Exhibit 99.5
ASSIGNMENT AGREEMENT
ASSIGNMENT AGREEMENT, dated as of December 29, 2006 ("Assignment
Agreement"), among COUNTRYWIDE HOME LOANS, INC. ("Assignor"), THE BANK OF NEW
YORK ("Assignee"), not in its individual or corporate capacity but solely as
Swap Contract Administrator for CWHEQ, Inc. Home Equity Loan Asset-Backed
Certificates Series 2006-S10, pursuant to a Swap Contract Administration
Agreement (the "Swap Contract Administration Agreement") dated as of December
29, 2006, and BEAR XXXXXXX FINANCIAL PRODUCTS INC. ("Remaining Party").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, effective as of December 29, 2006, Assignor desires to assign all
of its rights and delegate all of its duties and obligations to Assignee under a
certain Transaction (the "Assigned Transaction") as evidenced by a certain
confirmation with a Trade Date of December 19, 2006, whose BEAR XXXXXXX
FINANCIAL PRODUCTS INC. reference number is FXCW06SD10 (the "Confirmation"), a
copy of which is attached hereto as Exhibit I;
WHEREAS, the Confirmation supplements, forms a part of, and is subject to,
an agreement in the form of the 1992 Multicurrency - Cross-Border Master
Agreement published by the International Swaps and Derivatives Association, Inc.
(the "ISDA Form Master Agreement");
WHEREAS, Assignee desires to accept the assignment of rights and assume
the delegation of duties and obligations of the Assignor under the Assigned
Transaction and the Confirmation, including any modifications that may be agreed
to by Assignee and Remaining Party; and
WHEREAS, Assignor desires to obtain the written consent of Remaining Party
to the assignment, delegation, and assumption and Remaining Party desires to
grant such consent in accordance with the terms hereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Assignment and Assumption. Effective as of and from December 29, 2006
(the "Effective Date"), Assignor hereby assigns all of its rights and delegates
all of its duties and obligations to Assignee and Assignee hereby assumes all
Assignor's rights, duties, and obligations under the Assigned Transaction and
the Confirmation arising on or after the Effective Date.
2. Release. Effective as of and from the Effective Date, Remaining Party
and Assignor hereby release one another from all duties and obligations owed
under and in respect of the Assigned Transaction and the Confirmation, and
Assignor hereby terminates its rights under and in respect of the Assigned
Transaction; provided, that such release shall not affect
Remaining Party's obligation to pay the Upfront Amount in accordance with the
terms of the Assigned Transaction and the Confirmation.
3. Limitation on Liability. Assignor and Remaining Party agree to the
following: (a) The Bank of New York ("BNY") is entering into this Assignment
Agreement not in its individual or corporate capacity, but solely in its
capacity as Swap Contract Administrator under the Swap Contract Administration
Agreement and its liability under this Assignment Agreement and under the Swap
Contract Administration Agreement shall be as set forth in the Swap Contract
Administration Agreement; (b) in no case shall BNY (or any person acting as
successor Swap Contract Administrator under the Swap Contract Administration
Agreement) be personally liable for or on account of any of the statements,
representations, warranties, covenants or obligations stated to be those of
Assignee under the terms of the Assigned Transaction, all such personal
liability, if any, being expressly waived by Assignor and Remaining Party and
any person claiming by, through or under either such party; and (c) recourse
against BNY shall be limited to the assets available under the Swap Contract
Administration Agreement or the pooling and servicing agreement for CWHEQ, Inc.
Home Equity Loan Asset-Backed Certificates Series 2006-S10 dated as of December
1, 2006 among CWHEQ Inc., as depositor, Park Monaco Inc., as a seller, Park
Granada LLC, as a seller, Park Sienna LLC, as a seller, Countrywide Home Loans,
Inc., as a seller, Countrywide Home Loans Servicing LP, as master servicer and
The Bank of New York, as trustee (the "Pooling and Servicing Agreement").
4. Consent and Acknowledgment of Remaining Party. Remaining Party hereby
consents to the assignment and delegation by Assignor to Assignee of all the
rights, duties, and obligations of Assignor under the Assigned Transaction
pursuant to this Assignment Agreement.
5. Governing Agreement. Following the assignment of the Assigned
Transaction pursuant to the terms hereof, the Assigned Transaction and the
Confirmation shall form a part of, and be subject to, the ISDA Form Master
Agreement, as if Assignee and Remaining Party had executed such agreement on the
trade date of the Transaction (the "Assignee Agreement"). The Confirmation,
together with all other documents referring to the ISDA Form Master Agreement
confirming transactions entered into between Assignee and Remaining Party, shall
form a part of, and be subject to, the Assignee Agreement. For the purposes of
this paragraph, capitalized terms used herein and not otherwise defined shall
have the meanings assigned in the ISDA Form Master Agreement. For the avoidance
of doubt, in interpreting the Assignee Agreement, the Counterparty shall be the
Trust Fund created under the Pooling and Servicing Agreement for whom the
Assignee is acting on behalf of as Swap Contract Administrator, so that, for
example, a Bankruptcy pursuant to Section 5(a)(vii) of the ISDA Form Master
Agreement (as amended by the Confirmation) shall refer to a Bankruptcy of the
Trust Fund, not a Bankruptcy of either the Assignor or of Bank of New York in
its individual or corporate capacity or any other capacity.
6. Representations. Each party hereby represents and warrants to the other
parties as follows:
(a) It is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization or incorporation;
(b) It has the power to execute and deliver this Assignment Agreement;
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(c) Such execution, delivery and performance do not violate or conflict
with any law applicable to it, any provision of its constitutional
documents, any order or judgment of any court or other agency of
government applicable to it or any of its assets or any contractual
restriction binding on or affecting it or any of its assets;
(d) All governmental and other consents that are required to have been
obtained by it with respect to this Assignment Agreement have been
obtained and are in full force and effect and all conditions of any
such consents have been complied with; and
(e) Its obligations under this Assignment Agreement constitute its
legal, valid and binding obligations, enforceable in accordance with
their respective terms.
As of the Effective Date, each of Assignor and Remaining Party represents
that no event or condition has occurred that constitutes an Event of Default, a
Potential Event of Default or, to the party's knowledge, a Termination Event (as
such terms are defined in the Confirmation and Assignee Agreement), with respect
to the party, and no such event would occur as a result of the party's entering
into or performing its obligations under this Assignment Agreement.
7. Indemnity. Assignor hereby agrees to indemnify and hold harmless
Assignee with respect to any and all claims arising under the Assigned
Transaction prior to the Effective Date. Assignee (subject to the limitations
set forth in paragraph 3 above) hereby agrees to indemnify and hold harmless
Assignor with respect to any and all claims arising under the Assigned
Transaction on or after the Effective Date.
8. Governing Law. This Assignment Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflicts of law provisions thereof other than New York General Obligations Law
Sections 5-1401 and 5-1402.
9. Notices. For the purposes of this Assignment Agreement and Section 12(a)
of the ISDA Form Master Agreement of the Assigned Transaction, the addresses for
notices or communications are as follows: (i) in the case of Assignor,
Countrywide Home Loans, Inc., 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxx Xxxxxxxxxxxx, with a copy to the same address, Attention:
Legal Department, or such other address as may be hereafter furnished in writing
to Assignee and Remaining Party; (ii) in the case of Assignee, The Bank of New
York, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust
MBS Administration, CWHEQ, Series 2006-S10 or such other address as may be
hereafter furnished in writing to Assignor and Remaining Party, with a copy to
MBIA Insurance Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx, Attention:
IPM-Structured Mortgage; and (iii) in the case of Remaining Party,
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager - 36th Floor
Telex No. 000-000-0000
copy to: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
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Telex No: 000-000-0000
copy to: MBIA Insurance Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx
Xxxx
Attention: IPM-Structured Mortgage
such other address as may be hereafter furnished in writing to Assignor
and Assignee.
10. Payments. All payments (if any) remitted by Remaining Party under the
Assigned Transaction shall be made by wire transfer according to the following
instructions:
The Bank of New York
New York, NY
ABA # 000-000-000
GLA # 111-565
For Further Credit: TAS A/C 501686
Attn: Xxxxxxx Xxxxxx 212-815- 6093
Fax: 000-000-0000
11. Optional Termination. In connection with the optional termination of
the trust fund pursuant to Section 9.01 of the Pooling and Servicing Agreement,
with effect following all distributions on the final Distribution Date under the
Pooling and Servicing Agreement (such date, the "Optional Termination
Distribution Date"):
(a) (1) (A) Assignee hereby assigns all of its rights and delegates all of
its liabilities and obligations to Countrywide Home Loans, Inc., (for
purposes of this Section 11 "CHL") and CHL hereby assumes all of
Assignee's rights, liabilities, and obligations, under the Assigned
Transaction and the Confirmation arising after the final distributions
on the Optional Termination Distribution Date (such transaction and
confirmation, collectively, the "New Assigned Transaction") and (B)
Remaining Party hereby consents to such assignment, delegation and
assumption;
(2) Remaining Party and CHL agree to enter into the New Assigned
Transaction as evidenced by a confirmation (the "New Confirmation")
such New Confirmation evidencing a complete and binding agreement
between Remaining Party and CHL and such New Confirmation will
constitute a Confirmation (as that word is defined in the New
Agreement, defined below) that supplements, forms a part of, and is
subject to, an agreement (the "New Agreement") in the form of the 1992
Multicurrency - Cross Border Master Agreement in the form published by
the International Swaps and Derivatives Association, Inc. (the "ISDA
Form"), as if on the date Remaining Party and CHL enter into the New
Assigned Transaction Remaining Party and CHL had executed an agreement
in such form, but without any Schedule (as that word is defined in the
New Agreement) except for the elections made therein. Remaining Party
and CHL
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further agree that such New Confirmation shall have substantially
identical terms to the Assigned Transaction and Confirmation.
(b) Remaining Party and Assignee are each released and discharged from
further obligations owed under and in respect of the Assigned
Transaction and their respective rights against each other thereunder
are cancelled;
(c) Remaining Party and CHL hereby agree that the Confirmation shall be
amended as follows:
(1) Section 4 of the Confirmation shall be deleted in its entirety.
(d) Remaining Party hereby agrees that CHL may do one of the following
with the New Assigned Transaction and the New Confirmation:
(i) retain such New Assigned Transaction and New Confirmation;
(ii) assign all of its rights and delegate all of its liabilities
and obligations under the New Assigned Transaction and the New
Confirmation to a third party, such assignment and delegation to be
effective upon the receipt of written consent thereto from Remaining
Party (in its sole and absolute discretion); or
(iii) terminate the New Assigned Transaction by giving three
Business Days' prior written notice to Remaining Party (the
"Optional Swap Termination"). In connection with the Optional Swap
Termination, if any, a termination payment (if any) shall be payable
by CHL or Remaining Party, as applicable, as determined by the
Calculation Agent by the application of Section 6(e)(ii) of the ISDA
Form Master Agreement, with Market Quotation and Second Method being
the applicable method for determining the termination payment. The
exercise of the right to terminate under this provision shall not be
an Event of Default under any of the other Transactions between CHL
and Bear Xxxxxxx Financial Products Inc. For purposes of the
Optional Swap Termination, CHL shall be the sole Affected Party.
(e) If CHL exercises its right to retain the New Assigned Transaction and
New Confirmation pursuant to Section 11(d)(i) of this Assignment
Agreement, then Remaining Party has the right to do one of the
following with the New Assigned Transaction and the New Confirmation:
(i) retain such New Assigned Transaction and New Confirmation;
(ii) assign all of its rights and delegate all of its liabilities
and obligations under the New Assigned Transaction to a subsidiary
of The Bear Xxxxxxx Companies, Inc. without the consent of CHL; or
(iii) assign all of its rights and delegate all of its liabilities
and obligations under the New Assigned Transaction to a third party
with the consent of CHL;
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provided, however, that if Remaining Party exercises its right to
assign the Assigned Transaction under (ii) or (iii) above the
assignee shall be an entity that (1) has executed an ISDA Master
Agreement with CHL, (2) has executed an Item 1115 Regulation AB
Agreement with CHL and (3) agrees to accept all of the terms and
conditions of the Assigned Transaction and New Confirmation without
amendment or supplement.
12. Counterparts. This Assignment Agreement may be executed and delivered in
counterparts (including by facsimile transmission), each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement as of the date first above written.
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------------------
Name: Xxxxxx Xxxxx
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Title: Executive Vice President
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THE BANK OF NEW YORK, AS SWAP CONTRACT
ADMINISTRATOR FOR CWHEQ, INC. HOME EQUITY LOAN
ASSET-BACKED CERTIFICATES SERIES 2006-S10
By: /s/ Xxxxxxxx Xxxxxx
---------------------------------------------
Name: Xxxxxxxx Xxxxxx
-------------------------------------------
Title: Vice President
------------------------------------------
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxxxx
-------------------------------------------
Title: Authorized Signatory
------------------------------------------
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement as of the date first above written.
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------------------
Name: Xxxxxx Xxxxx
-------------------------------------------
Title: Executive Vice President
------------------------------------------
THE BANK OF NEW YORK, AS SWAP CONTRACT
ADMINISTRATOR FOR CWHEQ, INC. HOME EQUITY LOAN
ASSET-BACKED CERTIFICATES SERIES 2006-S10
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxxxx
-------------------------------------------
Title: Authorized Signatory
------------------------------------------
EXHIBIT I
BEAR XXXXXXX
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
DATE: December 29,2006
TO: Countrywide Home Loans, Inc.
ATTENTION: Xx. Xxxx Xxxxx
TELEPHONE: 0-000-000-0000
FACSIMILE: 0-000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
SUBJECT: Mortgage Derivatives Confirmation and Agreement
REFERENCE NUMBER: FXCW06SD10
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the " Transaction") between Bear Xxxxxxx Financial Products Inc. ("Bear
Xxxxxxx") and Countrywide Home Loans, Inc. ("Counterparty"). This letter
agreement constitutes the sole and complete "Confirmation," as referred to in
the "ISDA Master Agreement" (as defined below), as well as a "Schedule" as
referred to in the ISDA Master Agreement
(1) This Confirmation is subject to the 2000 ISDA Definitions (the
"Definitions"), as published by the International Swaps and Derivatives
Association, Inc. ("ISDA"), Any reference to a "Swap Transaction" in the
Definitions is deemed to be a reference to a "Transaction" for purposes
of this Agreement, and any reference to a "Transaction" in this
Agreement is deemed to be a reference to a "Swap Transaction" for
purposes of the Definitions. 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 Bear Xxxxxxx and Counterparty had
executed an agreement in such form on the date hereof, with a Schedule
as set forth in Item 4 of this Confirmation (the "Schedule"), 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 4 hereof and Annex A hereto; (ii) 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 dated as of December 1, 2006 among CWHEQ Inc., as depositor,
Park Monaco Inc., as a seller, Park Granada LLC, as a seller, Park
Sienna LLC, as a seller, Countrywide Home Loans, Inc., as a seller,
Countrywide Home Loans Servicing LP, as master servicer and The Bank of
New York, as trustee (the "Pooling and Servicing Agreement").
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 2 of 33
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 Schedule; 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:
Notional Amount: With respect to any Calculation Period, the
lesser of (i) the amount set forth for such
period on the Schedule I attached hereto and
(ii) the aggregate Certificate Principal Balance
of the Class A-2 and Class A-3 Certificates
(initially USD 869,584,000) immediately prior to
the Distribution Date occurring in the calendar
month in which such Calculation Period ends;
provided that upon the occurrence of an Optional
Termination, with respect to each Calculation
Period beginning on or after the final
Distribution Date with respect to such Optional
Termination, the Notional Amount shall equal the
Scheduled Amount for such Calculation Period as
set forth in the Schedule 1 attached hereto
multiplied by the quotient of (A) the Notional
Amount for the Calculation Period immediately
prior to such Optional Termination divided by
(B) the Scheduled Amount for the Calculation
Period immediately prior to such Optional
Termination as set forth in the Schedule I
attached hereto
Trade Date: December 19,2006
Effective Date: December 29,2006
Termination Date: November 25, 2013, 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: Counterparty
Fixed Rate Payer
Period End Dates: The 25th calendar day of each month during the
Term of this Transaction, commencing January 25,
2007 and ending on November 25,2013, with No
Adjustment.
Fixed Rate Payer
Payment Dates: The 25TH calendar day of each month during the
Term of this Transaction, commencing January 25,
2007 and ending on November 25, 2013, subject to
adjustment in accordance with the Business Day
Convention
Fixed Rate: 5.360%
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 3 of 33
Fixed Rate
Day Count Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Bear Xxxxxxx
Floating Rate Payer
Period End Dates: The 25th calendar day of each month during
the Term of this Transaction, commencing January
25, 2007 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. One Business
Day prior to each Floating Rate Payer Period End
Date.
Floating Rate for
initial Calculation
Period: To be determined
Floating Rate
Option: USD-LTBOR-BBA
Designated Maturity: One month, except with respect to the initial
Calculation Period for which the Designated
Maturity shall be the Linear Interpolation of
the 2 week and the one month
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period.
Compounding: Inapplicable
Business Days: New York
Business Day
Convention: Following
Calculation Agent: Bear Xxxxxxx
Upfront Amount: Bear Xxxxxxx will pay USD 2,200,000 to
Counterparty on December 29,2006.
Netting: Notwithstanding anything to the contrary in
Section 2(c) of the ISDA Master Agreement,
amounts that are payable with respect to
Calculation Periods which end in the same
calendar month (prior
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 4 of 33
to any adjustment of period end dates) shall be
netted, as provided in Section 2(c) of the ISDA
Master Agreement, even if such amounts are not
due on the same payment date. For avoidance of
doubt any payments pursuant to Section 6(e) of
the ISDA Master Agreement shall not be subject
to netting.
(3) Additional Provisions: For each Calculation Period, Counterparty will
make the Monthly Report available on its website
xxxxx://xxx.xxxxxxxxxxxxxxxxxxxx.xxx indicating
the outstanding principal balance of the Class
A-2 and Class A-3 Certificates as of the first
day of the month in which such Calculation
Period begins
(4) Provisions Deemed Incorporated in a Schedule to the ISDA Master
Agreement:
Part 1, Termination Provisions.
For purposes of the ISDA Master Agreement:
(a) "Specified Entity" will not apply to Bear Xxxxxxx or Counterparty for
any purpose.
(b) "Specified Transactions" will not apply to Bear Xxxxxxx or Counterparty
for any purpose.
(c) The "Failure to Pay or Deliver" provisions of Section 5(a)(i) will apply
to Bear Xxxxxxx and will apply to Counterparty; provided that
notwithstanding anything to the contrary in Section 5(a)(i) or Paragraph
7 of the Credit Support Annex, any failure by Bear Xxxxxxx to comply with
or perform any obligation to be complied with or performed by Bear
Xxxxxxx under the Credit Support Annex shall not constitute an Event of
Default under Section 5(a)(i) unless (A) a Xxxxx'x Second Level
Downgrade 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 Bear Xxxxxxx.
(d) The "Breach of Agreement" provisions of Section 5(a)(ii) will apply to
Bear Xxxxxxx and will not apply to Counterparty,
(e) The "Credit Support Default" provisions of Section 5(a)(iii) will apply
to (x) Bear Xxxxxxx; provided that notwithstanding anything to the
contrary in Section 5(a)(iii)(l), any failure by Bear Xxxxxxx to comply
with or perform any obligation to be complied with or performed by Bear
Xxxxxxx under the Credit Support Annex shall not constitute an Event of
Default under Section 5(a)(iii) unless (A) a Xxxxx'x Second Level
Downgrade 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 Bear Xxxxxxx and
(y) Counterparty solely in respect of Counterparty's obligations under
Paragraph 3(b) of the Credit Support Annex.
(f) The "Misrepresentation" provisions of Section 5(a)(iv) will apply to
Bear Xxxxxxx and will not apply to Counterparty.
(g) The "Default under Specified Transaction" provisions of Section 5(a)(v)
will not apply to Bear Xxxxxxx or Counterparty.
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 5 of 33
(h) The "Cross Default" provisions of Section 5(a)(vi) will apply to Bear
Xxxxxxx and will not apply to Counterparty.
"Specified Indebtedness" will have the meaning specified in
Section 14.
"Threshold Amount" means USD 100,000,000.
(i) The "Bankruptcy" provisions of Section 5(a)(vii) will apply to Bear
Xxxxxxx and will apply to Counterparty 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 Counterparty has not become
subject to), (7) and (9) will not apply to Counterparty; provided that,
with respect to Counterparty 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 Bear Xxxxxxx)", 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) or (6)
as amended".
(j) The "Tax Event Upon Merger" provisions of Section 5(b)(iii) will apply
to Bear Xxxxxxx and will apply to Counterparty; provided that Bear
Xxxxxxx 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.
(k) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not
apply to Bear Xxxxxxx or Counterparty.
(1) The "Automatic Early Termination" provision of Section 6(a) will not
apply to Bear Xxxxxxx or to Counterparty.
(m) Payments on Early Termination. For the purpose of Section 6(e) of the
ISDA Master Agreement:
(1) Market Quotation will apply; and
(2) the Second Method will apply;
provided that if Bear Xxxxxxx is the Defaulting Party or the sole
Affected Party, the following provisions will apply:
(A) Section 6(e) of the ISDA Master Agreement will be
amended by inserting on the first line "or is
effectively designated" after "If an Early Termination
Date occurs";
(B) 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, and a party making
the determination, an amount determined on the
basis of Firm Offers from Reference
Market-makers that are Eligible Replacements.
Each Firm Offer will be ( I ) for an amount that
would be paid to Counterparty (expressed as a
negative number) or by Counterparty (expressed
as a positive number) in consideration of an
agreement between Counterparty and such
Reference Market-maker to enter into a
Replacement Transaction and (2) made on the
basis that Unpaid Amounts in respect of the
Terminated Transaction or group of Transactions
are to be excluded but,
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 6 of 33
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 Firm Offer 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 Firm Offers 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. The Market
Quotation shall be the Firm Offer actually
accepted by Counterparty no later than the
Business Day preceding the Early Termination
Date. If no Firm Offers are provided by the
Business Day preceding the Early Termination
Date, it will be deemed that the Market
Quotation in respect of such Terminated
Transaction or group of Transactions cannot be
determined.
(C) Counterparty shall use best efforts to accept a Firm
Offer that would determine the Market Quotation. If more
than one Firm Offer (which, if accepted, would determine the
Market Quotation) is provided, Counterparty shall use
commercially reasonable efforts to accept the Firm Offer
(among such Firm Offers) which would require either (x) the
lowest payment by the Counterparty to the Reference
Market-maker, to the extent Counterparty would be required
to make a payment to the Reference Market-maker or (y) the
highest payment from the Reference Market-maker to
Counterparty, to the extent the Reference Market-maker would
be required to make a payment to the Counterparty. If only
one Firm Offer (which, if accepted, would determine the
Market Quotation) is provided, Counterparty shall use
commercially reasonable efforts to accept such Firm Offer.
(D) Upon the written request by Counterparty to Bear Xxxxxxx,
Bear Xxxxxxx shall obtain the Market Quotations on behalf of
Counterparty.
(E) If the Settlement Amount is a negative number, Section
6(e)(i)(3) of the ISDA Master Agreement 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)
Counterparty shall pay to Bear Xxxxxxx an amount
equal to the absolute value of the Settlement
Amount in respect of the Terminated
Transactions, (11) Counterparty shall pay to
Bear Xxxxxxx the Termination Currency Equivalent
of the Unpaid Amounts owing to Bear Xxxxxxx and
(111) Bear Xxxxxxx shall pay to Counterparty the
Termination Currency Equivalent of the Unpaid
Amounts owing to Counterparty; provided,
however, that (x) the amounts payable under the
immediately preceding clauses (11) and (111)
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 Bear Xxxxxxx
under the immediately preceding clause (111)
shall not be netted-off against any amount
payable by Counterparty under the immediately
preceding clause (I)."
Reference Number: FXCW06SD 10
Countrywide Home Loans, Inc.
December 29, 2006
Page 7 of 33
(n) "Termination Currency" means United States Dollars.
(0) Additional Termination Events. Additional Termination Events will apply:
(i) If, without the prior written consent (such consent not to be
unreasonably withheld) of Bear Xxxxxxx where such consent is
required under the Pooling and Servicing Agreement, an amendment
or supplemental agreement is made to the Pooling and Servicing
Agreement which amendment or supplemental agreement could
reasonably be expected to have a material adverse effect on the
interests of Bear Xxxxxxx under this Agreement, an Additional
Termination Event shall have occurred with respect to
Counterparty, Counterparty shall be the sole Affected Party and
all Transactions hereunder shall be Affected Transaction.
(ii) If (i) an Applied Realized Loss Amount is applied to reduce the
Certificate Principal Balance of any class of Class A Certificates
on any Distribution Date and (ii) the Certificate Insurer fails to
pay the amount of such Applied Realized Loss Amount on that
Distribution Date as required by the Certificate Insurance Policy,
then an Additional Termination Event shall have occurred with
respect to Counterparty and Counterparty shall be the sole
Affected Party with respect to such Additional Termination Event.
(iii) (A) If a S&P First Level Downgrade has occurred and is
continuing and Bear Xxxxxxx fails to take any action
described under Part (5)(f)(i)(l), within the time
period specified therein, then an Additional
Termination Event shall have occurred with respect to
Bear Xxxxxxx, Bear Xxxxxxx shall be the sole Affected
Party with respect to such Additional Termination
Event and all Transactions hereunder shall be Affected
Transactions.
(B) If a S&P Second Level Downgrade has occurred and is
continuing and Bear Xxxxxxx fails to take any action
described under Part (5)(f)(i)(2) within the time
period specified therein, then an Additional
Termination Event shall have occurred with respect to
Bear Xxxxxxx, Bear Xxxxxxx shall be the sole Affected
Party with respect to such Additional Termination
Event and all Transactions hereunder shall be Affected
Transactions.
(C) If (A) a Xxxxx'x Second Level Downgrade has not
occurred and been continuing for 30 or more Local
Business Days and (B) Bear Xxxxxxx has failed to comply
with or perform any obligation to be complied with or
performed by Bear Xxxxxxx in accordance with the
Credit Support Annex, then an Additional Termination
Event shall have occurred with respect to Bear Xxxxxxx
and Bear Xxxxxxx shall be the sole Affected Party with
respect to such Additional Termination Event.
(D) If (A) a Xxxxx'x Second Level Downgrade has occurred
and been continuing for 30 or more Local Business Days
and (B) either (i) at least one Eligible Replacement
has made a Firm Offer to be the transferee or (ii) at
least one entity that satisfies the Xxxxx'x Approved
Ratings Threshold has made a Firm Offer to provide an
Eligible Guaranty in respect of all of Bear Xxxxxxx'
present and future obligations under this Agreement,
then an Additional Termination Event shall have
occurred with respect to Bear Xxxxxxx, Bear Xxxxxxx
shall be the sole Affected Party with respect to such
Additional Termination Event and all Transactions
hereunder shall be Affected Transactions.
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 8 of 33
Part 2. Tax Matters.
(a) Tax Representations.
(i) Payer Representations. For the purpose of Section 3(e) of the ISDA
Master Agreement, each of Bear Xxxxxxx and the Counterparty 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 ISDA Master Agreement) to be made by it to the
other party under this Agreement. In making this representation, it may
rely on:
(1) the accuracy of any representations made by the other party
pursuant to Section 3(f) of the ISDA Master Agreement;
(2) the satisfaction of the agreement contained in Sections
4(a)(i) and 4(a)(iii) of the ISDA Master Agreement and the
accuracy and effectiveness of any document provided by the other
party pursuant to Sections 4(a)(i) and 4(a)(iii) of the ISDA
Master Agreement; and
(3) the satisfaction of the agreement of the other party contained
in Section 4(d) of the ISDA Master Agreement, provided that it
shall not be a breach of this representation where reliance is
placed on clause (ii) and the other party does not deliver a form
or document under Section 4(a)(iii) of the ISDA Master Agreement
by reason of material prejudice to its legal or commercial
position.
(ii) Payee Representations. For the purpose of Section 3(f) of the ISDA
Master Agreement, each of Bear Xxxxxxx and the Counterparty make the
following representations.
The following representation will apply to Bear Xxxxxxx:
Bear Xxxxxxx is a corporation organized under the laws of the State
of Delaware and its U.S. taxpayer identification number is
00-0000000.
The following representation will apply to the Counterparty:
Counterparty represents that it is a "United States person" as
such term is defined in Section 7701(a)(3) of the Internal Revenue
Code of 1986, as amended.
(b) Tax Provisions.
Notwithstanding the definition of "Indemnifiable Tax" in Section 14 of
this Agreement, all Taxes in relation to payments by Bear Xxxxxxx shall
be Indemnifiable Taxes (including any Tax imposed in respect of a Credit
Support Document) unless (i) such Taxes are assessed directly against
Counterparty and not by deduction or withholding by Bear Xxxxxxx or (ii)
arise as a result of a Change in Tax Law (in which case such Tax shall
be an Indemnifiable Tax only if such Tax satisfies the definition of
Indemnifiable Tax provided in Section 14). In relation to payments by
Counterparty, no Tax shall be an Indemnifiable Tax.
Reference Number: FXCW06SD10
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December 29, 2006
Page 9 of 33
Part 3. Agreement to Deliver Documents. For the purpose of Section 4(a) of the
ISDA Master Agreement:
(i) Tax forms, documents, or certificates to be delivered are:
Party required to Form/Document/ Date by which to
deliver document Certificate be delivered
Bear Xxxxxxx An original properly (i) upon execution
completed and executed of this Agreement,
United States Internal (ii) on or before
Revenue Service Form the first payment date
W-9 any successor under this Agreement,
thereto) with respect including any Credit
to any payments Support Document, (iii)
received or to be promptly upon the
received by Bear reasonable demand by
Xxxxxxx, that Counterparty, (iv) prior
eliminates U.S. to the expiration or
federal withholding obsolescence of any
and backup withholding previously delivered
Tax on payments to form, and (v) promptly
Bear Xxxxxxx under upon the information
this Agreement. on any such previously
delivered form
becoming inaccurate
or incorrect.
Counterparty An original properly (i) upon execution
completed and of this Agreement,
executed United (ii) on or before
States Internal the first payment date
Revenue Service under this Agreement,
Form W-9 (or any including any Credit
successor thereto) Support Document, (iii)
with respect to any promptly upon the
payments received reasonable demand by
or to be received by Bear Xxxxxxx, (iv) prior
Counterparty. 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.
(ii) Other documents to be delivered are:
Party required Form/Document/ Date by which to Covered by Section
to deliver Certificate be delivered 3(d) Representation
document
Bear Xxxxxxx and Any documents required by Upon the execution Yes
the Counterparty the receiving party to and delivery of this
evidence the authority of Agreement and such
the delivering party or Confirmation
its Credit Support
Provider, if any, for it
to execute and deliver
this Agreement, any
Confirmation, and any
Credit Support Documents
to which it is a party,
and to evidence the
authority of
Reference Number: FXCW06SD10
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December 29, 2006
Page 10 of 33
Party required Form/Document/ Date by which to Covered by Section
to deliver Certificate be delivered 3(d) Representation
document
the delivering party
or its Credit Support
Provider to perform its
obligations under this
Agreement, such
Confirmation and/or
Credit Support Document,
as the case may be
Bear Xxxxxxx A certificate of an Upon the execution Yes
and the authorized officer of and delivery of this
Counterparty the party, as to the Agreement and such
incumbency and authority Confirmation
of the respective
officers of the party
signing this Agreement,
any relevant Credit
Support Document, or
any Confirmation, as
the case may be
Bear Xxxxxxx and An opinion of counsel Upon the execution No
the Counterparty of such party regarding and delivery of this
the enforceability of Agreement
this Agreement in a
form reasonably
satisfactory to the
other party.
Counterparty An executed copy of the Concurrently with No
Pooling and Servicing filing of each draft
Agreement and the Swap of the Pooling and
Administration Agreement Servicing Agreement
with the U.S.
Securities and
Exchange Commission
Part 4 Miscellaneous.
(a) Address for Notices: For the purposes of Section 12(a) of the ISDA
Master Agreement:
Address for notices or communications to Bear Xxxxxxx:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx
00000
Reference Number: FXC W06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 11 of 33
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
and
Address: MBIA Insurance Corporation, 000 Xxxx Xxxxxx,
Xxxxxx, Xxx Xxxx 00000
Attention: IPM-Structured Mortgage
(For all purposes)
Address for notices or communications to the Counterparty:
Address: 0000 Xxxx Xxxxxxx
Xxxx Xxxx XX-000
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
with a copy to:
Address: MBIA Insurance Corporation, 000 Xxxx Xxxxxx,
Xxxxxx, Xxx Xxxx 00000
Attention: IPM-Structured Mortgage
(For all purposes)
(b) Account Details and Settlement Information:
Payments to Bear Xxxxxxx:
Citibank, N.A., New York
ABA Number: 02 1-0000-89, for the account of
Bear, Xxxxxxx Securities Corp.
Account Number: 0925-3 186, for further credit to
Bear Xxxxxxx Financial Products Inc.
Sub-account Number: 102-04654-1-3
Attention: Derivatives Department
Payments to Counterparty:
See Assignment Agreement
Reference Number: FXCW06SD10
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December 29, 2006
Page 12 of 33
(c) Process Agent. For the purpose of Section 13(c) of the ISDA Master
Agreement:
Bear Xxxxxxx appoints as its
Process Agent: Not Applicable
The Counterparty appoints as its
Process Agent: Not Applicable
(d) Offices. The provisions of Section 10(a) of the ISDA Master Agreement
will not apply to this Agreement; neither Bear Xxxxxxx nor the
Counterparty have any Offices other than as set forth in the Notices
Section.
(e) Multibranch Party. For the purpose of Section 10(c) of the ISDA Master
Agreement:
Bear Xxxxxxx is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(f) Credit Support Document.
Bear Xxxxxxx: The Credit Support Annex and any guaranty in support
of Bear Xxxxxxx' obligations under this Agreement.
Counterparty: The Credit Support Annex.
(g) Credit Support Provider.
Bear Xxxxxxx: The guarantor under any guaranty in support of Bear
Xxxxxxx' obligations under this Agreement.
Counterparty: Not Applicable
(h) Governing Law. The parties to this Agreement hereby agree that the law
of the State of New York shall govern their rights and duties in whole,
without regard to the conflict of law provisions thereof other than New
York General Obligations Law Sections 5-1401 and 5-1402.
(i) Jurisdiction. Section 13(b) is hereby amended by: (i) deleting in the
second line of subparagraph (i) thereof the word "non-", (ii) deleting
"; and" from the end of subparagraph 1 and inserting "." in lieu
thereof, and (iii) deleting the final paragraph thereof.
(j) "Affiliate": Bear Xxxxxxx and Counterparty shall be deemed not to have
any Affiliates for purposes of this Agreement, including for purposes of
Section 6(b)(ii) of the ISDA Master Agreement.
(k) Netting of Payments. The parties agree that subparagraph (ii) of Section
2(c) of the ISDA Master Agreement will apply to each Transaction.
Part 5. Other Provisions,
(a) Section 3 of the ISDA Master Agreement is hereby amended by adding at the
end thereof the following subsection (g):
Reference Number: FXC W06SD10
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December 29, 2006
Page 13 of 33
"(g) Relationship Between Parties.
Each party represents to the other party on each date when it
enters into a Transaction that:
(1) Nonreliance. (i) It is acting for its own account, (ii) it
is not relying on any statement or representation of the
other party regarding the Transaction (whether written or
oral), other than the representations expressly made in this
Agreement or the Confirmation in respect of that Transaction
and (iii) it has consulted with its own legal, regulatory,
tax, business, investment, financial and accounting advisors
to the extent it has deemed necessary, (iv) it has made its
own investment, hedging and trading decisions based upon its
own judgment and upon any advice from such advisors as it
has deemed necessary and not upon any view expressed by the
other party, (v) it has made its own independent decisions
to enter into the Transaction and as to whether the
Transaction is appropriate or proper for it based upon its
own judgment and upon advice from such advisors as it has
deemed necessary, (vi) 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 and (vii) it
has not received from the other party any assurance or
guaranty as to the expected results of this Transaction.
(2) Evaluation and Understanding.
(i) It has the capacity to evaluate (internally or through
independent professional advice) the Transaction and
has made its own decision to enter into the
Transaction; and
(ii) It understands the terms, conditions and risks of the
Transaction and is willing and able to accept those
terms and conditions and to assume those risks,
financially and otherwise.
(3) Purpose. It is entering into the Transaction for the
purposes of managing its borrowings or investments, hedging
its underlying assets or liabilities or in connection with a
line of business.
(4) Status of Parties. The other party is not acting as an
agent, fiduciary or advisor for it in respect of the
Transaction.
(5) Eligible Contract Participant. It constitutes an "eligible
contract participant" as such term is defined in Section
l(a)12 of the Commodity Exchange Act, as amended.
(6) Line of Business. It has entered into this Agreement
(including each Transaction governed hereby) in conjunction
with its line of business or the financing of its business."
(b) Non-Recourse. Notwithstanding any provision herein or in the ISDA Master
Agreement to the contrary, the obligations of Counterparty hereunder are
limited recourse obligations of Counterparty, payable solely from the Swap
Account and the proceeds thereof, in accordance with the terms of the Pooling
and Servicing Agreement. In the event that the Swap Account and proceeds
thereof should be insufficient to satisfy@ all claims outstanding and following
the realization of the Swap Account and the proceeds thereof, any claims
against or obligations of Counterparty under the ISDA Master Agreement or any
other
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 14 of 33
confirmation thereunder still outstanding shall be extinguished and thereafter
not revive. The Counterparty shall not have liability for any failure or delay
in making a payment hereunder to Bear Xxxxxxx due to any failure or delay in
receiving amounts in the Swap Account from the Trust created pursuant to the
Pooling and Servicing Agreement.
(c) Severability. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall be
held to be invalid or unenforceable (in whole or in part) for any reason, the
remaining terms, provisions, covenants, and conditions hereof shall continue
in full force and effect as if this Agreement had been executed with the
invalid or unenforceable portion eliminated, so long as this Agreement as so
modified continues to express, without material change, the original
intentions of the parties as to the subject matter of this Agreement and the
deletion of such portion of this Agreement will not substantially impair the
respective benefits or expectations of the parties.
The parties shall endeavor to engage in good faith negotiations to replace any
invalid or unenforceable term, provision, covenant or condition with a valid
or enforceable term, provision, covenant or condition, the economic effect of
which comes as close as possible to that of the invalid or unenforceable term,
provision, covenant or condition.
(d) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any and
all communications between officers or employees of the parties, waives any
further notice of such monitoring or recording, and agrees to notify its
officers and employees of such monitoring or recording.
(e) Waiver of Jury Trial. Each party waives any right it may have to a trial
by jury in respect of any Proceedings relating to this Agreement or any Credit
Support Document.
(f) Rating Agency Downgrade.
(i) S&P Downgrade:
(1) In the event that a S&P First Level Downgrade occurs and is
continuing, then within 30 days after such rating downgrade,
Bear Stems shall, at its own expense, either (i) procure a
Permitted Transfer, (ii) obtain an Eligible Guaranty or
(iii) post collateral in accordance with the Credit Support
Annex.
(2) In the event that a S&P Second Level Downgrade occurs and is
continuing, then within 10 Local Business Days after such
rating withdrawal or downgrade, Bear Xxxxxxx shall, at its
own expense, either (i) procure a Permitted Transfer or (ii)
obtain an Eligible Guaranty.
(ii) Moody's Downgrade,
(1) In the event that a Moody's Second Level Downgrade occurs
and is continuing, Bear Xxxxxxx shall as soon as reasonably
practicable thereafter, at its own expense and using
commercially reasonable efforts, either (i) procure a
Permitted Transfer or (ii) obtain an Eligible Guaranty.
(g) Payment Instructions. Bear Xxxxxxx hereby agrees that, unless notified in
writing by the Swap Administrator of other payment instructions, any and all
amounts payable by Bear Xxxxxxx to the Counterparty under this Agreement shall
be paid to the Swap Contract Administrator at the account specified herein.
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 15 of 33
(h) Amendment. No amendment, waiver, supplement or other modification of this
Transaction shall be permitted by either party unless (i) each of S&P and
Moody's have been provided notice of the same and (ii) such amendment, waiver,
supplement, assignment or other modification satisfies the Rating Agency
Condition.
(i) Transfer.
(i) The first paragraph of Section 7 is hereby amended in its entirety
as follows:
"Subject to Section 6(b)(ii), Part 5(f) and Part 5(j)), neither
this Agreement nor any interest or obligation in or under this
Agreement may be transferred (whether by way of security or
otherwise) without (a) the prior written consent of the other
party (which consent shall be deemed given by Counterparty if the
transfer, novation or assignment is to an Eligible Replacement)
and (b) satisfaction of the Rating Agency Condition with respect
to S&P, except that:"
(ii) If an entity has made a Firm Offer (which remains an offer that
will become legally binding upon acceptance by Counterparty) to be
the transferee of a transfer, Counterparty shall, at Bear Xxxxxxx'
written request and at Bear Xxxxxxx' expense, take any reasonable
steps required to be taken by Counterparty to effect such
transfer.
(j) Transfer to Avoid Termination Event. Section 6(b)(ii) is hereby amended
by (i) deleting the words "or if a Tax Event Upon Merger occurs and the
Burdened Party is the Affected Party," and (ii) deleting the last paragraph
thereof and inserting the following:
"Notwithstanding anything to the contrary in Section 7 (as amended
herein) and Part 5(i), any transfer by Bear Xxxxxxx under this
Section 6(b)(ii) shall not require the consent of Counterparty;
provided that:
(i) the transferee (the "Transferee") is an Eligible Replacement;
(ii) if the Transferee is domiciled in a different country or political
subdivision thereof from both Bear Xxxxxxx and Counterparty, such
transfer satisfies the Rating Agency Condition;
(iii) the Transferee will not, as a result of such transfer, be required
on the next succeeding Scheduled Payment Date to withhold or
deduct on account of any Tax (except in respect of default
interest) amounts in excess of that which Bear Xxxxxxx would, on
the next succeeding Scheduled Payment Date have been required to
so withhold or deduct unless the Transferee would be required to
make additional payments pursuant to Section 2(d) corresponding
to such excess;
(iv) a Termination Event or Event of Default does not occur as a result
of such transfer; and
(v) the Transferee confirms in writing that it will accept all of the
interests and obligations in and under this Agreement which are to
be transferred to it in accordance with the terms of this
provision.
On and from the effective date of any such transfer to the Transferee,
Bear Xxxxxxx will be fully released from any and all obligations
hereunder."
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 16 of 33
(k) Proceedings. Bear Xxxxxxx shall not institute against or cause any other
person to institute against, or join any other person in instituting against,
the Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy, dissolution or similar law, for a period of one year and one day
(or, if longer, the applicable preference period) following indefeasible
payment in full of the Certificates.
(l) Compliance with Regulation AB.
Regulation AB Compliance. Bear Xxxxxxx and Counterparty agree that the terms of
the Item 11 15 Agreement dated as of January 30, 2006 (the "Regulation AB
Agreement"), between Countrywide Home Loans, Inc., CWABS, INC., CWMBS, Inc.,
CWALT, Inc., CWHEQ, Inc. and Bear Xxxxxxx Financial Products Inc., shall be
incorporated by reference into this Agreement so that Counterparty shall be an
express third party beneficiary of the Regulation AB Agreement. A copy of the
Regulation AB Agreement is attached hereto as Annex B.
(m) Substantial Financial Transaction. Each party hereto is hereby advised
and acknowledges that the other party has engaged in (or refrained from
engaging in) substantial financial transactions and has taken (or refrained
from taking) other material actions in reliance upon the entry by the parties
into the Transaction being entered into on the terms and conditions set forth
herein and in the Confirmation relating to such Transaction, as applicable.
This paragraph shall be deemed repeated on the trade date of each Transaction.
(n) Set-Off. Except as expressly provided for in Section 2(c), Section 6 or
Part I(m)(E) hereof, and notwithstanding any other provision of this Agreement
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. Section 6(e) shall be amended by deleting
the following sentence: "The amount, if any, payable in respect of an Early
Termination Date and determined pursuant to this Section will be subject to
any Set-off."
(o) Counterparts. 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.
(p) Swap Contract Administration Agreement. BSFP shall be an express third
party beneficiary of the Swap Contract Administration Agreement, dated as of
December 29, 2006 (the "Swap Contract Administration Agreement"), among The
Bank of New York, as Swap Contract Administrator and not in its individual or
corporate capacity but solely as Trustee under the Pooling and Servicing
Agreement, and Countrywide Home Loans, Inc. A copy of the Swap Contract
Administration Agreement is attached hereto as Annex C,
(q) Additional Defined Terms.
(i) Capitalized terms used but nor defined herein shall have the
meanings ascribed to such terms in the Pooling and Servicing
Agreement.
(ii) Additional Definitions:
"Eligible Guaranty" means an unconditional and irrevocable
guaranty of all present and future payment obligations and
obligations to post collateral of Bear Xxxxxxx or an Eligible
Replacement to Counterparty under this Agreement that is provided
by an Eligible Guarantor as principal debtor
Reference Number: FXC W06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 17 of 33
rather than surety and that is directly enforceable by
Counterparty, the form and substance of which guaranty are subject
to the Rating Agency Condition with respect to S&P.
"Eligible Guarantor" means an entity that has credit ratings at
least equal to the Moody's Required Ratings Threshold and S&P
Approved Ratings Threshold.
"Eligible Replacement" means an entity that either (i) satisfies
the S&P Approved Ratings Threshold and the Moody's Required
Ratings Threshold or (ii) provides an Eligible Guaranty from an
Eligible Guarantor.
"Firm Offer" means an offer which, when made, is capable of
becoming legally binding upon acceptance.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor.
"Moody's Approved Ratings Threshold" means, with respect to (i)
Bear Xxxxxxx, a Moody's counterparty rating of "Al" or above and
(ii) with respect to any other entity (or its guarantor), (x) if
such entity has both a long-term unsecured and unsubordinated debt
rating or counterparty rating from Moody's and a short-term
unsecured and unsubordinated debt rating from Moody's, a long-term
unsecured and unsubordinated debt rating or counterparty rating
from Moody's of "A2" or above and a short-term unsecured and
unsubordinated debt rating from Moody's of "Prime-I" or above, or
(y) if such entity has only a long-term unsecured and
unsubordinated debt rating or counterparty rating from Moody's, a
long-term unsecured and unsubordinated debt rating or counterparty
rating from Moody's of "Al" or above.
"Moody's First Level Downgrade7' means that no Relevant Entity
satisfies the Moody's Approved Rating Threshold.
"Moody's Required Ratings Threshold" means, with respect to (i)
Bear Xxxxxxx, a counterparty rating of "A3" or above and (ii) with
respect to any other entity (or its guarantor), (x) if such entity
has both a long-term unsecured and unsubordinated debt rating or
counterparty rating from Moody's and a short-term unsecured and
unsubordinated debt rating from Moody's, a long-term unsecured and
unsubordinated debt rating or counterparty rating from Moody's of
"A3" or above or a short-term unsecured and unsubordinated debt
rating from Moody's of "Prime-2" or above, or (y) if such entity
has only a long-term unsecured and unsubordinated debt rating or
counterparty rating from Moody's, a long-term unsecured and
unsubordinated debt rating or counterparty rating from Moody's of
"A3" or above.
"Moody's Second Level Downgrade" means that no Relevant Entity
satisfies the Moody's Required Ratings Threshold.
"Permitted Transfer" means a transfer by novation by Bear Xxxxxxx
to an entity (the "Transferee") of all, but not less than all, of
Bear Xxxxxxx' rights, liabilities, duties and obligations under
this Agreement, with respect to which transfer each of the
following conditions is satisfied: (a) the Transferee is an
Eligible Replacement that is a recognized dealer in interest rate
swaps organized under the laws of the United States of America or
a jurisdiction located in the United States of America (or another
jurisdiction reasonably acceptable to Counterparty), (b) an Event
of Default or Termination Event would not occur as a result of
such transfer, (c) pursuant to a written instrument (the "Transfer
Agreement"), the Transferee acquires and assumes all rights and
obligations of Bear Xxxxxxx under the Agreement and the relevant
Transaction, (d) Bear Xxxxxxx will be responsible for any costs or
expenses incurred in connection with such transfer (including any
replacement cost of
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 18 of 33
entering into a replacement transaction); (e) either (A) Moody's
has been given prior written notice of such transfer and the
Rating Agency Condition is satisfied with respect to S&P or (B)
each Rating Agency has been given prior written notice of such
transfer and such transfer is in connection with the assignment
and assumption of this Agreement without modification of its
terms, other than party names, dates relevant to the effective
date of such transfer, tax representations and any other
representations regarding the status of the substitute
counterparty, notice information and account details and other
similar provisions; and (f) such transfer otherwise complies with
the terms of the Pooling and Servicing Agreement.
"Rating Agency" means each of Moody's and S&P.
"Rating Agency Condition" means, with respect to any particular
proposed act or omission to act hereunder that the party acting or
failing to act must consult with each Rating Agency then providing
a rating of the Certificates and any Notes and receive from each
such Rating Agency a prior written confirmation that the proposed
action or inaction would not cause a downgrade or withdrawal of
its then-current rating of the Certificates and any Notes (without
regard to the Certificate Insurance Policy, in the case of the
Class A Certificates).
"Relevant Entity" means Bear Xxxxxxx and any Eligible Guarantor
under an Eligible Guaranty with respect to Bear Xxxxxxx.
"Replacement Transaction" means, with respect to any Terminated
Transaction or group of Terminated Transactions, a transaction or
group of transactions that (i) would have the effect of preserving
for Counterparty 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 Transaction or group of Terminated
Transactions that would, but for the occurrence of the relevant
Early Termination Date, have been required after that Date, and
(ii) has terms which are substantially the same as this Agreement,
including, without limitation, rating triggers, Regulation AB
compliance, and credit support documentation, as determined by
Counterparty in its sole discretion, acting in a commercially
reasonable manner.
"S&P" means Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc.
"S&P Approved Ratings Threshold" means with respect to (i) Bear
Xxxxxxx, a counterparty rating of "A+" or above and (ii) with
respect to any other entity (or its guarantor), a short-term
unsecured and unsubordinated debt rating from S&P of "A-1" or
above, or, if such entity does not have a short- term unsecured
and unsubordinated debt rating from S&P, a long-term unsecured and
unsubordinated debt rating from S&P of "A+" or above.
"S&P First Level Downgrade" means that no Relevant Entity
satisfies the S&P Approved Rating Threshold.
"S&P Required Ratings Threshold" means with respect to (i) Bear
Xxxxxxx, a counterparty rating of "BBB-" or above and (ii) with
respect to any other entity (or its guarantor), a long-term
unsecured and unsubordinated debt rating from S&P of "BBB-" or
above.
"S&P Second Level Downgrade" means that no Relevant Entity
satisfies the S&P Required Rating Thresholds.
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 19 of 33
(q) Rating Agency Notifications. Except as otherwise provided herein, no
Early Termination Date shall be effectively designated hereunder shall be made
by either party unless each Rating Agency has been given prior written notice
of such designation.
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR
AFFILIATE OF THE BEAR XXXXXXX COMPANIES INC. OTHER THAN BEAR XXXXXX
IS AN OBLIGOR OR A CREDIT SUPPORT PROVIDER ON THIS AGREEMENT
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.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to Bear Xxxxxxx a facsimile of the
fully-executed Confirmation to 000-000-0000. For inquiries regarding U.S.
Transactions, please contact Derivatives Documentation by telephone at
000-000-0000. For all other inquiries please contact Derivatives Documentation
by telephone at 000-0-000-0000. Originals will be provided for your execution
upon your request.
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.
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 20 of 33
Very truly yours.
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Name: XXXXX XXXXXXXX
Title: AUTHORIZED SIGNATOR
Counterparty, acting through its duly authorized signatory, hereby agrees
to, accepts and confirms the terms of the foregoing as of the Trade Date.
COUNTRYWIDE HOME LOANS, INC.
By: /s/ /s/ Xxxxxx Xxxxx
---------------------------------------
Name: Xxxxxx Xxxxx
Title: Executive VP
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.
December 29, 2006
Page 21 of 33
SCHEDULE I
(where for the purposes of (i) determining Floating Amounts, all such
dates subject to adjustment in accordance with the Following Business Day
Convention and (ii) determining Fixed Amounts, all such dates subject
to No Adjustment.)
From and including To but excluding Scheduled Amount (USD)
------------------ ---------------- ----------------------
Effective Date
-------------- 25-Jan-07 869,584,000
25-Jan-07 25-Feb-07 869,584,000
25-Feb-07 25-Mar-07 869,584,000
25-Mar-07 25-Apr-07 869,584,000
25-Apr-07 25-May-07 869,584,000
25-May-07 25-Jun-07 869,584,000
25-Jun-07 25-Jul-07 869,584,000
25-Jul-07 25-Aug-07 869,584,000
25-Aug-07 25-Sep-07 869,584,000
25-Sep-07 25-0ct-07 869,584,000
25-0ct-07 25-NOV-07 869,584,000
25-NOV-07 25-Dec-07 869,584,000
25-Dec-07 25-Jan-08 869,584,000
25-Jan-08 25-Feb-08 869,584,000
25-Feb-08 25-Mar-08 869,584,000
25-Mar-08 25-Apr-08 869,584,000
25-Apr-08 25-May-08 869,584,000
25-May-08 25-Jun-08 869,584,000
25-Jun-08 25-Jul-08 869,584,000
25-Jul-08 25-Aug-08 869,584,000
25-Aug-08 25-Sep-08 869,584,000
25-Sep-08 25-0ct-08 869,584,000
25-0ct-08 25-NOV-08 869,584,000
25-NOV-08 25-Dec-08 869,584,000
25-Dec-08 25-Jan-09 848,860,136
25-Jan-09 25-Feb-09 823,861,408
25-Feb-09 25-Mar-09 799,561,670
25-Mar-09 25-Apr-09 775,941,556
25-Apr-09 25-May-09 752,982,234
25-May-09 25-Jun-09 730,665,389
25-Jun-09 25-Jul-09 708,973,212
25-Jul-09 25-Aug-09 691,185,871
25-Aug-09 25-Sep-09 671,552,309
25-Sep-09 25-Oct-09 652,468,760
25-Oct-09 25-NOV-09 633,919,965
25-NOV-09 25-Dec-09 615,891,087
25-Dec-09 25-Jan-10 598,367,696
25-Jan-10 25-Feb-10 581,335,760
25-Feb-10 25-Mar-10 564,781,635
25-Mar-10 25-Apr-10 5548,692,050
25-Apr-10 25-May-10 533,054,103
25-May-10 25-Jun-10 517,855,247
Reference Number: FXCW06SD10
Countrywide Home Loans, Inc.,
December 29, 2006
Page 22 of 33
25-Jun-10 25-Jul-10 503,083,280
25-Jul-10 25-Aug-10 488,726,338
25-Aug-10 25-Sep-10 474,772,883
25-Sep-10 25-Oct-10 461,211,696
25-Oct-10 25-NOV-10 448,031,867
25-NOV-10 25-Dec-10 435,222,789
25-Dec-10 25-Jan-11 422,774,144
25-Jan-11 25-Feb-11 410,675,904
25-Feb-11 25-Mar-11 398,918,312
25-Mar-11 25-Apr-ll 387,491,886
25-Apr-ll 25-May-11 376,387,403
25-May-11 25-Jun-ll 365,595,894
25-Jun-ll 25-Jul-11 355,108,640
25-Jul-11 25-Aug-11 344,917,162
25-Aug-11 25-Sep-11 335,013,215
25-Sep-11 25-Oct-11 325,388,782
25-Oct-11 25-NOV-11 316,036,069
25-NOV-11 25-Dec-11 306,947,496
25-Dec-11 25-Jan-12 298,116,185
25-Jan-12 25-Feb-12 289,534,455
25-Feb-12 25-Mar-12 281,195,340
25-Mar-12 25-Apr-12 273,092,065
25-Apr-12 25-May-12 265,218,043
25-May-12 25-Jun-12 257,566,870
25-Jun-12 25-Jul-12 250,132,320
25-Jul-12 25-Aug-12 242,908,337
25-Aug-12 25-Sep-12 235,889,035
25-Sep-12 25-Oct-12 229,068,689
25-Oct-12 25-NOV-12 222,441,735
25-NOV-12 25-Dec-12 216,002,762
25-Dec-12 25-Jan-13 209,746,508
25-Jan-13 25-Feb-13 203,667,859
25-Feb-13 25-Mar-13 197,761,840
25-Mar-13 25-Apr-13 192,023,618
25-Apr-13 25-May-13 186,448,490
25-May-13 25-Jun-13 180,968,565
25-Jun-13 25-Jul-13 175,475,324
25-Jul-13 25-Aug-13 170,138,408
25-Aug-13 25 Sep 13 164,953,431
25 Sep 13 25-Oct-13 159,916,132
25-Oct-13 Termination Date 155,022,364
----------------
ANNEX A
ANNEX A
UNILATERAL CSA SCHEDULE
Pledgor: BEAR XXXXXXX FINANCIAL PRODUCTS INC. (the "Pledgor")
Secured Party: COUNTRYWIDE HOME LOANS, INC. (the "Secured Party")
Paragraph 13. Elections and Variables
(a) Security Interest for "Obligations". The term "Obligations" as used in
this Annex includes no "additional obligations" within the meaning of
Paragraph 12.
(b) Credit Support Obligations.
(i) Delivery Amount, Return Amount and Credit Support Amount
(1) Delivery Amount, Paragraph 3(a) shall be amended by
replacing the words "upon a demand made by the Secured Party
on or promptly following a Valuation Date" with the words
"on each Valuation Date". The "Delivery Amount" with respect
to Pledgor for any Valuation Date shall equal the greatest
of:
(A) the amount by which the S&P Collateral Amount exceeds
the S&P Value on such Valuation Date of all Posted
Credit Support held by the Secured Party;
(B) the amount by which the Moody's First Level Collateral
Amount exceeds the Moody's First Level Value on such
Valuation Date of all Posted Credit Support held by
the Secured Party,
(C) the amount by which the Moody's Second Level
Collateral Amount exceeds the Moody's Second Level
Value on such Valuation Date of all Posted Credit
Support held by the Secured Party.
(2) "Return Amount" applicable to Secured Party for any
Valuation Date shall equal the least of:
(A) the amount by which the S&P Value on such Valuation
Date of all Posted Credit Support held by the Secured
Party exceeds the S&P Collateral Amount;
(B) the amount by which the Moody's First Level Value on
such Valuation Date of all Posted Credit Support held
by the Secured Party exceeds the Moody's First Level
Collateral Amount.
(C) the amount by which the Moody's Second Level Value on
such Valuation Date of all Posted Credit Support held
by the Secured Party exceeds the Moody's Second Level
Collateral Amount.
(3) "Credit Support Amount" shall be deleted in its entirety.
(ii) Eligible Collateral The items set forth on the Collateral Schedule
attached as Schedule A hereto will qualify as "Eligible
Collateral" for the party specified.
11
(iii) Other Eligible Support, None
(iv) Thresholds.
(A) "Independent Amount" means:
Pledgor: Not applicable.
Secured Party: Not applicable.
(B) "Threshold" means:
Pledgor: Not applicable.
Secured Party: Not applicable.
(C) "Minimum Transfer Amount" means USD100,OOO; provided, that
if the aggregate Certificate Principal Balance of
Certificates rated by S&P is less than USD 50,000,000, the
"Minimum Transfer Amount" shall mean USD 50,000.
(D) Rounding. The Delivery Amount will be rounded up and the
Return Amount will be rounded down to the nearest integral
multiple of USD10,OOO.
(c) Valuation and Timing.
(i) "Valuation Agent7' means Pledgor.
(ii) "Valuation Date" means each Local Business Day.
(iii) "Valuation Time" means the close of business on the Local
Business Day in the city where the Valuation Agent is located
immediately preceding the Valuation Date or date of calculation,
as applicable; provided that the calculations of Value and
Exposure will be made as of approximately the same time on the
same date.
(iv) "Notification Time" means 1l:OO A.M. (New York time).
(v) Transfer Timing and Calculations, Paragraphs 4(b) and 4(c) are
hereby amended and restated in entirety as set forth below.
"(b) Transfer Timing. Subject to Paragraphs 4(a) and 5 and unless
otherwise specified, if a demand for the Transfer of
Eligible Credit Support or Posted Credit Support is made by
the Notification Time, then the relevant Transfer will be
made not later than the close of business on the Valuation
Date; if a demand is made after the Notification Time, then
the relevant Transfer will be made not later than the close
of business on the next Local Business Day thereafter.
(c) Calculations. All calculations of Value and Exposure for
purposes of Paragraphs 3 and 6(d) will be made by the
Valuation Agent as of the Valuation Time. The Valuation
Agent will notify each party (or the other party, if the
Valuation Agent is a party) of its calculations not later
than the Notification Time on the applicable Valuation Date
(or in the case of Paragraph 6(d), the Local Business Day
following the day on which such relevant calculations are
performed)."
(d) Conditions Precedent There shall be no "Specified Condition" with
respect to either party for purposes of this Annex.
12
(e) Substitution
(i) "Substitution Date" means (A) the Local Business Day on which
the Secured Party receives the Substitute Credit Support, if
notice of substitution is received by the Notification Time on
such date, and (B) the Local Business Day following the date on
which the Secured Party receives the Substitute Credit Support, if
notice of substitution is received after the Notification Time.
(ii) Consent of Secured Party for Substitution. Inapplicable.
(iii) Amendment of Paragraph 4(d)(ii). Paragraph 4(d)(ii) is amended and
restated in its entirety as set forth below:
"(ii) subject to Paragraph 4(a) of this Annex, the Secured
Party will Transfer the items of Posted Credit Support
specified by the Pledgor in its notice not later than the
close of business on the Substitution Date, provided,
however, that if the Secured Party shall not have received
the Substitute Credit Support prior to 1:00 P.M. (New York
time) on the Substitution Date, then the Secured Party shall
Transfer the applicable items of Posted Credit Support not
later than the close of business on the Local Business Day
immediately following the day on which the Secured Party
receives the Substitute Credit Support. Notwithstanding the
foregoing, the Secured Party will only be obligated to
Transfer Posted Credit Support with a Value as of the
Substitution Date equal to the Value of the Substitute
Credit Support delivered by the Pledgor in exchange
therefor."
(f) Dispute Resolution.
(i) "Resolution Time" means 12:OO noon, New York time, on the Local
Business Day for both parties following the date the Disputing
Party gives notice of a dispute pursuant to Paragraph 5.
(ii) Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), disputes
over the Value of Posted Credit Support will be resolved by the
Valuation Agent seeking bid-side quotations as of the relevant
Recalculation Date or date of Transfer, as applicable, from three
parties that regularly act as dealers in the securities in
question. The Value will be the arithmetic mean of the quotations
obtained by the Valuation Agent, multiplied by the applicable
Valuation Percentage, if any. If no quotations are available for a
particular security, then the Valuation Agent's original
calculation of Value thereof will be used for that security.
(iii) Alternative. Subject to item (iv) below, the provisions of
Paragraph 5 will apply.
(iv) Modification of Paragraph 5. The introductory paragraph of
Paragraph 5 shall be amended and restated to read in its entirety
as follows:
"If a party (a 'Disputing Party') disputes (I) the Valuation
Agent's calculation of a Delivery Amount or a Return Amount
or (II) the Value of any Transfer of Eligible Credit Support
or Posted Credit Support, then:
(A) the Disputing Party will (x) notify the other
party and, if applicable, the Valuation Agent of the amount
it is disputing, (y) indicate what it believes the correct
amount to be and (z) provide a statement showing, in
reasonable detail, how it arrived at such amount and the
appropriate party will deliver the undisputed amount to the
other party not later than (i) (a) the close of business on
the
13
Valuation Date, if the demand made under Paragraph 3 in the
case of (I) above is made by the Notification Time, or (b)
the close of business of the Local Business Day following
the date on which the demand is made under Paragraph 3 in
the case of (1) above, if such demand is made after the
Notification Time, or (ii) the close of business of the date
of Transfer, in the case of (11) above;
(B) the parties will consult with each other and provide
such information as the other party shall reasonably request
in an attempt to resolve the dispute; and
(C) if they fail to resolve the dispute by the Resolution
Time, then:"
(g) Holding and Using Posted CollateraL
(i) Eligibility to Hold Posted Collateral; Custodians. The Secured
Party and its Custodian (if any) will be entitled to hold Posted
Collateral pursuant to Paragraph 6(b), provided that the following
conditions applicable to it are satisfied:
(1) it is not a Defaulting Party;
(2) Posted Collateral consisting of Cash or certificated
securities that cannot be paid or delivered by book-entry may be
held only in any state of the United States which has adopted the
Uniform Commercial Code;
(3) the short-term rating of any Custodian shall be at least "A-1"
by S&P There shall be no Custodian for Pledgor.
(ii) Use of Posted Collateral The provisions of Paragraph 6(c) will not
apply to Secured Party and Secured Party will not have any right
to use the Posted Collateral or take any action specified in
Paragraph 6(c).
(h) Distributions and Interest Amount,
(i) Interest Rate. The "Interest Rate" will be the "Federal Funds
(Effective)" rate as such rate is displayed on Telerate page 1 18
for such day under the caption "Effective".
(ii) Amendment of Paragraph 6(d)(i) - Distributions. Clause (d)(i)
of Paragraph 6 shall be amended and restated to read in its
entirety as follows:
"(i) Distributions. If the Secured Party receives
Distributions on a Local Business Day, it will credit to
Pledgor not later than the following Local Business Day any
Distributions it receives, and such Distributions will
constitute Posted Collateral and will be subject to the
security interest granted under Xxxxxxxxx 0."
(xxx) Amendment of Paragraph 6(d)(ii) - Interest Amount Clause
(d)(ii) of Paragraph 6 shall be amended and restated to read in
its entirety as follows:
"(ii) Interest Amount. In lieu of any interest, dividends or
other amounts paid with respect to Posted Collateral in the
form of cash (all of which may be retained by the Secured
Party), the Secured Party will credit to Pledgor on the 201h
day of each calendar month (or if such day is not a Local
Business Day, the next Local Business Day) the Interest
Amount. The Interest Amount will constitute Posted
Collateral and will be subject to the security interest
granted under Paragraph 2.
14
For purposes of calculating the Interest Amount the amount
of interest calculated for each day of the interest period
shall be compounded monthly." Secured Party shall not be
obliged to credit any Interest Amount unless and until it
has received such amount.
(i) Demands and Notices.
All demands, specifications and notices under this Annex will be made
pursuant to the Notices Section of this Agreement.
(j) Addresses for Transfers.
Pledgor: To be provided in writing by Pledgor to Secured Party.
Secured Party: To be provided in writing by Secured Party to
Pledgor.
(k) Other Provision(s).
(i) Amendment of Paragraph 7 - Events of Default. Clause (iii) of
Paragraph 7 shall not apply to Secured Party.
(ii) Non-Reliance. Notwithstanding the obligations of the Secured
Party under Paragraph 6(a), and without limiting the generality of
the final sentence of Paragraph 6(a), each party, as Pledgor,
acknowledges that it has the means to monitor all matters relating
to all valuations, payments, defaults and rights with respect to
Posted Collateral without the need to rely on the other party, in
its capacity as Secured Party, and that, given the provisions of
this Annex on substitution, responsibility for the preservation of
the rights of the Pledgor with respect to all such matters is
reasonably allocated hereby to the Pledgor.
(iii) Agreement as to Single Secured Party and Pledgor. Each of Pledgor
and Secured Party agree that, notwithstanding anything to the
contrary in the recital to this Annex, Paragraph l(b) or Paragraph
2 or the definitions in Paragraph 12, (a) the term "Secured Party"
as used in this Annex means only Secured Party, (b) the term
"Pledgor" as used in this Annex means only Pledgor, (c) only
Pledgor makes the pledge and grant in Paragraph 2, the
acknowledgement in the final sentence of Paragraph 8(a) and the
representations in Paragraph 9 and (d) only Pledgor will be
required to make Transfers of Eligible Credit Support hereunder.
(iv) Trustee. The Trustee is hereby authorized to (i) make demands on
behalf of the Secured Party pursuant to Paragraph 3 hereunder and
(ii) provide notice on behalf of the Secured Party pursuant to
Paragraph 7 hereunder.
(v) Collateral Account. Secured Party shall at all times maintain all
Posted Collateral in a segregated trust account.
(vi) External Calculations. At any time at which Pledgor (or, to the
extent applicable, its Credit Support Provider) does not have a
long-term unsubordinated and unsecured debt rating of at least
"BBB+" from S&P, the Valuation Agent shall (at its own expense)
obtain external calculations of the Secured Party's Exposure from
at least two Reference Market-makers on the last Local Business
Day of each calendar month. Any determination of the S&P
Collateral Amount shall be based on the greatest of the Secured
Party's Exposure determined by the Valuation Agent and such
Reference Market-makers. Such external
15
calculation may not be obtained from the same Reference
Market-maker more than four times in any 12-month period.
(vii) Notice to S&P. At any time at which Pledgor (or, to the extent
applicable, its Credit Support Provider) does not have a
long-term unsubordinated and unsecured debt rating of at least
"BBB+" from S&P, the Valuation Agent shall provide to S&P not
later than the Notification Time on the Local Business Day
following each Valuation Date its calculations of the Secured
Party's Exposure and the Value of any Eligible Credit Support or
Posted Credit Support for that Valuation Date. The Valuation
Agent shall also provide to S&P any external marks of the
Secured Party's Exposure.
(viii) Expenses. Pledgor shall be responsible for all reasonable costs
and expenses incurred by Secured Party in connection with the
Transfer of any Eligible Collateral under this Annex.
(ix) Additional Defined Terms.
"DVOl" means, with respect to a Transaction and any date of
determination, the sum of the estimated change in the Secured
Party's Exposure with respect to such Transaction that would
result from a one basis point change in the relevant swap curve on
such date, as determined by the Valuation Agent in good faith and
in a commercially reasonable manner. The Valuation Agent shall,
upon request of Secured Party, provide to Secured Party a
statement showing in reasonable detail such calculation.
"Xxxxx'x First Level Additional Collateralized Amount" means, with
respect to any Transaction, the lesser of (x) the product of 15
and DVOl for such Transaction and such Valuation Date and (y) the
product of 2% and the Notional Amount for such Transaction for the
Calculation Period which includes such Valuation Date.
"Xxxxx'x First Level Collateral Amount" means, (A) for any
Valuation Date on which (I) a Xxxxx'x First Level Downgrade has
occurred and has been continuing (x) for at least 30 Local
Business Days or (y) since this Annex was executed and (11) it is
not the case that a Xxxxx'x Second Level Downgrade has occurred
and been continuing for at least 30 Local Business Days, an amount
equal to the greater of (a) zero and (b) the sum of the Secured
Party's aggregate Exposure for all Transactions and the aggregate
of Xxxxx'x First Level Additional Collateralized Amounts for each
Transaction and (B)for any other Valuation Date, zero,
"Xxxxx'x First Level Value" means, for any date that the Xxxxx'x
First Level Collateral Amount is determined and the Value of any
Eligible Collateral or Posted Collateral that is a security, the
bid price for such security obtained by the Valuation Agent
multiplied by the Xxxxx'x First Level Valuation Percentage for
such security set forth on Schedule A hereto.
"Xxxxx'x Second Level Additional Collateralized Amount" means,
with respect to any Transaction,
(I) if such Transaction is not a Transaction-Specific Hedge,
the lesser of (i) the product of the 50 and DVOl for such
Transaction and such Valuation Date and (ii) the product of
8% and the Notional Amount for such Transaction for the
Calculation Period (as defined in the related Transaction)
which includes such Valuation Date; or
(2) if such Transaction is a Transaction-Specific Hedge, the
lesser of (i) the product of the 65 and DVOl for such
Transaction and such Valuation Date and (ii) the product of
10%
16
and the Notional Amount for such Transaction for the
Calculation Period (as defined in the related Transaction)
which includes such Valuation Date.
"Xxxxx'x Second Level Collateral Amount" means, (A) for any
Valuation Date on which it is the case that a Xxxxx'x Second
Level Downgrade has occurred and been continuing for at
least 30 Local Business Days, an amount equal to the
greatest of (a) zero, (b) the aggregate amount of the Next
Payments for all Next Payment Dates and (c) the sum of the
Secured Party's aggregate Exposure and the aggregate of
Xxxxx'x Second Level Additional Collateralized Amounts for
each Transaction and (B) for any other Valuation Date, zero.
"Xxxxx'x Second Level Value" means, for any date that the
Xxxxx'x Second Level Collateral Amount is determined and the
Value of any Eligible Collateral or Posted Collateral that
is a security, the bid price for such security obtained by
the Valuation Agent multiplied by the Xxxxx'x Second Level
Valuation Percentage for such security set forth on Schedule
A hereto.
"Next Payment" means, in respect of each Next Payment Date,
the greater of (i) the amount of any payments due to be made
by the Pledgor pursuant to Section 2(a) on such Next Payment
Date less any payments due to be made by the Secured Party
under Section 2(a) on such Next Payment Date (in each case,
after giving effect to any applicable netting under Section
2(c)) and (ii) zero.
"Next Payment Date" means the next scheduled payment date
under any Transaction.
"Remaining Weighted Average Maturity" means, with respect to
a Transaction, the expected weighted average maturity for
such Transaction as determined by the Valuation Agent.
"S&P Collateral Amount" means, (A) for any Valuation Date on
which a S&P First Level Downgrade has occurred and been
continuing for at least 30 days or on which a S&P Second
Level Downgrade has occurred and is continuing, an amount
equal to the sum of (1) 100.0% of the Secured Party's
Exposure for such Valuation Date and (2) the product of the
Volatility Buffer for each Transaction and the Notional
Amount of such Transaction for the Calculation Period (as
defined in the related Transaction) of such Transaction
which includes such Valuation Date, or (B) for any other
Valuation Date, zero.
"S&P Value" means, for any date that the S&P Collateral
Amount is determined and the Value of any Eligible
Collateral or Posted Collateral that is a security, the bid
price for such security obtained by the Valuation Agent
multiplied by the S&P Valuation Percentage for such security
set forth on Schedule A hereto.
"Transaction-Specific Hedge" means any Transaction that is a
cap, floor or swaption or a Transaction in respect of which
(x) the notional amount of the interest rate swap is
"balance guaranteed" or (y) the notional amount of the
interest rate swap for any Calculation Period otherwise is
not a specific dollar amount that is fixed at the inception
of the Transaction.
"Volatility Buffer" means, for any Transaction, the related
percentage set forth in the following table:
17
-------------------------------------------------------------------------------
The higher of the Remaining Remaining Remaining Remaining
S&P short-term Weighted Weighted Weighted Weighted
credit rating of (i) Average Average Average Average
Pledgor and (ii) the Maturity Maturity Maturity Maturity
Credit Support up to 3 up to 5 up to 10 up to 30
Provider of Pledgor, years years years years
if applicable
-------------------------------------------------------------------------------
"A-2" or higher 2.75% 3.25% 4.00% 4.75%
-------------------------------------------------------------------------------
"A-3" 3.25% 4.00% 5.00% 6.25%
-------------------------------------------------------------------------------
"BB+" - or lower 3.50% 4.50% 6.75% 7.50%
-------------------------------------------------------------------------------
18
IN WITNESS WHEREOF, the parties have executed this Annex on the
respective dates specified below with effect from the date specified on the
first page of this document.
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Name: XXXXX XXXXXXXX
Title: AUTHORIZED SIGNATORY
Date:
COUNTRYWIDE HOME LOANS, INC
By: /s/ Xxxxxx Xxxxx
---------------------------------------
Name: Xxxxxx Xxxxx
Title: Executive VP
19
SCHEDULE A
----------
COLLATERAL SCHEDULE
-------------------
The Xxxxx'x First Level Valuation Percentages shall be used in determining the
Xxxxx'x First Level Collateral Amount.
The Xxxxx'x Second Level Valuation Percentages shall be used in determining
the Xxxxx'x Second Level Collateral Amount.
The S&P Valuation Percentages shall be used in determining the S&P Collateral
Amount.
-------------------------------------------------------------------------------------------------
Xxxxx'x
Xxxxx'x Second
ISDA Collateral First Level Level S&P
Assset Definition Remaining Valuation Valuation Valuation
(ICAD) Code Maturity Percentage Percentage Percentage
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
US-CASH N/A 100% 100% 100%
EU-CASH N/A 98% 94% 92.5%
GB-CASH N/A 98% 95% 94.1%
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
< 1 Year 100% 100% 98.9%
1 to 2 years 100% 99% 98.0%
US-TBILL 2 to 3 years 100% 98% 97.4%
US-TNOTE 3 to 5 years 100% 97% 95.5%
US-TBOND 5 to 7 years 100% 96% 93.7%
(fixed rate) 7 to 10 years 100% 94% 92.5%
10 to 20 years 100% 90% 91.1%
> 20 years 100% 88% 88.6%
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
US-TBILL
US-TNOTE Not Eligible
US-TBOND All Maturities 100% 99% Collateral
(floating rate)
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
< 1 Year 100% 99% 98.5%
1 to 2 years 100% 99% 97.7%
2 to 3 years 100% 98% 97.3%
GA-US-AGENCY 3 to 5 years 100% 96% 94.5%
(fixed rate) 5 to 7 years 100% 93% 93.1%
7 to 10 years 100% 93% 90.7%
10 to 20 years 100% 89% 87.7%
> 20 years 100% 87% 84.4%
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
GA-US-AGENCY All Maturities 100% 98% Not Eligible
(floating rate) Collateral
-------------------------------------------------------------------------------------------------
20
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Rated Aa3 Rated Aa3 Rated AAA
or better or better or better
by Xxxxx'x By Xxxxx'x by S&P
< 1 Year 98% 94% 98.8%
GA-EUROZONE- 1 to 2 years 98% 93% 97.9%
GOV (other than 2 to 3 years 98% 92% 97.1%
EU-CASH) (fixed 3 to 5 years 98% 90% 91.2%
rate) 5 to 7 years 98% 89% 87.5%
7 to 10 years 98% 88% 83.8%
10 to 20 years 98% 84% 75.5%
Not Eligible
> 20 years 98% 82% Collateral
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Rated Aa3 Rated Aa3 Rated AAA
GA-EUROZONE-GOV or better or better or better
(other than by Xxxxx'x By Xxxxx'x by S&P
EU-CASH Not Eligible
(floating rate) All Maturities 98% 93% Collateral
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
< 1 Year 98% 94% Not Eligible
Collateral
1 to 2 years 98% 93% Not Eligible
Collateral
2 to 3 years 98% 92% Not Eligible
Collateral
GA-GB-GOV 3 to 5 years 98% 91% Not Eligible
(other than Collateral
GB-CASH) (fixed rate) 5 to 7 years 98% 90% Not Eligible
Collateral
7 to 10 years 98% 89% Not Eligible
Collateral
10 to 20 years 98% 86% Not Eligible
Collateral
> 20 years 98% 84% Not Eligible
Collateral
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
GA-GB-GOV
(other than GB- All Maturities 98% 94% Not Eligible
CASH) (floating Collateral
rate)
-------------------------------------------------------------------------------------------------
The ISDA Collateral Asset Definition (ICAD) Codes used in this Collateral
Schedule shall have the meanings set forth in the Collateral Asset Definitions
(First Edition -June 2003) as published and copyrighted in 2003 by the
International Swaps and Derivatives Association, Inc.
21
