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BEAR STEARNS FINANCIAL PRODUCTS INC.

383 MADISON AVENUE

NEW YORK, NEW YORK 10179

212-272-4009


 

 

DATE:

 

November 29, 2006

 

 

 

TO:

 

LaSalle Bank National Association, not individually, but solely as Trustee on behalf

of the Supplemental Interest Trust with respect to Bear Stearns Mortgage Funding

Trust 2006-SL4 Mortgage-Backed Certificates, Series 2006-SL4

 

ATTENTION:

 

Global Securities and Trust Services  

TELEPHONE:

 

312-904-6709

FACSIMILE:

 

312-904-1368

 

 

 

FROM:

 

Derivatives Documentation

TELEPHONE:

 

212-272-2711

FACSIMILE:

 

212-272-9857

 

 

 

RE:

 

Novation Confirmation

 

REFERENCE NUMBER(S):   FXNSC8957-CXNS205195

 

The purpose of this letter is to confirm the terms and conditions of the Novation Transaction entered into between the parties and effective from the Novation Date specified below. This Novation Confirmation constitutes a “Confirmation” as referred to in the New Agreement specified below.

 

1.   The definitions and provisions contained in the 2004 ISDA Novation Definitions (the “Definitions”) and the terms and provisions of the 2000 ISDA Definitions , as published by the International Swaps and Derivatives Association, Inc. and amended from time to time, are incorporated in this Novation Confirmation. In the event of any inconsistency between (i) the Definitions, (ii) the 2000 ISDA Definitions and/or (iii) the Novation Agreement and this Novation Confirmation, this Novation Confirmation will govern.

 

2.   The terms of the Novation Transaction to which this Novation Confirmation relates are as follows:

 

 

Novation Trade Date:

November 29, 2006

 

Novation Date:

November 29, 2006

 

Novated Amount:

USD 3,004,711.90

 

Transferor:

BearBear Stearns Capital Markets Inc

 

Transferee:

BearBear Stearns Financial Products Inc.

 

Remaining Party:

LaSalle Bank National Association, not individually, but solely as Trustee on behalf of the Supplemental Interest Trust with respect to Bear Stearns Mortgage Funding Trust 2006-SL4 Mortgage-Backed Certificates, Series 2006-SL4

 

New Agreement (between Transferee and Remaining Party):

The Master Agreement as defined in the New Confirmation

 

3.   The terms of the Old Transaction to which this Novation Confirmation relates, for identification purposes, are as follows:

 

 

Trade Date of Old Transaction:

November 6, 2006

 

Effective Date of Old Transaction:

November 10, 2006

 

Termination Date of Old Transaction:

July 25, 2010

 

 

4.   The terms of the New Transaction to which this Novation Confirmation relates shall be as specified in the New Confirmation attached hereto as Exhibit A including the Credit Support Annex attached hereto as Annex A.

 

 

Full First Calculation Period:

Applicable

 

5.   Offices:

 

 

Transferor:

Not Applicable

 

Transferee:

Not Applicable

 

Remaining Party:

Not Applicable

 

The parties confirm their acceptance to be bound by this Novation Confirmation as of the Novation Date by executing a copy of this Novation Confirmation and returning a facsimile of the fully-executed Novation Confirmation to 212-272-9857. The Transferor, by its execution of a copy of this Novation Confirmation, agrees to the terms of the Novation Confirmation as it relates to the Old Transaction. The Transferee, by its execution of a copy of this Novation Confirmation, agrees to the terms of the Novation Confirmation as it relates to the New Transaction. For inquiries regarding U.S. Transactions, please contact Derivatives Documentation by telephone at 212-272-2711 . For all other inquiries please contact Derivatives Documentation by telephone at 353-1-402-6223 .

 

 

Bear Stearns Financial Products Inc.

 

 

By: /s/ Annie Manevitz

Name: Annie Manevitz

Title: Authorized Signatory

Date: November 29, 2006

Bear Stearns Capital Markets

 

 

By: /s/ Susan Donlon

Name: Susan Donlon

Title: Authorized Signatory

Date: November 29, 2006

 

 

L aSalle Bank National Association, not individually, but solely as Trustee on behalf of the Supplemental Interest Trust with respect to Bear Stearns Mortgage Funding Trust 2006-SL4 Mortgage-Backed Certificates, Series 2006-SL4

 

 

By: /s/ Rita Lopez

Name: Rita Lopez

Title: Vice President

Date: November 29, 2006

 

 


 

BEAR STEARNS FINANCIAL PRODUCTS INC.

383 MADISON AVENUE

NEW YORK, NEW YORK 10179

212-272-4009

 

Exhibit A

 

DATE:

 

November 29, 2006

 

 

 

TO:

 

LaSalle Bank National Association, not individually, but solely as Trustee on

behalf of the Supplemental Interest Trust with respect to Bear Stearns

Mortgage Funding Trust 2006-SL4 Mortgage-Backed Certificates, Series

2006-SL4

ATTENTION:

 

Global Securities and Trust Services  

TELEPHONE:

 

312-904-6709

FACSIMILE:

 

312-904-1368

 

 

 

FROM:

 

Derivatives Documentation

TELEPHONE:

 

212-272-2711

FACSIMILE:

 

212-272-9857

 

 

 

SUBJECT:

 

Fixed Income Derivatives Confirmation and Agreement

 

REFERENCE NUMBER:   FXNSC8957

 

The purpose of this long-form confirmation ( “Confirmation” ) is to confirm the terms and conditions of the current Transaction entered into on the Trade Date specified below (the “Transaction” ) between Bear Stearns Financial Products Inc. ( “Party A” )   and LaSalle Bank National Association, not individually, but solely as trustee (the “Supplemental Interest Trust Trustee”) on behalf of the supplemental interest trust with respect to the Bear Stearns Mortgage Funding Trust 2006-SL4 Mortgage-Backed Certificates, Series 2006-SL4 (the “Supplemental Interest Trust”) ( “Party B” ) created under the Pooling and Servicing Agreement, dated as of October 1, 2006, among Bear Stearns Asset Backed Securities I LLC, a Delaware limited liability company, as depositor (the “Depositor”), EMC Mortgage Corporation, a Delaware corporation, as seller (in such capacity, the “Seller”) and as master servicer (in such capacity, the “Master Servicer”), and LaSalle Bank National Association, a national banking association (the “Trustee”) . (the “Pooling and Servicing Agreement” ). This Confirmation evidences a complete and binding agreement between you and us to enter into the Transaction on the terms set forth below and replaces any previous agreement between us with respect to the subject matter hereof. This Confirmation constitutes a “Confirmation” and also constitutes a “Schedule” as referred to in the ISDA Master Agreement, and Paragraph 13 of a Credit Support Annex to the Schedule.

 

1.  

This Confirmation shall supplement, form a part of, and be subject to an agreement in the form of the ISDA Master Agreement (Multicurrency - Cross Border) as published and copyrighted in 1992 by the International Swaps and Derivatives Association, Inc. (the “ISDA Master Agreement” ), as if Party A and Party B had executed an agreement in such form on the date hereof, with a Schedule as set forth in Item 3 of this Confirmation, and an ISDA Credit Support Annex (Bilateral Form - ISDA Agreements Subject to New York Law Only version) as published and copyrighted in 1994 by the International Swaps and Derivatives Association, Inc., with Paragraph 13 thereof as set forth in Annex A hereto (the “Credit Support Annex” ). For the avoidance of doubt, the Transaction described herein shall be the sole Transaction governed by such ISDA Master Agreement. In the event of any inconsistency among any of the following documents, the relevant document first listed shall govern: (i) this Confirmation, exclusive of the provisions set forth in Item 3 hereof and Annex A hereto; (ii) the provisions set forth in Item 3 hereof, which are incorporated by reference into the Schedule; (iii) the Credit Support Annex; (iv) the Definitions; and (v) the ISDA Master Agreement. Terms capitalized but not defined herein shall have the meanings attributed to them in the Pooling and Servicing Agreement.

 

Each reference herein to a “Section” (unless specifically referencing the Pooling and Servicing Agreement) or to a “Section of this Agreement” will be construed as a reference to a Section of the ISDA Master Agreement; each herein reference to a “Part” will be construed as a reference to the provisions herein deemed incorporated in a Schedule to the ISDA Master Agreement; each reference herein to a “Paragraph” will be construed as a reference to a Paragraph of the Credit Support Annex.

 

 

2.

The terms of the particular Transaction to which this Confirmation relates are as follows:

 

Type of Transaction:                              Interest Rate Swap   

 

Notional Amount:                                   With respect to any Calculation Period, the amount set forth for such period on Schedule I attached hereto.

 

Trade Date:                                              November 28, 2006  

 

Effective Date:                                         November   10, 2006, provided however for purposes of calculating the initial Fixed and Floating Amounts such date shall be November 25, 2006.

 

Termination Date:                                   July 25, 2010, subject to adjustment in accordance with the Business Day Convention; provided, however, that for the purpose of determining the final Fixed Rate Payer Period End Date, Termination Date shall be subject to No Adjustment.

 

Fixed Amounts:

 

Fixed Rate Payer:                     Party B

 

Fixed Rate Payer

Period End Dates:                   The 25 th calendar day of each month during the Term of this Transaction, commencing December 25, 2006, and ending on the Termination Date, with No Adjustment.

 

Fixed Rate Payer

Payment Dates:                       Early Payment shall be applicable. The Fixed Rate Payer Payment Date shall be one Business Day preceding each Fixed Rate Payer Period End Date.

 

Fixed Rate:                                5.15000%

 

Fixed Amount:                         To be determined in accordance with the following formula:

                                                       

                                                                   100*Fixed Rate*Notional Amount*Fixed Rate Day Count Fraction

 

Fixed Rate Day

Count Fraction:                       30/360

 

Floating Amounts:  

 

Floating Rate Payer:               Party A

 

Floating Rate Payer

Period End Dates:                  The 25 th calendar day of each month during the Term of this Transaction, commencing December 25, 2006, and ending on the Termination Date, subject to adjustment in accordance with the Business Day Convention.

 

Floating Rate Payer

Payment Dates:                       Early Payment shall be applicable. The Floating Rate Payer Payment Date shall be one Business Day preceding each Fixed Rate Payer Period End Date.

 

Floating Rate Option:             USD-LIBOR-BBA

 

Floating Amount:                    To be determined in accordance with the following formula:

 

                                                                                   100*Floating Rate Option*Notional Amount*Floating Rate Day Count Fraction

 

Designated Maturity:              One month

 

Floating Rate Day

Count Fraction:                        Actual/360

 

Reset Dates:                             The first day of each Calculation Period.

 

Compounding:                         Inapplicable

 

Business Days:                       New York and Illinois

 

Business Day Convention:   Following

 

Calculation Agent:                  Party A

 

 

 


 

3.

Provisions Deemed Incorporated in a Schedule to the ISDA Master Agreement:

 

Part 1.

Termination Provisions.

 

For the purposes of this Agreement:-

 

(a)   “Specified Entity” will not apply to Party A or Party B for any purpose.

 

(b)

“Specified Transaction” will have the meaning specified in Section 14.

 

(c)

Events of Default.

 

The statement below that an Event of Default will apply to a specific party means that upon the occurrence of such an Event of Default with respect to such party, the other party shall have the rights of a Non-defaulting Party under Section 6 of this Agreement; conversely, the statement below that such event will not apply to a specific party means that the other party shall not have such rights.

 

(i)  

The “Failure to Pay or Deliver” provisions of Section 5(a)(i) will apply to Party A and will apply to Party B; provided, however, that Section 5(a)(i) is hereby amended by replacing the word “third” with the word “second”; provided, further, that notwithstanding anything to the contrary in Section 5(a)(i) and Paragraph 7 of the Credit Support Annex, any failure by Party A to comply with or perform any obligation to be complied with or performed by Party A under the Credit Support Annex shall not constitute an Event of Default under Section 5(a)(i) unless (A) a Required Ratings Downgrade Event has occurred and been continuing for 30 or more Local Business Days and (B) such failure is not remedied on or before the third Local Business Day after notice of such failure is given to Party A.

 

(ii)  

The “Breach of Agreement” provisions of Section 5(a)(ii) will apply to Party A and will not apply to Party B.

 

(iii)  

The “Credit Support Default” provisions of Section 5(a)(iii) will apply to Party A and will not apply to Party B except that Section 5(a)(iii)(1) will apply to Party B solely in respect of Party B’s obligations under Paragraph 3(b) of the Credit Support Annex; provided, however, that notwithstanding anything to the contrary in Section 5(a)(iii)(1), any failure by Party A to comply with or perform any obligation to be complied with or performed by Party A under the Credit Support Annex shall not constitute an Event of Default under Section 5(a)(iii) unless (A) a Required Ratings Downgrade Event has occurred and been continuing for 30 or more Local Business Days and (B) such failure is not remedied on or before the third Local Business Day after notice of such failure is given to Party A.

 

(iv)  

The “Misrepresentation” provisions of Section 5(a)(iv) will apply to Party A and will not apply to Party B.

 

(v)  

The “Default under Specified Transaction” provisions of Section 5(a)(v) will apply to Party A and will not apply to Party B.

 

(vi)  

The “Cross Default” provisions of Section 5(a)(vi) will apply to Party A and will not apply to Party B. For purposes of Section 5(a)(vi), solely with respect to Party A:

 

“Specified Indebtedness” will have the meaning specified in Section 14.

 

“Threshold Amount” means with respect to Party A USD 100,000,000

 

 

(vii)  

The “Bankruptcy” provisions of Section 5(a)(vii) will apply to Party A and will apply to Party B except that the provisions of Section 5(a)(vii)(2), (6) (to the extent that such provisions refer to any appointment contemplated or effected by the Pooling and Servicing Agreement or any appointment to which Party B has not become subject), (7) and (9) will not apply to Party B; provided that, with respect to Party B only, Section 5(a)(vii)(4) is hereby amended by adding after the words “against it” the words “(excluding any proceeding or petition instituted or presented by Party A or its Affiliates)”, and Section 5(a)(vii)(8) is hereby amended by deleting the words “to (7) inclusive” and inserting lieu thereof “, (3), (4) as amended, (5), (6) as amended, or (7)”.

 

(viii)  

The “Merger Without Assumption” provisions of Section 5(a)(viii) will apply to Party A and will apply to Party B.

 

(d)   Termination Events.

 

The statement below that a Termination Event will apply to a specific party means that upon the occurrence of such a Termination Event, if such specific party is the Affected Party with respect to a Tax Event, the Burdened Party with respect to a Tax Event Upon Merger (except as noted below) or the non-Affected Party with respect to a Credit Event Upon Merger, as the case may be, such specific party shall have the right to designate an Early Termination Date in accordance with Section 6 of this Agreement; conversely, the statement below that such an event will not apply to a specific party means that such party shall not have such right; provided, however, with respect to “Illegality” the statement that such event will apply to a specific party means that upon the occurrence of such a Termination Event with respect to such party, either party shall have the right to designate an Early Termination Date in accordance with Section 6 of this Agreement.

 

(i)   The “Illegality” provisions of Section 5(b)(i) will apply to Party A and will apply to Party B.

 

 

(ii)

The “Tax Event” provisions of Section 5(b)(ii) will apply to Party A except that, for purposes of the application of Section 5(b)(ii) to Party A, Section 5(b)(ii) is hereby amended by deleting the words “(x) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (y)”, and the “Tax Event” provisions of Section 5(b)(ii) will apply to Party B.

 

 

(iii)

The “Tax Event Upon Merger” provisions of Section 5(b)(iii) will apply to Party A and will apply to Party B, provided that Party A shall not be entitled to designate an Early Termination Date by reason of a Tax Event upon Merger in respect of which it is the Affected Party.

 

 

(iv)

The “Credit Event Upon Merger” provisions of Section 5(b)(iv) will not apply to Party A and will not apply to Party B.

 

(e)

The “Automatic Early Termination” provision of Section 6(a) will not apply to Party A and will not apply to Party B.

 

(f)     Payments on Early Termination. For the purpose of Section 6(e) of this Agreement:

 

(i)  

Market Quotation will apply, provided, however, that, in the event of a Derivative Provider Trigger Event, the following provisions will apply:

 

 

(A)

The definition of Market Quotation in Section 14 shall be deleted in its entirety and replaced with the following:

 

“Market Quotation” means, with respect to one or more Terminated Transactions, a Firm Offer which is (1) made by a Reference Market-maker that is an Eligible Replacement, (2) for an amount that would be paid to Party B (expressed as a negative number) or by Party B (expressed as a positive number) in consideration of an agreement between Party B and such Reference Market-maker to enter into a Replacement Transaction, and (3) made on the basis that Unpaid Amounts in respect of the Terminated Transaction or group of Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The party making the determination (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other.  

 

 

(B)

The definition of Settlement Amount shall be deleted in its entirety and replaced with the following:

 

“Settlement Amount” means, with respect to any Early Termination Date, an amount (as determined by Party B) equal to:

 

 

(a)

If a Market Quotation for the relevant Terminated Transaction or group of Terminated Transactions is accepted by Party B so as to become legally binding on or before the day falling ten Local Business Days after the day on which the Early Termination Date is designated, or such later day as Party B may specify in writing to Party A, but in either case no later than one Local Business Day prior to the Early Termination Date (such day, the “Latest Settlement Amount Determination Day”), the Termination Currency Equivalent of the amount (whether positive or negative) of such Market Quotation;

 

 

(b)

If, on the Latest Settlement Amount Determination Day, no Market Quotation for the relevant Terminated Transaction or group of Terminated Transactions has been accepted by Party B so as to become legally binding and one or more Market Quotations from Approved Replacements have been made and remain capable of becoming legally binding upon acceptance, the Settlement Amount shall equal the Termination Currency Equivalent of the amount (whether positive or negative) of the lowest of such Market Quotations (for the avoidance of doubt, the lowest of such Market Quotations shall be the lowest Market Quotation of such Market Quotations expressed as a positive number or, if any of such Market Quotations is expressed as a negative number, the Market Quotation expressed as a negative number with the largest absolute value); or

 

 

(c)

If, on the Latest Settlement Amount Determination Day, no Market Quotation for the relevant Terminated Transaction or group of Terminated Transactions is accepted by Party B so as to become legally binding and no Market Quotation from an Approved Replacement remains capable of becoming legally binding upon acceptance, the Settlement Amount shall equal Party B’s Loss (whether positive or negative and without reference to any Unpaid Amounts) for the relevant Terminated Transaction or group of Terminated Transactions.

 

 

(C)

If Party B requests Party A in writing to obtain Market Quotations, Party A shall use its reasonable efforts to do so before the Latest Settlement Amount Determination Day.

 

 

(D)

If the Settlement Amount is a negative number, Section 6(e)(i)(3) shall be deleted in its entirety and replaced with the following:

 

“(3) Second Method and Market Quotation. If the Second Method and Market Quotation apply, (I) Party B shall pay to Party A an amount equal to the absolute value of the Settlement Amount in respect of the Terminated Transactions, (II) Party B shall pay to Party A the Termination Currency Equivalent of the Unpaid Amounts owing to Party A and (III) Party A shall pay to Party B the Termination Currency Equivalent of the Unpaid Amounts owing to Party B; provided, however, that (x) the amounts payable under the immediately preceding clauses (II) and (III) shall be subject to netting in accordance with Section 2(c) of this Agreement and (y) notwithstanding any other provision of this Agreement, any amount payable by Party A under the immediately preceding clause (III) shall not be netted-off against any amount payable by Party B under the immediately preceding clause (I).”

 

 

(E)

At any time on or before the Latest Settlement Amount Determination Day at which two or more Market Quotations from Approved Replacements remain capable of becoming legally binding upon acceptance, Party B shall be entitled to accept only the lowest of such Market Quotations (for the avoidance of doubt, the lowest of such Market Quotations shall be the lowest Market Quotation of such Market Quotations expressed as a positive number or, if any of such Market Quotations is expressed as a negative number, the Market Quotation expressed as a negative number with the largest absolute value).

 

(ii)  

The Second Method will apply.

 

(g)   “Termination Currency” means USD.

 

(h)   Additional Termination Events. Additional Termination Events will apply as provided in Part 5(c).

 


 

Part 2.   Tax Matters.

 

(a)   Tax Representations.  

 

 

(i)

Payer Representations. For the purpose of Section 3(e) of this Agreement:

 

(A)   Party A makes the following representation(s):

 

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: 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)   Party B makes the following representation(s):

 

None.

 

(ii)   Payee Representations. For the purpose of Section 3(f) of this Agreement:

 

(A)   Party A makes the following representation(s):

 

Party A is a corporation created or organized in the United States or under the laws of the United States or of any State or of the District of Columbia. Party A is a “United States person” for U.S. federal tax purposes as that term is defined in Section 7701(a)(30) (or any applicable successor provision) of the U.S. Internal Revenue Code of 1986, as amended. Party A’s U.S. taxpayer identification number is 13-3866307.

 

 

 

(B)   Party B makes the following representation(s):

 

None.  

 

(b)

Tax Provisions.

 

 

(i)

Gross Up. Section 2(d)(i)(4) shall not apply to Party B as X, and Section 2(d)(ii) shall not apply to Party B as Y, in each case such that Party B shall not be required to pay any additional amounts referred to therein.

 

 

(ii)

Indemnifiable Tax. The definition of “Indemnifiable Tax” in Section 14 is deleted in its entirety and replaced with the following:

 

“Indemnifiable Tax” means, in relation to payments by Party A, any Tax (including any Tax imposed in respect of a payment under a Credit Support Document) and, in relation to payments by Party B, no Tax.

 

 

 

 


 

Part 3.   Agreement to Deliver Documents.  

 

(a)   For the purpose of Section 4(a)(i), tax forms, documents, or certificates to be delivered are:

 

 

Party required to deliver document

 

 

Form/Document/

Certificate

 

 

Date by which to

be delivered

 

 

Party A

 

 

An original properly completed and executed United States Internal Revenue Service Form W- 9 (or any successor thereto) with respect to any payments received or to be received by Party A, that eliminates U.S. federal withholding and backup withholding Tax on payments to Party A under this Agreement.

 

 

(i) upon execution of this Agreement, (ii) on or before the first payment date under this Agreement, including any Credit Support Document, (iii) promptly upon the reasonable demand by Party B, (iv) prior to the expiration or obsolescence of any previously delivered form, and (v) promptly upon the information on any such previously delivered form becoming inaccurate or incorrect.

 

 

Party B

 

 

Party B will deliv


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