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Exhibit 10.3
[GRAPHIC OMITTED][GRAPHIC OMITTED][GRAPHIC OMITTED]
HSBC Bank USA, National Association
452 Fifth Avenue
New York, NY10018
Fax: (212) 525-5517
Date: July 2, 2007
To: LaSalle Bank National Association, not in its individual capacity but solely in its
capacity as Trustee for the benefit of the RAAC Series 2007-SP2 Supplemental Interest
Trust
135 South LaSalle Street, Suite
1511 Chicago, IL60603
Attn: Global Securities and Trust Services, RAAC Series 2007-SP2
Attention: RAAC Series 2007-SP2 Trust
Telephone no.: (312) 904-4373
Facsimile no.: (312) 904-1368
Cc: Kimberly Sturm
Our Reference: Global No. 481986HN
Re: Interest Rate Swap Transaction
Ladies and Gentlemen:
The purpose of this letter agreement is to set forth the terms and conditions of the transaction entered into
between HSBC Bank USA, National Association ("Party A") and RAAC Series 2007-SP2 Trust, acting through LaSalle
Bank National Association, not in its individual capacity but solely as Trustee for the benefit of RAAC Series
2007-SP2 Trust ("Party B") on the Trade Date specified below (the "Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the Agreement specified below.
The definitions and provisions contained in the 2000 ISDA Definitions (the "Definitions") as published by the
International Swaps and Derivatives Association, Inc. are incorporated by reference herein. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation will govern. For purposes of this
Transaction, any capitalized and undefined terms contained herein (other than the capitalized terms the
definitions of which are contained in the Definitions) shall have the meanings ascribed to them in the Pooling
and Servicing Agreement dated as of July 7, 2007 (the "Pooling and Servicing Agreement") relating to the RAAC
Series 2007-SP2 Trust Mortgage Asset-Backed Pass-Through Certificates, Series 2007-SP2, which is hereby
incorporated by reference into this Confirmation.
1. This Confirmation evidences a complete and binding agreement between Party A and Party B as to the terms
of the Transaction to which this Confirmation relates. This Confirmation, together with all other
documents referring to the ISDA Form, as defined below, confirming the Transaction entered into between
us shall supplement, form a part of, and be subject to an agreement in the form of the 1992 ISDA Master
Agreement (Multicurrency-Cross Border) (the "ISDA Form") (as may be amended, modified or supplemented
from time to time, the "Agreement") as if we had executed an agreement on the Trade Date of the first
such Transaction between us in such form, with the Schedule thereto specifying only that (a) the
governing law is the laws of the State of New York, and (b) the Termination Currency is U.S. Dollars.
In the event of any inconsistency between the terms of this Confirmation, and the terms of the
Agreement, this Confirmation will prevail for the purpose of this Transaction.
2. The terms of the particular Transaction to which this Confirmation relates are as follows:-
Notional Amount: With respect to any Calculation Period during which the
Reference Transaction has not been terminated, the lesser,
if any, of (A) the amount set forth on Schedule A attached
hereto and (B) the outstanding aggregate principal balance
of the Class A Certificates and Class M Certificates
immediately prior to the related Floating Rate Payer
Period End Date. Party A will be able to access the
outstanding aggregate principal balance of the Class A and
Class M Certificates via the Trustee's internet websitehttp://www.etrustee.net"RAAC SERIES 2007-SP2" as the
deal. This information will be posted at least 5 Business
Days prior to the related Payment Date.
Trade Date: June 27, 2007
Effective Date: July 25, 2007
Termination Date: June 25, 2012, subject to adjustment in accordance with the
Following Business Day Convention.
Fixed Amounts:
Fixed Rate Payer: Party B
Fixed Rate Payer
Period End Dates: The 25th calendar day of each month of each year, commencing
August 25, 2007, through and including the Termination Date,
subject to adjustment in accordance with the Following
Business Day Convention
Fixed Rate Payer
Payment Dates: Delayed Payment - Two (2) Business Days prior to each Fixed
Rate Payer Period End Date
Fixed Rate: 5.3490%
Fixed Rate Day
Count Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Party A
Floating Rate Payer
Period End Dates: The 25th calendar day of each month of each year, commencing
August 25, 2007, through and including the Termination Date,
subject to adjustment in accordance with the Following
Business Day Convention.
Floating Rate Payer
Payment Dates: Early Payment - Two Business Days prior to each Floating
Rate Payer Period End Date
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: One month
Spread: None
Floating Rate Day
Count Fraction: Actual/360
Floating Rate for initial
Calculation Period: To be determined
Reset Dates: The first Business Day in each Calculation Period.
Compounding: Not applicable
Business Days: New York
3. ACCOUNT DETAILS:
Payments to Party A: HSBC Bank USA, National Association
ABA # 021-001-088
For credit to Department 299
A/C: 000-04929-8
HSBC Derivative Products Group
Payments to Party B: LaSalle Bank
ABA # 071000505
LaSalle CHGO/CTR/BNF:/LaSalle Trust
Account # 724879.2
Attn: RAAC Series 2007-SP2
4. OFFICES:
The Office for Party A for this Transaction is New York, NY.
The Office of Party B for this Transaction is Chicago, IL.
5. CALCULATION AGENT: Party A
6. REPRESENTATIONS.
Each party will be deemed to represent to the other party on the date on which it enters into this Transaction
that (absent a written agreement between the parties that expressly imposes affirmative obligations to the
contrary for this Transaction):
(i) NON-RELIANCE. It is acting for its own account, and it has made its own independent decisions to enter
into this Transaction and as to whether this Transaction is appropriate or proper for it based upon its own
judgment and upon advice from such advisers 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 this Transaction;
it being understood that information and explanations related to the terms and conditions of this Transaction
shall not be considered investment advice or a recommendation to enter into this 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 this, as Trustee, Transaction. Notwithstanding the foregoing, the parties agree that LaSalle
Bank National Association has executed this Confirmation pursuant to the direction received by it pursuant to the
Pooling and Servicing Agreement.
(ii) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the merits of and understanding (on its own
behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks
of this Transaction. It is also capable of assuming, and assumes, the risks of this, as Trustee Transaction.
Notwithstanding the foregoing, the parties agree that the LaSalle Bank National Association has executed this
Confirmation pursuant to the direction received by it pursuant to the Pooling and Servicing Agreement.
(iii) STATUS OF PARTIES. The other party is not acting as a fiduciary for, or an adviser to it in respect of
this Transaction.
(iv) PARI PASSU: Party A represents that its obligations under this Confirmation rank pari passu with all
of its other unsecured, unsubordinated obligations except those obligations preferred by operation of law.
7. ISDA FORM.
(a) "Specified Entity" means, in relation to Party A, for the purpose of Section 5(a)(v), Section 5(a)(vi),
Section 5(a)(vii) and Section 5(b)(iv): Not Applicable.
(b) "Specified Entity" means, in relation to Party B for the purpose of Section 5(a)(v), Section 5(a)(vi),
Section 5(a)(vii) and Section 5(b)(iv): Not Applicable.
(c) "Specified Indebtedness" will have the meaning specified in Section 14 of the ISDA Form, provided that
Specified Indebtedness shall not include deposits received in the course of a party's ordinary banking business.
(d) "Specified Transaction" will have the meaning specified in Section 14 of the ISDA Form.
(e) "Threshold Amount" means, with respect to Party A (or its Credit Support Provider), 3% of shareholders'
equity as described in its most recently published audited financial statement or its equivalent in any currency.
(f) Sections 5(a)(ii), 5(a)(iii), 5(a)(iv) and 5(a)(vi) of the ISDA Form will not apply to Party B; provided
that Section 5(a)(iii) of the ISDA Form shall apply to Party B to the extent that Party B fails to return a
Return Amount under the Credit Support Annex. With respect to Party A and Party B, the provisions of Section
5(a)(v) of the ISDA Form will not apply.
(g) Section 5(a)(vi) of the ISDA Form "Cross Default" applies to Party A, provided, however, that,
notwithstanding the foregoing, an Event of Default shall not occur under either (i) or (ii) above if (A) (I) the
default, or other similar event or condition referred to in (1) or the failure to pay referred to in (2) is a
failure to pay or deliver caused by an error or omission of an administrative or operational nature, and (II)
funds or the asset to be delivered were available to such party to enable it to make the relevant payment or
delivery when due and (III) such payment or delivery is made within three (3) Local Business Days following
receipt of written notice from an interested party of such failure to pay, or (B) such party was precluded from
paying, or was unable to pay, using reasonable means, through the office of the party through which it was acting
for purposes of the relevant Specified Indebtedness, by reason of force majeure, act of State, illegality or
impossibility.
(h) Section 5(a)(vii) of the ISDA Form applies to Party A and Party B; provided that with respect to Party
B, clauses (2), (7) and (9) will not be applicable as an Event of Default to the extent such event relates to
nonpayment of indebtedness other than that of the related class of Notes; clause (4) will not apply to Party B to
the extent that it refers to proceedings or petitions instituted or presented by Party A or any of its
Affiliates; clause (6) will not apply to Party B to the extent that it refers to (i) any appointment that is
contemplated or effected by the Transaction Documents or (ii) any appointment that Party B has not become subject
to); clause (8) will not apply to Party B to the extent that it applies to Sections 5(a)(vii)(2)(4)(6), and (7)
of the ISDA Form (except to the extent that such provisions are not disapplied with respect to Party B.
(i) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) of the ISDA Form will not apply to Party A
or Party B.
(j) The "Automatic Early Termination" provision of Section 6(a) of the ISDA Form will not apply to Party A
or Party B.
(k) The "Tax Event Upon Merger" provisions of Section 5(b)(iii) of the ISDA Form will apply, 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.
(l) Section 6(b)(ii) of the ISDA Form will apply; provided that the words "or if a Tax Event Upon Merger
occurs and the Burdened Party is the Affected Party" shall be deleted.
(m) The ISDA Form will be governed by, and construed in accordance with, the laws of the State of New York
without reference to its conflict of laws provisions (except for Sections 5-1401 and 5-1402 of the New York
General Obligations Law).
(n) The phrase "Termination Currency" means United States Dollars.
(o) For the purpose of Section 6(e) of the ISDA Form:
(i) Market Quotation will apply and the Second Method will apply; provided, however, with
respect to an early termination in which Party A is the Defaulting Party or sole Affected Party
in respect of an Additional Termination Event or Tax Event Upon Merger, notwithstanding Section
6 of the ISDA Form the following amendment to Agreement set forth in paragraphs (i) to (ix)
below shall apply:
For the purposes of Section 6(d)(i) of the ISDA Form, Party B's obligation with respect to the
extent of information to be provided with its calculations is limited to information Party B has
already received in writing which Party B is able to release without breaching any contractual
obligations or the provisions of any law applicable to Party B.
The definition of "Market Quotation" 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 transaction (the "Replacement Transaction") that would have the
effect of preserving for such party the economic equivalent of any payment or delivery (whether
the underlying obligation was absolute or contingent and assuming the satisfaction of each
applicable condition precedent) by the parties under Section 2(a)(i) in respect of such
Terminated Transactions or group of Terminated Transactions that would, but for the occurrence
of the relevant Early Termination Date, have been required after that Date, (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 and (4) made in respect of a
Replacement Transaction with terms substantially the same as those of this Agreement (save for
the exclusion of provisions relating to Transactions that are not Terminated Transactions)."
(ii) 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 in accordance with the Pooling and Servicing Agreement) equal to the Termination
Currency Equivalent of the amount (whether positive or negative) of any Market Quotation for the
relevant Terminated Transaction or group of Terminated Transactions that is accepted by Party B
in accordance with the Pooling and Servicing Agreement so as to become legally binding, provided
that:
(a) if, on or prior to such Early Termination Date, a Market Quotation for the
relevant Terminated Transaction or group of Terminated Transactions is accepted by
Party B so as to become legally binding, the Termination Currency Equivalent of the
amount (whether positive or negative) of such Market Quotation;
(b) if, on such Early Termination Date, 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 one or more Market Quotations have been communicated
to Party B and remain capably of becoming legally binding upon acceptance by Party B,
the Termination Currency Equivalent of the amount (whether positive or negative) of
the lowest of such Market Quotation;
(c) if, on such Early Termination Date, 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 Quotations have been communicated to Party
B and remain capable of becoming legally binding upon acceptance by Party B, Party B's
Loss (whether positive or negative and without reference to Unpaid Amounts) for the
relevant Terminated Transaction or group of Terminated Transactions; and
(d) At any time on or before the Early Termination Date at which two or more Market
Quotations have been communicated to Party B and remain capable of becoming legally
binding upon acceptance by Party B, Party B shall be entitled to accept only the
lowest of such Market Quotations (for the avoidance of doubt, (i) a Market Quotation
expressed as a negative number is lower than a Market Quotation expressed as a
positive number and (ii) the lower of two Market Quotations expressed as negative
numbers is the one with the largest absolute value).
(iii) For the purpose of sub-paragraph (4) of the definition of Market Quotation, Party B
shall determine in its sole discretion in accordance with the Pooling and Servicing Agreement,
acting in a commercially reasonable manner, whether a Firm Offer is made in respect of a
Replacement Transaction with commercial terms substantially the same as those of this Agreement
(save for the exclusion of provisions relating to Transactions that are not Terminated
Transactions).
(iv) If Party B requests Party A in writing to obtain Market Quotations, Party A shall use
its reasonable efforts to do so before the Early Termination Date
(v) If the Settlement Amount is a negative number, Section 6(e)(i)(3) of the ISDA Form
shall be deleted in its entirety and replaced with the following:
"SECOND METHOD AND MARKET QUOTATION. If Second Method and Market Quotation apply, (1) Party B
shall pay to Party A an amount equal to the absolute value of the Settlement Amount in respect
of the Terminated Transactions, (2) Party B shall pay to Party A the Termination Currency
Equivalent of the Unpaid Amounts owing to Party A and (3) Party A shall pay to Party B the
Termination Currency Equivalent of the Unpaid Amounts owing to Party B, provided that, (i) the
amounts payable under clauses (2) and (3) shall be subject to netting in accordance with Section
2(c) of this Agreement and (ii) notwithstanding any other provision of this Agreement, any
amount payable by Party A under clause (3) shall not be netted-off against any amount payable by
Party B under clause (1)."
(p) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form: (a) Party A is not a
Multibranch Party; and (b) Party B is not a Multibranch Party.
(q) Credit Support Document. Initially with respect to Party A, a Credit Support Annex and any guaranty in
support of Party A's obligations. With respect to Party B, a Credit Support Annex, but only with respect to
Paragraph 3(b) of such Credit Support Annex.
(r) Credit Support Provider. In relation to Party A: Not Applicable. In relation to Party B: Not Applicable.
(s) Section 12(a)(ii) of the ISDA Form is deleted in its entirety.
(t) Party A may assign or transfer its rights and obligations hereunder to any entity pursuant to Section 9
of this Agreement. This Transaction shall not be amended or modified pursuant to Section 9(b) of the ISDA Form
unless the Rating Agency Condition is satisfied.
(u) Notwithstanding any provision of this Transaction or any other existing or future agreement, each party
irrevocably waives any and all rights it may have to set off, net, recoup or otherwise withhold or suspend or
condition payment or performance of any obligation between it and the other party hereunder against any
obligation between it and the other party under any other agreements. The provisions for Set-off set forth in
Section 6(e) of the Agreement shall not apply for purposes of this Transaction.
8. LIMITATION OF LIABILITY.
Notwithstanding anything herein to the contrary, it is expressly understood and agreed by the parties
hereto that (a) this Confirmation is executed and delivered by LaSalle Bank National Association ("LaSalle
Bank"), not individually or personally, but solely as Trustee of the the RAAC Series 2007-SP2 Trust, in the
exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings
and agreements herein made on the part of the RAAC Series 2007-SP2 Trust is made and intended not as personal
representations, undertakings and agreements by LaSalle Bank but is made and intended for the purpose of binding
only the RAAC Series 2007-SP2 Trust, (c) nothing herein contained shall be construed as creating any liability on
LaSalle Bank, 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; provided that nothing in this paragraph shall relieve LaSalle Bank from performing
its duties and obligations under the Pooling and Servicing Agreement in accordance with the standard of care set
forth therein, and (d) under no circumstances shall LaSalle Bank be personally liable for the payment of any
indebtedness or expenses of the RAAC Series 2007-SP2 Trust or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the RAAC Series 2007-SP2 Trust under this
Confirmation or any other related documents.
9. ADDITIONAL PROVISIONS.
(I) DOWNGRADE OF PARTY A. If a Ratings Event (as defined below) shall occur and be continuing with
respect to Party A, then Party A shall (A) within 5 Business Days of such Ratings Event, give notice to Party B
of the occurrence of such Ratings Event, and (B) (x)within 30 calendar days after the occurrence of a Ratings
Event, with respect to Fitch or, (y) within 10 Business Days with respect to Party A (or its Credit Support
Provider) that is a Financial Institution with respect to S&P; either (i) use reasonable efforts to transfer (at
its own cost) Party A's rights and obligations hereunder to another party, subject to satisfaction of the Rating
Agency Condition (as defined below), (ii) post Eligible Collateral in accordance with the Credit Support Annex
attached hereto and made a part hereof or (iii) obtain a guaranty which satisfies the Rating Agency Condition.
Party A's obligations to find a transferee, to post Eligible Collateral under such Credit Support Annex or obtain
a guarantor shall remain in effect only for so long as a Ratings Event is continuing with respect to Party A.
For the purpose hereof, a "Ratings Event" shall occur in that event that (1) Party A's (or its Credit Support
Provider's) short-term unsecured and unsubordinated debt rating is reduced below "A-1" by Standard & Poor's
Ratings Service ("S&P") (or if its short-term rating is not available by S&P, in the event that its long-term
unsecured and unsubordinated debt rating is reduced below "A+" by S&P) and with respect to Party A (or its Credit
Support Provider) such entity is a Financial Institution (an "S&P Approved Ratings Downgrade") or (2) its
short-term unsecured and unsubordinated debt rating is reduced below "F1" by Fitch, Inc. ("Fitch") (or, if its
short-term rating is not available by Fitch), its long-term unsecured and unsubordinated debt rating is withdrawn
or reduced below "A" by Fitch or (iii) if Party A fails to satisfy the Moody's Downgrade provisions set forth in
Section 9(ii) hereof.
If an S&P Required Rating Downgrade (as defined below) shall occur and be continuing with respect to Party A,
then Party A shall within 2 Business Days of such S&P Required Rating Downgrade, (A) give notice to Party B of
the occurrence of such S&P Required Rating Downgrade, and (B) within 10 Business Days of the occurrence of such
Ratings Withdrawal comply with the terms of the Credit Support Annex and (C) within 60 days of the date of the
S&P Required Ratings Downgrade, in addition to posting collateral pursuant to the Credit Support Annex (i)
transfer (at its own cost) Party A's rights and obligations hereunder to another party, subject to satisfaction
of the Rating Agency Condition or (ii) obtain a guaranty of its obligations hereunder from another party, subject
to the satisfaction of the Rating Agency Condition, and such guaranty shall remain in effect only for so long as
a S&P Required Rating Downgrade is continuing with respect to Party A. For the purpose hereof, a "S&P Required
Rating Downgrade" shall occur with respect to Party A (or its Credit Support Provider) (x) if such entity is a
Financial Institution, its the short-term senior unsecured deposit rating is withdrawn by S&P or cease to be at
least "A-2" (or if its short-term rating is not available by S&P, in the event that its long-term unsecured and
unsubordinated debt rating is cease to be at least "BBB+" by S&P) or (y) with respect to Party A (or its Credit
Support Provider) if such entity is not a Financial Institution, at any time its short-term senior unsecured
deposit rating is withdrawn or reduced below "A-1" (or if its short-term rating is not available by S&P, in the
event that its long-term unsecured and unsubordinated debt rating is cease to be at least "A+" by S&P).
"Financial Institution" means a bank, broker/dealer, insurance company, structured investment vehicle or
derivative product company.
"Rating Agency Condition" means, with respect to any action taken or to be taken, a condition that is
satisfied when S&P, Moody's and Fitch have confirmed in writing that such action would not result in the
downgrade, qualification (if applicable) or withdrawal of the rating then assigned by such Rating Agency to the
Certificates.
(II) MOODY'S DOWNGRADE PROVISIONS.
(A) Moody's First Rating Trigger Collateral. For purposes of this section, if Party A
has failed to comply with or perform any obligation to be complied with or performed by Party A
in accordance with the Credit Support Annex from time to time entered into between Party A and
Party B in relation to this Agreement and either (x) the Moody's Second Rating Trigger
Requirements do not apply or (y) less than 30 Local Business Days have elapsed since the last
time the Moody's Second Rating Trigger Requirements did not apply, such failure by Party A to
comply with the provisions set forth above shall constitute an Additional Termination Event for
which Party A shall be the sole Affected Party.
(B) Moody's Second Rating Trigger Replacement. It shall be an Additional termination
Event with respect to Party A as sole Affected Party if (x) the Moody's Second Rating Trigger
Requirements apply and 30 or more Local Business Days have elapsed since the last time the
Moody's Second Rating Trigger Requirements did not apply and (y) (i) at least one Eligible
Replacement has made a Firm Offer (which remains capable of becoming legally binding upon
acceptance) to be the transferee of a transfer to be made in accordance with Part 5(m)(ii)
below and/or (ii) at least one entity with the Moody's First Trigger Required Ratings has made
a Firm Offer (which remains capable of becoming legally binding upon acceptance by the offeree)
to provide an Eligible Guarantee in respect of all of Party A's present and future obligations
under this Agreement
For the purpose of sub-paragraph (B) and (C) above:
"Eligible Guarantee" means an unconditional and irrevocable guarantee that is provided by a
guarantor as principal debtor rather than surety and is directly enforceable by Party B, where
either (A) a law firm has given a legal opinion confirming that none of the guarantor's
payments to Party B under such guarantee will be subject to withholding for Tax or (B) such
guarantee provides that, in the event that any of such guarantor's payments to Party B are
subject to withholding for tax, such guarantor is required to pay such additional amount as is
necessary to ensure that the net amount actually received by Party B (free and clear of any
withholding tax) will equal the full amount Party B would have received had no such withholding
been required.
"Eligible Replacement" means an entity (A) (i) with the Moody's First Trigger Required Ratings
or (ii) whose present and future obligations owing to Party B are guaranteed pursuant to an
Eligible Guarantee provided by a guarantor with the Moody's First Trigger Required Ratings and
(B) with a short-term unsecured and unsubordinated debt rating of at least "A-1" by S&P (or if
its short-term rating is not available by S&P, in the event that its long-term unsecured and
unsubordinated debt rating is at least "A+" by S&P) and with short-term unsecured and
unsubordinated debt rating of at least "F1" by Fitch
"Firm Offer" means an offer which, when made, was capable of becoming legally binding upon
acceptance.
"Moody's Short-term Rating" means a rating assigned by Moody's under its short-term rating
scale in respect of an entity's short-term, unsecured and unsubordinated debt obligations.
"Relevant Entities" means Party A and any guarantor under an Eligible Guarantee in respect of
all of Party A's present and future obligations under this Agreement.
An entity shall have the "Moody's First Trigger Required Ratings" (x) where such entity is the
subject of a Moody's Short-term Rating, if such rating is "Prime-1" and its long-term,
unsecured and unsubordinated debt or counterparty obligations are rated "A2" or above by
Moody's and (y) where such entity is not the subject of a Moody's Short-term Rating, if its
long-term, unsecured and unsubordinated debt or counterparty obligations are rated "A1" or
above by Moody's.
The "Moody's Second Rating Trigger Requirements" shall apply so long as no Relevant Entity has
the Second Trigger Required Ratings.
An entity shall have the "Moody's Second Trigger Required Ratings" (x) where such entity is the
subject of a Moody's Short-term Rating, if such rating is "Prime-2" or above and its long-term,
unsecured and unsubordinated debt obligations are rated "A3" or above by Moody's and (y) where
such entity is not the subject of a Moody's Short-term Rating, if its long-term, unsecured and
unsubordinated debt obligations are rated "A3" or above by Moody's.
So long as the Moody's Second Rating Trigger Requirements apply, Party A will at its own cost
use commercially reasonable efforts to, as soon as reasonably practicable, procure either (x)
an Eligible Guarantee in respect of all of Party A's present and future obligations under this
Agreement to be provided by a guarantor with the Moody's First Trigger Required Ratings and/or
the Moody's Second Trigger Required Ratings or (y) a transfer in accordance with Section 9(ii)
below.
(III) TRANSFERS.
(a) Section 7 of the ISDA Form shall not apply to Party A and, subject to Section 6(b)(ii)
of the ISDA Form and Section 9(v) herein, Party A may not transfer (whether by way of security
or otherwise) any interest or obligation in or under this Agreement without the prior written
consent of Party B and Party A has satisfied The Rating Agency Condition with respect to S&P.
Any transfer pursuant to this Section will require that the transferee enter into a Regulation
AB indemnification agreement substantially similar to the one previously entered into by Party
A.
(b) Subject to Section 9(v) below, Party A may (at its own cost) transfer all or
substantially all of its rights and obligations with respect to this Agreement to any other
entity (a "TRANSFEREE") that is an Eligible Replacement, provided that Party B shall determine
in its sole discretion in accordance with the Pooling and Servicing Agreement, acting in a
commercially reasonable manner, whether or not a transfer relates to all or substantially all
of Party A's rights and obligations under this Agreement and Party A has satisfied The Rating
Agency Condition with respect to S&P. Following such transfer, all references to Party A shall
be deemed to be references to the Transferee.
(c) If an entity has made a Firm Offer (which remains capable of becoming legally binding upon
acceptance) to be the transferee of a transfer to be made in accordance with (ii) above and
Party A has satisfied The Rating Agency Condition with respect to S&P, Party B shall (at Party
A's cost) at Party A's written request, take any reasonable steps required to be taken by it to
effect such transfer provided that such steps shall be in accordance with the Pooling and
Servicing Agreement.
(IV) TAX. Notwithstanding the definition of "Indemnifiable Tax" in Section 14 of the ISDA Form, in
relation to payments by Party A, any Tax shall be an Indemnifiable Tax and, in relation to payments by Party B,
no Tax shall be an Indemnifiable Tax.
(V) RATING AGENCY NOTIFICATIONS. Notwithstanding any other provision of this Agreement, this
Agreement shall not be amended, no Early Termination Date shall be effectively designated by Party B, and no
transfer of any rights or obligations under this Agreement shall be made (other than a transfer of all of Party
A's rights and obligations with respect to this Agreement in accordance with Section 9(ii) above) unless Moody's
has been given prior written notice of such amendment, designation or transfer.
10. ADDITIONAL TERMINATION EVENTS.
(a) A Ratings Event or a S&P Required Rating Downgrade occurs as set forth in Section 9 hereof and Party A
fails to satisfy the requirements set forth in Section 9 hereof. Party A shall be the sole
Affected Party.
(b) The Pooling and Servicing Agreement is amended or modified, without the prior written consent of Party
A, in any manner which materially adversely affects Party A, and such consent is required
pursuant to the Pooling and Servicing Agreement. Party B shall be the sole Affected Party.
(c) The Trust Fund (as defined in the Pooling and Servicing Agreement) is terminated pursuant to the Pooling
and Servicing Agreement or notice of the Terminator's (as defined in the Pooling and Servicing
Agreement) intention to exercise its option to purchase the Mortgage Loans pursuant to Section
9.01 of the Pooling and Servicing Agreement is given by the Trustee to Certificateholders
pursuant to Section 9.01 of the Pooling and Servicing Agreement. Party B shall be the sole
Affected Party.
11. NON-PETITION.
Party A hereby irrevocably and unconditionally agrees that it will not institute against, or join any
other person in instituting against or cause any other person to institute against Party B, any bankruptcy,
reorganization, arrangement, insolvency, or similar proceeding under the laws of the United States, or any other
jurisdiction for the non-payment of any amount due hereunder or any other reason until the payment in full of the
certificates issued by Party B under the Pooling and Servicing Agreement and the expiration of a period of one
year plus ten days (or, if longer, the applicable preference period) following such payment.
12. TAX REPRESENTATIONS.
(a) Payer Representations. For the purpose of Section 3(e) of the ISDA Form, Party A and Party B will make
the following representations:
It is not required by any applicable law, as modified by the practice of any relevant governmental
revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account
of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of the Agreement)
to be made by it to the other party under the 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 the Agreement;
(ii) the satisfaction of the agreement contained in Section 4(a)(iii) of the Agreement and the accuracy and
effectiveness of any document provided by the other party pursuant to Section 4(a)(iii) of the
Agreement; and
(iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the 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 the Agreement, each of Party A and Party B
make the following representations.
The following representation will apply to Party A:
Party A is a national banking association organized under the federal laws of the United States and its
U.S. taxpayer identification number is 20-1177241.
The following representation will apply to Party B:
LaSalle Bank National Association is the Trustee and Supplemental Interest Trust Trustee under the
Pooling and Servicing Agreement.
13. NON-RECOURSE PROVISIONS.
Notwithstanding anything to the contrary contained herein, none of Party B or any of its officers,
directors, or shareholders (the "Non-recourse Parties") shall be personally liable for the payment by or on
behalf of the RAAC Series 2007-SP2 Trust hereunder, and Party A shall be limited to a proceeding against the
Collateral or against any other third party other than the Non-recourse Parties, and Party A shall not have the
right to proceed directly against the RAAC Series 2007-SP2 Trust for the satisfaction of any monetary claim
against the Non-recourse Parties or for any deficiency judgment remaining after foreclosure of any property
included in such Collateral and following the realization of the Collateral, any claims of Party A shall be
extinguished.
14. DOCUMENTS TO BE DELIVERED. For the purpose of Sections 4(a)(i) and 4(a)(iii):
(1) Tax forms, documents, or certificates to be delivered are:
----------------------------------------------------- ------------------------------------------- ---------------------------------------------------------------
PARTY REQUIRED TO DELIVER DOCUMENT FORM/DOCUMENT/ DATE BY WHICH TO BE DELIVERED
CERTIFICATE
----------------------------------------------------- ------------------------------------------- ---------------------------------------------------------------
----------------------------------------------------- ------------------------------------------- ---------------------------------------------------------------
Party A and Any document required or reasonably Promptly after the earlier of (i) reasonable demand by either
Party B requested to allow the other party to party or (ii) learning that such form or document is required.
make payments under this Agreement
without any deduction or withholding for
or on the account of any Tax or with such
deduction or withholding at a reduced
rate.
----------------------------------------------------- ------------------------------------------- ---------------------------------------------------------------
(2) Other documents to be delivered (unless publicly available) are:
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
PARTY REQUIRED TO DELIVER DOCUMENT FORM/DOCUMENT/ DATE BY WHICH TO BE DELIVERED COVERED BY SECTION 3(D)
CERTIFICATE REPRESENTATION
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
Party A and Party B Any documents to evidence the authority of Upon the execution and delivery of this Yes
the delivering party for it to execute and Agreement and such Confirmation.
deliver this Confirmation.
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
Yes
Party A and Party B A certificate of an authorized officer of
the party, as to the incumbency and Upon the execution and delivery of this
authority of the respective officers of the Confirmation.
party signing this Confirmation.
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
Party A Legal opinion(s) with respect to such party Within 5 Local Business Days of No
and its Credit Support Provider, if any, execution hereof.
for it, reasonably satisfactory in form and
substance to the other party relating to
the enforceability of the party's
obligations under this Agreement.
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
Party A Annual Financial Statements of Party A as Promptly upon request made by Party B. Yes
set forth in Party A's Call Report.
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
Party B Each other report or other document Promptly upon request by Party A, or No
required to be delivered by or to Party B with respect to any particular type of
under the terms of the Pooling and report or other document as to which
Servicing Agreement, other than those Party A has previously made request to
required to be delivered directly by the receive all reports or documents of
Trustee to Party A thereunder. that type, promptly upon delivery or
receipt of such report or document by
Party B and delivery shall be satisfied
by posting such report on Party B's
websitehttp://www.usbank.com/mbs.
-------------------------------------- --------------------------------------------- ----------------------------------------- ---------------------------------
15. WAIVER OF RIGHT TO TRIAL BY JURY.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS TRANSACTION.
16. ELIGIBLE CONTRACT PARTICIPANT.
Each party represents to the other party that it is an "eligible contract participant" as defined in
Section 1a(12) of the U.S. Commodity Exchange Act, as amended.
17. NOTICE BY FACSIMILE TRANSMISSION.
Section 12(a) of the ISDA Form is hereby amended by deleting the parenthetical "(except that a notice or
other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging
system)."
This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
We are very pleased to have executed this Transaction with you and we look forward to completing other transactions
with you in the near future.
Very truly yours,
HSBC BANK USA, NATIONAL ASSOCIATION
By: /s/ Charleen Collins
Name: Charleen Collins
Title: Vice President ID# 15564
By: /s/ Dennis J. Nevins
Name: Dennis J. Nevins
Title: Officer ID# 15157
Confirmed as of the date above:
RAAC SERIES 2007-SP2 TRUST
By: LaSalle Bank National Association not in its individual capacity
but solely in its capacity as Trustee for the benefit of the RAAC Series 2007-SP2
Trust
By: /s/ Susan L. Feld
Name: Susan L. Feld
Title: Vice President
SCHEDULE A
With respect to calculating a Fixed Amount or Floating Amount for any Calculation Period falling within the
periods set forth below, the Notional Amount shall be the amount set forth opposite the relevant period and
underneath the caption Notional Amount, as follows:
------------------------------------------------------------------------------- ------------------------------
For the Calculation Periods Notional Amount
------------------------------------------------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
From and including:* To but excluding:* in USD:
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
The Effective Date August 25, 2007 283,621,956.85
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
August 25, 2007 September 25, 2007 274,761,803.75
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
September 25, 2007 October 25, 2007 264,815,953.31
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
October 25, 2007 November 25, 2007 254,923,899.46
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
November 25, 2007 December 25, 2007 243,260,970.00
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
December 25, 2007 January 25, 2008 232,967,883.99
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
January 25, 2008 February 25, 2008 221,728,518.91
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
February 25, 2008 March 25, 2008 210,623,465.26
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
March 25, 2008 April 25, 2008 201,085,601.22
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
April 25, 2008 May 25, 2008 192,691,206.85
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
May 25, 2008 June 25, 2008 184,694,586.95
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
June 25, 2008 July 25, 2008 177,054,558.38
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
July 25, 2008 August 25, 2008 169,733,692.00
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
August 25, 2008 September 25, 2008 162,647,539.82
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
September 25, 2008 October 25, 2008 155,652,635.02
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
October 25, 2008 November 25, 2008 148,452,597.53
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
November 25, 2008 December 25, 2008 138,560,294.11
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
December 25, 2008 January 25, 2009 95,571,924.43
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
January 25, 2009 February 25, 2009 82,756,979.51
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
February 25, 2009 March 25, 2009 78,525,794.97
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
March 25, 2009 April 25, 2009 75,052,739.21
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
April 25, 2009 May 25, 2009 71,962,622.20
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
May 25, 2009 June 25, 2009 69,215,470.25
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
June 25, 2009 July 25, 2009 66,687,057.34
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
July 25, 2009 August 25, 2009 64,241,567.44
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
August 25, 2009 September 25, 2009 61,913,266.73
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
September 25, 2009 October 25, 2009 59,677,741.17
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
October 25, 2009 November 25, 2009 57,302,741.89
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
November 25, 2009 December 25, 2009 55,119,347.16
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
December 25, 2009 January 25, 2010 51,230,305.49
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
January 25, 2010 February 25, 2010 48,020,850.03
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
February 25, 2010 March 25, 2010 46,406,411.05
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
March 25, 2010 April 25, 2010 44,849,826.23
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
April 25, 2010 May 25, 2010 43,348,821.65
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
May 25, 2010 June 25, 2010 41,901,223.02
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
June 25, 2010 July 25, 2010 40,504,950.79
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
July 25, 2010 August 25, 2010 39,148,693.48
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
August 25, 2010 September 25, 2010 37,849,752.64
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
September 25, 2010 October 25, 2010 36,596,103.11
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
October 25, 2010 November 25, 2010 35,341,513.42
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
November 25, 2010 December 25, 2010 34,176,643.05
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
December 25, 2010 January 25, 2011 33,000,196.72
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
January 25, 2011 February 25, 2011 31,917,736.21
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
February 25, 2011 March 25, 2011 30,865,932.62
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
March 25, 2011 April 25, 2011 29,857,034.92
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
April 25, 2011 May 25, 2011 28,882,590.89
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
May 25, 2011 June 25, 2011 27,941,299.21
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
June 25, 2011 July 25, 2011 27,032,060.67
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
July 25, 2011 August 25, 2011 26,152,910.57
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
August 25, 2011 September 25, 2011 25,279,164.20
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
September 25, 2011 October 25, 2011 24,429,286.83
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
October 25, 2011 November 25, 2011 23,395,117.66
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
November 25, 2011 December 25, 2011 22,353,318.28
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
December 25, 2011 January 25, 2012 21,421,167.83
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
January 25, 2012 February 25, 2012 20,615,860.89
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
February 25, 2012 March 25, 2012 19,973,003.62
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
March 25, 2012 April 25, 2012 19,350,237.45
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
April 25, 2012 May 25, 2012 18,746,926.68
--------------------------------------- --------------------------------------- ------------------------------
--------------------------------------- --------------------------------------- ------------------------------
May 25, 2012 The Termination Date 18,162,456.23
--------------------------------------- --------------------------------------- ------------------------------
* All dates listed above (with the exception of the Effective Date) are subject to adjustment in accordance with
the Following Business Day Convention
Dates Referenced Herein and Documents Incorporated by Reference
