EXHIBIT 99.3
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The Swap Contract Administration Agreement
SWAP CONTRACT ADMINISTRATION AGREEMENT
This SWAP CONTRACT ADMINISTRATION AGREEMENT, dated as of November
30, 2006 (this "Agreement"), among THE BANK OF NEW YORK ("BNY"), as Swap
Contract Administrator (in such capacity, the "Swap Contract Administrator") and
not in its individual or corporate capacity but solely as Trustee under the
Pooling and Servicing Agreement referred to below (in such capacity, the
"Trustee"), and COUNTRYWIDE HOME LOANS, INC. ("CHL").
WHEREAS, CHL is a party to an interest rate swap agreement between
CHL and Xxxxxx Brothers Special Financing Inc. (the "Counterparty"), with a
Trade Date of November 22, 2006 and a Global Deal ID of 2758853 (the "Swap
Contract"), a copy of which is attached to this Agreement as Exhibit A;
WHEREAS, CHL is conveying certain mortgage loans and other related
assets to a trust fund, Alternative Loan Trust 0000-XX00 (xxx "Xxxxx Xxxx")
created pursuant to a Pooling and Servicing Agreement, dated as of November 1,
2006 (the "Pooling and Servicing Agreement"), among CWALT, Inc., as depositor,
CHL, as a seller, Park Granada LLC, as a seller, Park Monaco Inc., as a seller,
Park Sienna LLC, as a seller, Countrywide Home Loans Servicing LP, as master
servicer (the "Master Servicer"), and the Trustee;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, CHL is assigning all of its rights, and delegating all of its duties
and obligations (other than its obligation to pay the Additional Payment (as
defined in the Swap Contract)) under the Swap Contract to the Swap Contract
Administrator, pursuant to the Assignment Agreement, dated as of the date hereof
(the "Assignment Agreement"), among CHL, as assignor, the Swap Contract
Administrator, as assignee, and the Counterparty;
WHEREAS, the parties hereto desire that the Trustee make remittances
to the Swap Contract Administrator as contemplated by and to the extent provided
in the Pooling and Servicing Agreement to cover payments due to the Counterparty
under the Swap Contract;
WHEREAS, CHL desires that the Net Payments (as defined below)
payable by the Counterparty on the Swap Contract be distributed to the Trustee
under the Pooling and Servicing Agreement to be applied for the purposes
specified in the Pooling and Servicing Agreement and that the Excess Payments
(as defined below) on the Swap Contract be distributed to CHL;
WHEREAS, CHL and the Trustee desire to appoint the Swap Contract
Administrator, and the Swap Contract Administrator desires to accept such
appointment, to distribute funds received under the Swap Contract to the Trustee
and to CHL as provided in this Agreement, and, in the case of a NIM Issuance, to
distribute Excess Payments in accordance with the related Swap Excess Assignment
Agreement (each as defined below).
NOW, THEREFORE, in consideration of the mutual covenants contained
in this Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties agree as follows:
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1. Definitions. Capitalized terms used but not otherwise defined in this
Agreement shall have the respective meanings assigned thereto in the Pooling and
Servicing Agreement.
Benefited Certificates: The LIBOR Certificates.
Excess Payment: For any Distribution Date on or prior to the Swap
Contract Termination Date and as to which the Swap Contract or a replacement
swap contract is in effect, an amount equal to the excess, if any, of (i) the
Net Swap Payment (as defined in the Pooling and Servicing Agreement) received by
the Swap Contract Administrator from the Counterparty with respect to such
Distribution Date over (ii) the Net Payment for such Distribution Date. For any
Distribution Date on or prior to the Swap Contract Termination Date but only if
neither the Swap Contract nor a replacement swap contract is in effect, zero.
For any Distribution Date after the Swap Contract Termination Date, an amount
equal to all remaining funds on deposit in the Swap Administration Account.
Indenture Trustee: With respect to a NIM Issuance (if any), the
indenture trustee under the indenture pursuant to which the notes related to
such NIM Issuance are issued.
ISDA Master Agreement: The 1992 ISDA Master Agreement (Multicurrency
- Cross Border), including the Schedule and Credit Support Annex thereto, dated
November 30, 2006, between the Counterparty and the Swap Contract Administrator.
Net Payment: With respect to any Distribution Date on or prior to
the Swap Contract Termination Date, an amount equal to the sum of (i) any
Current Interest and Interest Carry Forward Amounts in respect of the Benefited
Certificates, (ii) any Net Rate Carryover in respect of the Benefited
Certificates, (iii) any Unpaid Realized Loss Amounts in respect of the Benefited
Certificates and (iv) any remaining Overcollateralization Deficiency Amount, in
each case remaining unpaid following the distribution to the Benefited
Certificates of Excess Cashflow pursuant to Section 4.02(c)(i) through (iv) of
the Pooling and Servicing Agreement. With respect to any Distribution Date after
the Swap Contract Termination Date, zero.
NIM Issuance: An issuance by a NIM Trust, on or after the date
hereof, of asset-backed notes secured by the Class C Certificates and/or Class P
Certificates.
NIM Trust: A Delaware statutory trust or other special-purpose
entity that is the issuer of the securities issued in connection with a NIM
Issuance (if any).
Responsible Officer: When used with respect to the Swap Contract
Administrator, any Vice President, any Assistant Vice President, the Secretary,
any Assistant Secretary, any Trust Officer or any other officer of the Swap
Contract Administrator customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
Swap Administration Account: The separate account created and
maintained by the Swap Contract Administrator pursuant to Section 3 with a
depository institution in the name of the Swap Contract Administrator for the
benefit of the Counterparty, CHL and the Trustee on behalf of the Holders of the
Benefited Certificates and designated "The Bank of New York for
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Countrywide Home Loans, Inc., Xxxxxx Brothers Special Financing Inc. and certain
registered Holders of Mortgage Pass-Through Certificates, Series 2006-OC10".
Funds in the Swap Administration Account shall be held for the Counterparty, CHL
and the Trustee on behalf of the Holders of the Benefited Certificates as set
forth in this Agreement.
Swap Excess Assignment Agreement: With respect to a NIM Issuance (if
any), an agreement executed on or after the date hereof by CHL, the related NIM
Trust and the Swap Contract Administrator (in form and substance reasonably
satisfactory to the Swap Contract Administrator), pursuant to which rights to
receive certain portions of Excess Payments shall be assigned to such NIM Trust
and pursuant to which the Swap Contract Administrator shall agree to distribute
Excess Payments to the related Indenture Trustee and CHL (in accordance with the
terms of such agreement).
2. Appointment of Swap Contract Administrator.
CHL and the Trustee hereby appoint BNY to serve as Swap Contract
Administrator pursuant to this Agreement and pursuant to the related Swap Excess
Assignment Agreement (if any). The Swap Contract Administrator accepts such
appointment and acknowledges the transfer and assignment to it of CHL's rights
and obligations under the Swap Contract pursuant to the Assignment Agreement.
The Swap Contract Administrator agrees to exercise the rights referred to above
for the benefit of CHL, the Trustee and the Counterparty and to perform the
duties set forth in this Agreement. In the event of a NIM Issuance, the Swap
Contract Administrator further agrees to perform the duties set forth in the
related Swap Excess Assignment Agreement for the benefit of CHL, the related NIM
Trust and the related Indenture Trustee.
3. Receipt of Funds; Swap Administration Account.
The Swap Contract Administrator hereby agrees to receive (i) on behalf of
CHL and the Trustee, all amounts paid by the Counterparty under the Swap
Contract and (ii) on behalf of the Counterparty, all amounts remitted by the
Trustee pursuant to the Pooling and Servicing Agreement for payment to the
Counterparty.
The Swap Contract Administrator shall establish and maintain a Swap
Administration Account into which the Swap Contract Administrator shall deposit
or cause to be deposited on the Business Day of receipt, (x) all amounts
remitted by the Trustee for payment to the Counterparty pursuant to the Swap
Contract and (y) all amounts payable by the Counterparty under the Swap
Contract. All funds deposited in the Swap Administration Account shall be held
for the benefit of the Counterparty, CHL and the Trustee on behalf of the
Holders of the Benefited Certificates until withdrawn in accordance with Section
4.
The Swap Administration Account shall be an "Eligible Account" as defined
in the Pooling and Servicing Agreement. Funds in the Swap Administration Account
shall remain uninvested.
The Swap Contract Administrator shall give at least 30 days' advance notice
to the Counterparty, CHL and the Trustee of any proposed change of location of
the Swap Administration Account prior to any change thereof.
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4. Calculations; Distribution of Payments; Delivery of Notices.
The Swap Contract Administrator hereby agrees to make payments based on the
information provided by the Trustee and the Counterparty, and the Swap Contract
Administrator shall, absent manifest error, be entitled to rely on information
provided by the Trustee and the Counterparty.
On the Business Day of receipt of any payment from the Counterparty, the
Swap Contract Administrator shall withdraw the amount of such payment from the
Swap Administration Account and distribute such amounts sequentially, as
follows:
(a) first, to the Trustee for deposit into the Swap Account, the
applicable Net Payment; and
(b) second, to CHL, the applicable Excess Payment, in accordance with the
following wiring instructions:
Bank: Bank of New York
Account Name: Countrywide Home Loans
Account No: 8900038632
ABA No: 000000000
REF: CWALT 2006-OC10 X'S SwapPyt
On the Business Day of receipt of any payment from the Trustee for payment
to the Counterparty, the Swap Contract Administrator shall withdraw the amount
of such payment from the Swap Administration Account and distribute such amounts
to the Counterparty in accordance with the wiring instructions specified in the
Swap Contract.
The Swap Contract Administrator shall prepare and deliver any notices
required to be delivered under the Swap Contract.
On the Business Day of receipt of any notices, information or reports
received by the Swap Contract Administrator from the Counterparty, the Swap
Contract Administrator shall provide the same to the Trustee, including without
limitation information regarding any Net Swap Payment or Swap Termination
Payment that will be payable by the Swap Contract Administrator to the
Counterparty with respect to the next Distribution Date.
5. Control Rights; Delivery Amounts; Replacement Swap Contract.
The Trustee shall have the right to direct the Swap Contract Administrator
with respect to the exercise of any right under the Swap Contract and the ISDA
Master Agreement (such as the right to designate an Early Termination Date
following an Event of Default or Termination Event (each such term as defined in
the ISDA Master Agreement)).
If the obligations of the Counterparty are, or shall become, guaranteed
pursuant to the guarantee of any party (whether an affiliate of the Counterparty
or otherwise), then the Swap Contract Administrator shall promptly demand in
accordance with the terms of the guarantee from such guarantor all amounts
payable or deliverable by the Counterparty under the ISDA
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Master Agreement in the event that the Counterparty fails to make timely payment
or delivery of such amounts.
Upon the Swap Contract Administrator or the Trustee obtaining actual
knowledge of the rating of the Counterparty falling below the Approved Ratings
Threshold or the Required Ratings Threshold (as defined in the ISDA Master
Agreement), the Swap Contract Administrator, at the direction of the Trustee,
shall demand payment of the Delivery Amount from the Counterparty, (as defined
in the ISDA Master Agreement) on each Valuation Date (as defined in the ISDA
Master Agreement) and perform its other obligations in accordance with the ISDA
Master Agreement or (ii) take such other action required under the ISDA Master
Agreement. If a Delivery Amount is demanded, the Swap Contract Administrator
shall establish an account to hold cash or other eligible investments pledged
under the ISDA Master Agreement. Any such account shall be an "Eligible Account"
as defined in the Pooling and Servicing Agreement. Any cash or other Eligible
Collateral (as defined in the ISDA Master Agreement) pledged under the ISDA
Master Agreement shall not be part of the Swap Administration Account unless
they are applied in accordance with the ISDA Master Agreement to make a payment
due to the Swap Contract Administrator pursuant to the Swap Contract.
In the event that the Swap Contract is terminated, CHL shall assist the
Swap Contract Administrator in procuring a replacement swap contract with terms
approximating those of the original Swap Contract, and the Swap Contract
Administrator shall enter into a replacement swap contract procured by CHL or
the Counterparty and continue to serve as Swap Contract Administrator pursuant
to the terms hereof. Any Swap Termination Payment received from the Counterparty
shall be used to pay any upfront amount required under any replacement swap
contract, and any excess shall be distributed to CHL. In the event that a
replacement swap contract cannot be procured, any Swap Termination Payment
received from the Counterparty in respect of the termination of the original
Swap Contract shall be held in the Swap Administration Account and distributed
as provided in Section 4.
In the event that a replacement swap is procured and the replacement
counterparty pays an upfront amount to the Swap Contract Administrator in
connection with the execution of the replacement swap contract, then (i) if that
upfront amount is not received prior to the Distribution Date on which any Swap
Termination Payment was due to the Counterparty under the original Swap
Contract, that upfront amount shall be held in the Swap Administration Account
and distributed as provided in Section 4, and (ii) if that upfront amount is
received prior to the Distribution Date on which any Swap Termination Payment is
due to the Counterparty under the original Swap Contract, the Swap Contract
Administrator shall remit to the Trustee, to be included in Interest Funds for
Loan Group 1 and Loan Group 2, the portion of such upfront amount equal to the
lesser of (x) such upfront amount and (y) the amount of the Swap Termination
Payment due to the Counterparty under the original Swap Contract, to be
allocated between Loan Group 1 and Loan Group 2 pro rata based on their
respective Interest Funds for that Distribution Date. Any upfront amount paid by
a replacement counterparty that is not remitted by the Swap Contract
Administrator to the Trustee pursuant to clause (ii) of the preceding sentence
shall be distributed to CHL.
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6. Representations and Warranties of the Swap Contract Administrator. The Swap
Contract Administrator represents and warrants as follows:
(a) BNY is duly organized and validly existing as a banking corporation
under the laws of the State of New York and has all requisite power
and authority to execute and deliver this Agreement and to perform its
obligations as Swap Contract Administrator under this Agreement.
(b) The execution, delivery and performance of this Agreement by BNY as
Swap Contract Administrator has been duly authorized by BNY.
(c) This Agreement has been duly executed and delivered by BNY as Swap
Contract Administrator and is enforceable against BNY in accordance
with its terms, except as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in
a proceeding in equity or at law).
7. Certain Matters Concerning the Swap Contract Administrator.
(a) The Swap Contract Administrator shall undertake to perform such duties
and only such duties as are specifically set forth in this Agreement.
(b) No provision of this Agreement shall be construed to relieve the Swap
Contract Administrator from liability for its own grossly negligent
action, its own grossly negligent failure to act or its own willful
misconduct, its grossly negligent failure to perform its obligations
in compliance with this Agreement, or any liability that would be
imposed by reason of its willful misfeasance or bad faith; provided
that:
(i) the duties and obligations of the Swap Contract Administrator
shall be determined solely by the express provisions of this
Agreement, the Swap Contract Administrator shall not be liable,
individually or as Swap Contract Administrator, except for the
performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Swap Contract
Administrator and the Swap Contract Administrator may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Swap Contract
Administrator and conforming to the requirements of this
Agreement that it reasonably believed in good faith to be genuine
and to have been duly executed by the proper authorities
respecting any matters arising hereunder;
(ii) the Swap Contract Administrator shall not be liable, individually
or as Swap Contract Administrator, for an error of judgment made
in good faith by a Responsible Officer or Responsible Officers of
the Swap Contract Administrator, unless the Swap Contract
Administrator was grossly negligent or acted in bad faith or with
willful misfeasance; and
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(iii) the Swap Contract Administrator shall not be liable,
individually or as Swap Contract Administrator, with respect to
any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Trustee or CHL, or
exercising any power conferred upon the Swap Contract
Administrator under this Agreement.
(c) Except as otherwise provided in Sections 7(a) and 7(b):
(i) the Swap Contract Administrator may request and rely upon and
shall be protected in acting or refraining from acting upon any
resolution, officer's certificate, certificate of auditors or any
other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(ii) the Swap Contract Administrator may consult with counsel and any
opinion of counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted
by it hereunder in good faith and in accordance with such opinion
of counsel;
(iii) the Swap Contract Administrator shall not be liable,
individually or as Swap Contract Administrator, for any action
taken, suffered or omitted by it in good faith and believed by it
to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(iv) the Swap Contract Administrator shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or
document, unless requested in writing so to do by the
Counterparty, CHL or the Trustee; provided, however, that if the
payment within a reasonable time to the Swap Contract
Administrator of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the
opinion of the Swap Contract Administrator not reasonably assured
to the Swap Contract Administrator by the Counterparty, CHL
and/or the Trustee, the Swap Contract Administrator may require
reasonable indemnity against such expense, or liability from the
Counterparty, CHL and/or the Trustee, as the case may be, as a
condition to taking any such action; and
(v) the Swap Contract Administrator shall not be required to expend
its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such liability is not assured to it.
(d) CHL covenants and agrees to pay or reimburse the Swap Contract
Administrator, upon its request, for all reasonable expenses and
disbursements incurred or made
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by the Swap Contract Administrator in accordance with any of the
provisions of this Agreement except any such expense or disbursement
as may arise from its negligence, bad faith or willful misconduct. The
Swap Contract Administrator and any director, officer, employee or
agent of the Swap Contract Administrator shall be indemnified by CHL
and held harmless against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement, the Swap
Contract or the Assignment Agreement, or in connection with the
performance of any of the Swap Contract Administrator's duties
hereunder or thereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in
the performance of any of the Swap Contract Administrator's duties
hereunder or thereunder. Such indemnity shall survive the termination
of this Agreement or the resignation of the Swap Contract
Administrator hereunder and under the Swap Contract and the Assignment
Agreement. Notwithstanding anything to the contrary in this Section 7,
any expenses, disbursements, losses or liabilities of the Swap
Contract Administrator or any director, officer, employee or agent
thereof that are made or incurred as a result of any request, order or
direction of any NIM Insurer or any of the Certificateholders made to
the Trustee as contemplated by Section 8.02(ix) of the Pooling and
Servicing Agreement and consequently made to the Swap Contract
Administrator by the Trustee shall be payable by the Trustee out of
the security or indemnity provided by any NIM Insurer or such
Certificateholders pursuant to Section 8.02(ix) of the Pooling and
Servicing Agreement.
(e) Upon the resignation of BNY as Trustee in accordance with the Pooling
and Servicing Agreement, (i) BNY shall resign and be discharged from
its duties as Swap Contract Administrator hereunder and (ii) the
Person that succeeds BNY as Trustee shall be appointed as successor
Swap Contract Administrator hereunder upon its execution,
acknowledgement and delivery of the instrument accepting such
appointment in accordance with Section 8.08 of the Pooling and
Servicing Agreement, whereupon the duties of the Swap Contract
Administrator hereunder shall pass to such Person. In addition, upon
the appointment of a successor Trustee under the Pooling and Servicing
Agreement, such successor Trustee shall succeed to the rights of the
Trustee hereunder.
(f) In the event of a NIM Issuance, nothing in this Section 7 shall limit
or otherwise modify or affect the rights, duties or obligations of the
Swap Contract Administrator under the related Swap Excess Assignment
Agreement.
8. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
(b) Each of BNY and CHL hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any
legal proceedings arising out of or relating to this Agreement.
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(c) The Counterparty shall be an express third party beneficiary of this
Agreement for the purpose of enforcing the provisions hereof to the
extent of the Counterparty's rights explicitly specified herein as if
a party hereto.
(d) This Agreement shall terminate upon the termination of the Swap
Contract and the disbursement by the Swap Contract Administrator of
all funds received under the Swap Contract to CHL and the Trustee on
behalf of the Holders of the Benefited Certificates.
(e) This Agreement may be amended, supplemented or modified in writing by
the parties hereto, provided that no amendment shall adversely affect
in any material respect the Counterparty without the prior written
consent of the Counterparty, which consent shall not be unreasonably
withheld.
(f) This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by
facsimile transmission), and all such counterparts taken together
shall be deemed to constitute one and the same instrument.
(g) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(h) The representations and warranties made by the parties to this
Agreement shall survive the execution and delivery of this Agreement.
No act or omission on the part of any party hereto shall constitute a
waiver of any such representation or warranty.
(i) The article and section headings in this Agreement are for convenience
of reference only, and shall not limit or otherwise affect the meaning
of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
THE BANK OF NEW YORK,
as Swap Contract Administrator
By: /s/ Xxxxxxxx Xxxxxxxxxxx
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Name: Xxxxxxxx Xxxxxxxxxxx
Title: Vice President
THE BANK OF NEW YORK,
not in its individual or corporate capacity but
solely as Trustee
By: /s/ Xxxxxxxx Xxxxxxxxxxx
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Name: Xxxxxxxx Xxxxxxxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxxx Xxxxxxxxxxxx
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Name: Xxxxxxx Xxxxxxxxxxxx, Xx.
Title: Senior Vice President
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EXHIBIT A
SWAP CONTRACT
A-1
