
Ref:
SAIL 2006-BNC3
Attn:
▇. ▇▇▇▇▇▇; SAIL 2006-BNC3 // Interest Rate Cap
Account
|
Reference
Number: 405309HN
3
Please
confirm that the foregoing correctly sets forth the terms and conditions
of our
agreement by executing this Confirmation and returning to us by fax/telex
to ▇▇▇
▇▇▇ ▇▇▇▇ to the attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇:
|
Fax
Number
|
:
▇▇▇ ▇▇▇ ▇▇▇▇
|
|
Telephone
Number
|
:
▇▇▇ ▇▇▇ ▇▇▇▇
|
HSBC
BANK USA, NATIONAL ASSOCIATION
By:
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Authorized
Signatory
HSBC
BANK USA, NATIONAL ASSOCIATION
By:
/s/
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Authorized
Signatory
Accepted
and confirmed as of the Trade Date written above:
SUPPLEMENTAL
INTEREST TRUST
STRUCTURED
ASSET INVESTMENT LOAN TRUST SERIES 2006-BNC3
By:
U.S.
Bank
National Association,
not in its individual capacity, but solely as Trustee
By:
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
Vice President
Reference
Number: 405309HN
4
SCHEDULE
A to the Confirmation dated as of August 25, 2006.
Re:
Reference Number: 405309HN
Amortization
Schedule, *subject
to adjustment in accordance with the Following Business Day
Convention
|
Calculation
Period in respect of the Payment Date scheduled to occur
on*:
|
Notional
Amount (USD)
|
Strike
Rate (%)
|
|
8/25/2007
|
2,417,000.00
|
6.25%
|
|
9/25/2007
|
8,740,000.00
|
6.25%
|
|
10/25/2007
|
15,062,000.00
|
6.25%
|
|
11/25/2007
|
21,385,000.00
|
6.25%
|
|
12/25/2007
|
27,707,000.00
|
6.25%
|
|
1/25/2008
|
34,030,000.00
|
6.25%
|
|
2/25/2008
|
40,352,000.00
|
6.25%
|
|
3/25/2008
|
46,674,000.00
|
6.25%
|
|
4/25/2008
|
52,997,000.00
|
6.25%
|
|
5/25/2008
|
59,319,000.00
|
6.25%
|
|
6/25/2008
|
65,642,000.00
|
6.25%
|
|
7/25/2008
|
71,964,000.00
|
6.25%
|
|
8/25/2008
|
78,286,000.00
|
6.25%
|
|
9/25/2008
|
84,609,000.00
|
6.25%
|
|
10/25/2008
|
128,764,000.00
|
6.25%
|
|
11/25/2008
|
165,176,000.00
|
6.25%
|
|
12/25/2008
|
188,035,000.00
|
6.25%
|
|
1/25/2009
|
201,667,000.00
|
6.25%
|
|
2/25/2009
|
208,773,000.00
|
6.25%
|
|
3/25/2009
|
211,138,000.00
|
6.25%
|
|
4/25/2009
|
209,984,000.00
|
6.25%
|
|
5/25/2009
|
206,172,000.00
|
6.25%
|
|
6/25/2009
|
200,328,000.00
|
6.25%
|
|
7/25/2009
|
194,569,000.00
|
6.25%
|
|
8/25/2009
|
188,894,000.00
|
6.25%
|
|
9/25/2009
|
183,314,000.00
|
6.25%
|
|
10/25/2009
|
177,829,000.00
|
6.25%
|
|
11/25/2009
|
172,441,000.00
|
6.25%
|
|
12/25/2009
|
167,151,000.00
|
6.25%
|
|
1/25/2010
|
161,961,000.00
|
6.25%
|
|
2/25/2010
|
156,873,000.00
|
6.25%
|
|
3/25/2010
|
151,886,000.00
|
6.25%
|
|
4/25/2010
|
147,003,000.00
|
6.25%
|
|
5/25/2010
|
142,220,000.00
|
6.25%
|
|
6/25/2010
|
137,543,000.00
|
6.25%
|
|
7/25/2010
|
132,968,000.00
|
6.25%
|
|
8/25/2010
|
128,496,000.00
|
6.25%
|
|
9/25/2010
|
124,125,000.00
|
6.25%
|
|
10/25/2010
|
119,857,000.00
|
6.25%
|
|
11/25/2010
|
115,691,000.00
|
6.25%
|
Reference
Number: 405309HN
5
|
Calculation
Period in respect of the Payment Date scheduled to occur
on*:
|
Notional
Amount (USD)
|
Strike
Rate (%)
|
|
12/25/2010
|
111,623,000.00
|
6.25%
|
|
1/25/2011
|
107,655,000.00
|
6.25%
|
|
2/25/2011
|
103,786,000.00
|
6.25%
|
|
3/25/2011
|
100,014,000.00
|
6.25%
|
|
4/25/2011
|
96,337,000.00
|
6.25%
|
|
5/25/2011
|
92,755,000.00
|
6.25%
|
|
6/25/2011
|
89,268,000.00
|
6.25%
|
|
7/25/2011
|
85,873,000.00
|
6.25%
|
|
8/25/2011
|
82,579,000.00
|
6.25%
|
Reference
Number: 405309HN
6