EXHIBIT 99.5
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The ISDA Master Agreement
(Multicurrency--Cross Border)
ISDA (R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of November 30, 2006
XXXXXX BROTHERS SPECIAL FINANCING INC. THE BANK OF NEW YORK, not in its
individual or corporate capacity but
solely as Swap Contract
Administrator for CWALT, Inc.
Alternative Loan Trust 2006-OC10,
pursuant to a Swap Contract
Administration Agreement
("Party A") and ("Party B")
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions. Accordingly, the parties agree as follows: --
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the parties (collectively referred to as this "Agreement"), and the parties
would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than by
payment), such delivery will be made for receipt on the due date in the
manner customary for the relevant obligation unless otherwise specified in
the relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing,
(2) the condition precedent that no Early Termination Date in respect of
the relevant Transaction has occurred or been effectively designated and
(3) each other applicable condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable: --
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to
make payment of any such amount will be automatically satisfied and discharged
and, if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as modified by
the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that
party("X") will: --
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y under
this Section 2(d)) promptly upon the earlier of determining that
such deduction or withholding is required or receiving notice that
such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy),
or other documentation reasonably acceptable to Y, evidencing such
payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this Agreement,
such additional amount as is necessary to ensure that the net amount
actually received by Y (free and clear of Indemnifiable Taxes,
whether assessed against X or Y) will equal the Full amount Y would
have received had no such deduction or withholding been required.
However, X will not be required to pay any additional amount to Y to
the extent that it would not be required to be paid but for: --
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure would
not have occurred but for (I) any action taken by a taxing
authority, or brought in a court of competent jurisdiction, on
or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with
respect to a party to this Agreement) or (II) a Change in Tax
Law.
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(ii) Liability. If: --
(1) X is required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, to make any
deduction or withholding in respect of which X would not be required
to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against
X,
then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such
liability (including any related liability for interest, but including any
related liability for penalties only if Y has failed to comply with or
perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that: --
(a) Basic Representations.
(i) Status. It is duly organised and validly existing under the laws of
the jurisdiction of its organisation or incorporation and, if relevant
under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to perform
its obligations under this Agreement and any obligations it has under any
Credit Support Document to which it is a party and has taken all necessary
action to authorise such execution, delivery and performance;
(iii) No Violation or Conflict. 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;
(iv) Consents. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in full
force and effect and all conditions of any such consents have been
complied with; and
(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid
and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganisation, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding
in equity or at law)).
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(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or perforating its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.
(f) Payee Tax Representations. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and true.
4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party: --
(a) Furnish Specified Information. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs: --
(i) any forms, documents or certificates relating to taxation specified in
the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to allow
such other party or its Credit Support Provider to make a payment under
this Agreement or any applicable Credit Support Document without any
deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of such
demand), with any such form or document to be accurate and completed in a
manner reasonably satisfactory to such other party and to be executed and
to be delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of such
failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,
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organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party: --
(i) Failure to Pay or Deliver. Failure by the party to make, when due, any
payment under this Agreement or delivery under Section 2(a)(i) or 2(e)
required to be made by it if such failure is not remedied on or before the
third Local Business Day after notice of such failure is given to the
party;
(ii) Breach of Agreement. Failure by the party to comply with or perform
any agreement or obligation (other than an obligation to make any payment
under this Agreement or delivery under Section 2(a)(i) or 2(c) or to give
notice of a Termination Event or any agreement or obligation under Section
4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party
in accordance with this Agreement if such failure is not remedied on or
before the thirtieth day after notice of such failure is given to the
party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any applicable
grace period has elapsed;
(2) the expiration or termination of such Credit Support Document or
the failing or ceasing of such Credit Support Document to be in full
force and effect for the purpose of this Agreement (in either case
other than in accordance with its terms) prior to the satisfaction
of all obligations of such party under each Transaction to which
such Credit Support Document relates without the written consent of
the other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the
validity of, such Credit Support Document;
(iv) Misrepresentation. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made or
repeated by the party or any Credit Support Provider of such party in this
Agreement or any Credit Support Document proves to have been incorrect or
misleading in any material respect when made or repeated or deemed to have
been made or repeated;
(v) Default under Specified Transaction. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation
of, an acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any applicable
notice requirement or grace period, in making any payment or delivery due
on the last payment, delivery or exchange date of, or any payment on early
termination of, a Specified Transaction (or such default continues for at
least three Local Business Days if there is no applicable notice
requirement or grace period) or (3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified Transaction (or such action is
taken by any person or entity appointed or empowered to operate it or act
on its behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default, event
of default or other similar condition or event (however
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described) in respect of such party, any Credit Support Provider of such
party or any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of
them (individually or collectively) in an aggregate amount of not less
than the applicable Threshold Amount (as specified in the Schedule) which
has resulted in such Specified Indebtedness becoming, or becoming capable
at such time of being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and payable or (2) a
default by such party, such Credit Support Provider or such Specified
Entity (individually or collectively) in making one or more payments on
the due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments (after
giving effect to any applicable notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party: --
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its creditors;
(4) institutes or has instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or petition
instituted or presented against it, such proceeding or petition (A)
results in a judgment of insolvency or bankruptcy or the entry of an
order for relief or the making of an order for its winding-up or
liquidation or (B) is not dismissed, discharged, stayed or
restrained in each case within 30 days of the institution or
presentation thereof, (5) has a resolution passed for its
winding-up, official management or liquidation (other than pursuant
to a consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its assets;
(7) has a secured party take possession of all or substantially all
its assets or has a distress, execution, attachment, sequestration
or other legal process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged, stayed
or restrained, in each case within 30 days thereafter; (8) causes or
is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect to any
of the events specified in clauses (1) to (7) (inclusive); or (9)
takes any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provider
of such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and, at
the time of such consolidation, amalgamation, merger or transfer: --
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event specified below constitutes an Illegality if the
event is specified in (i) below, a Tax Event if the event is specified in (ii)
below or a Tax Event Upon Merger if the event is specified in (iii) below, and,
if specified to be applicable, a Credit Event
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Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below: --
(i) Illegality. Due to the adoption of, or any change in, any applicable
law after the date on which a Transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date, it becomes unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party): --
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document
relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action is
taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay to the other party an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of
interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is
required to be paid in respect of such Tax under Section 2(d)(i)(4) (other
than by reason of Section 2(d)(i)(4)(A) or (B));
(iii) Tax Event Upon Merger. The party (the "Burdened Party") on the next
succeeding Scheduled Payment Date will either (1) be required to pay an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount has been deducted or
withheld for or on account of any Indemnifiable Tax in respect of which
the other party is not required to pay an additional amount (other than by
reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a
party consolidating or amalgamating with, or merging with or into, or
transferring all or substantially all its assets to, another entity (which
will be the Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, such party ("X"), any Credit
Support Provider of X or any applicable Specified Entity of X consolidates
or amalgamates with, or merges with or into, or transfers all or
substantially all its assets to, another entity and such action does not
constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be the Affected Party); or
(v) Additional Termination Event. If any "Additional Termination Event" is
specified in the Schedule or any Confirmation as applying, the occurrence
of such event (and, in such event, the Affected Party or Affected Parties
shall be as specified for such Additional Termination Event in the
Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.
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6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying the
nature of that Termination Event and each Affected Transaction and will
also give such other information about that Termination Event as the other
party may reasonably require.
(ii) Transfer to avoid Termination Event. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the
Affected Party, the Affected Party will, as a condition to its right to
designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its rights and obligations
under this Agreement in respect of the Affected Transactions to another of
its Offices or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days after
the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject
to and conditional upon the prior written consent of the other party,
which consent will not be withheld if such other party's policies in
effect at such time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) or a
Tax Event occurs and there are two Affected Parties, each party will use
all reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action to avoid that Termination
Event.
(iv) Right to Terminate If: --
(1) a transfer under Section 6(b)(ii) or an agreement under Section
6(b)(iii), as the case may be, has not been effected with respect to
all Affected Transactions within 30 days after an Affected Party
gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected Party,
either party in the case of an Illegality, the Burdened Party in the case
of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event
or an Additional Termination Event if there is more than one Affected
Party, or the party which is not the Affected Party in the case of a
Credit Event Upon Merger or an Additional Termination Event if there is
only one Affected Party may, by not more than 20 days notice to the other
party and provided that the relevant Termination Event is then
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continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under Section
6(a) or (b), the Early Termination Date will occur on the date so
designated, whether or not the relevant Event of Default or Termination
Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination
Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in
respect of the Terminated Transactions will be required to be made, but
without prejudice to the other provisions of this Agreement. The amount,
if any, payable in respect of an Early Termination Date shall be
determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable detail,
such calculations (including all relevant quotations and specifying any
amount payable under Section 6(e)) and (2) giving details of the relevant
account to which any amount payable to it is to be paid. In the absence of
written confirmation from the source of a quotation obtained in
determining a Market Quotation, the records of the party obtaining such
quotation will be conclusive evidence of the existence and accuracy of
such quotation.
(ii) Payment Date. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day that
notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event of
Default) and on the day which is two Local Business Days after the day on
which notice of the amount payable is effective (in the case of an Early
Termination Date which is designated as a result of a Termination Event).
Such amount will be paid together with (to the extent permitted under
applicable law) interest thereon (before as well as after judgment) in the
Termination Currency, from (and including) the relevant Early Termination
Date to (but excluding) the date such amount is paid, at the Applicable
Rate. Such interest will be calculated on the basis of daily compounding
and the actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
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.
(i) Events of Default. If the Early Termination Date results from an Event
of Default: --
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party over (B) the Termination Currency Equivalent of
the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a positive
number, the Non-defaulting Party's Loss in respect of this
Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the
9
Non-defaulting Party) in respect of the Terminated Transactions and
the Termination Currency Equivalent of the Unpaid Amounts owing to
the Non-defaulting Party less (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party. If
that amount is a positive number, the Defaulting Party will pay it
to the Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that amount to
the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party's Loss in
respect of this Agreement. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is a
negative number, the Non-defaulting Party will pay the absolute
value of that amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event: --
(1) One Affected Party. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3), if
Market Quotation applies, or Section 6(e)(i)(4), if Loss applies,
except that, in either case, references to the Defaulting Party and
to the Non-defaulting Party will be deemed to be references to the
Affected Party and the party which is not the Affected Party,
respectively, and, if Loss applies and fewer than all the
Transactions are being terminated, Loss shall be calculated in
respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties: --
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of (a)
one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable equal
to one-half of the difference between the Loss of the party
with the higher Loss ("X") and the Loss of the party with the
lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will be
subject to such adjustments as are appropriate and permitted by law to
reflect any payments or deliveries made by one party to the other under
this Agreement (and retained by such other party) during the period from
the relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies an
amount recoverable under this Section 6(e) is a reasonable pre-estimate of
loss and not a penalty. Such amount is payable for the loss of bargain and
the loss of protection against future risks and except as otherwise
provided in this Agreement neither party will be entitled to recover any
additional damages as a consequence of such losses.
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7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that: --
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. Contractual Currency
(a) Payment in the Contractual Currency. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
convened into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.
11
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in respect
of it) may be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable
and may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange of
electronic messages on an electronic messaging system, which in each case
will be sufficient for all purposes to evidence a binding supplement to
this Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
12
to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details, provided (see the
Schedule) and will be deemed effective as indicated: --
(i) if in writing and delivered in person or by courier, on the date it is
delivered;
(ii) if sent by telex, on the date the recipient's answer back is
received;
(iii) if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form (it
being agreed that the burden of proving receipt will be on the sender and
will not be met by a transmission report generated by the sender's
facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered
or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably: --
(i) submits to the jurisdiction of the English courts, if this Agreement
is expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of New
York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Xxx 0000 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any
13
reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.
(d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. Definitions
As used in this Agreement: --
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means: --
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
14
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have
15
been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
Faith by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head or
home office.
"Potential Event of Default" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market,
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of: --
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meanings specified in the Schedule.
16
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
"Tax" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market
17
value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or would
have been required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the determination
under Section 6(e) or, if each party is so obliged, it shall be the average of
the Termination Currency Equivalents of the fair market values reasonably
determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
XXXXXX BROTHERS SPECIAL FINANCING INC. THE BANK OF NEW YORK, not in its
individual or corporate capacity but
solely as Swap Contract
Administrator for CWALT, Inc.
Alternative Loan Trust 2006-OC10,
pursuant to a Swap Contract
Administration Agreement
("Party A") ("Party B")
------------------------------- ---------------------------------
(Name of Party) (Name of Party)
By: /s/ Xxxxxxxxxx X. Xxxxxx By: /s/ Xxxxxxxx Xxxxxxxxxxx
Name: Xxxxxxxxxx X. Xxxxxx Name: Xxxxxxxx Xxxxxxxxxxx
Title: Vice President Title: Vice President
18
(Multicurrency-Cross Border)
SCHEDULE
to the
Master Agreement
dated as of November 30,2006
between
XXXXXX BROTHERS SPECIAL FINANCING INC. ("Party A"),
a corporation organized under the laws of
the State of Delaware
and
THE BANK OF NEW YORK, not in its individual or corporate capacity but solely as
Swap Contract Administrator for CWALT Inc., Alternative Loan Trust 2006-OC10
pursuant to a Swap Contract Administration Agreement (`Party B")
All terms used herein and not otherwise defined are given their meaning in the
Pooling and Servicing Agreement dated as of November 1, 2006 among CWALT, Inc.
as depositor, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Park
Grananda 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") and in the Swap Contract Administration
Agreement dated as of November 30, 2006, among the Bank of New York, as Swap
Contract Administrator (in such capacity, the "Swap Contract Administrator") and
as Trustee under the Pooling and Servicing Agreement referred to below (in such
capacity, the "Trustee"), and Countrywide Home Loans, Inc.(the "Swap Contract
Administration Agreement").
Part 1. Termination Provisions.
For the purposes of this Agreement:-
(a) "Specified Entity" will not apply to Party A or Party B for any purpose.
(b) "Specified Transaction" will not apply to Party A or Party B for any
purpose.
(c) Events of Default.
The statement below that an Event of Default will apply to a specific
party means that upon the occurrence of such an Event of Default with
respect to such party, the other party shall have the rights of a
Non-defaulting Party under Section 6 of this Agreement; conversely, the
statement below that such event will not apply to a specific party means
that the other party shall not have such rights.
(i) The "Failure to Pay or Deliver" provisions of Section 5(a)(i) will
apply to Party A and will apply to Party B; provided, however, that
Section 5(a)(i) is hereby amended by replacing the word "third" with
the word "first"; provided, further, that notwithstanding anything
to the contrary in Section 5(a)(i), any failure by Party A to comply
with or perform any obligation to be complied with or performed by
Party A under the Credit Support Annex shall not constitute an Event
of Default under Section 5(a)(i) unless (A) a Required Ratings
Downgrade Event has occurred and been continuing for 30 or more
Local Business Days and (B) such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to Party A.
(ii) The "Breach of Agreement" provisions of Section 5(a)(ii) will apply
to Party A and will not apply to Party B.
(iii) The "Credit Support Default" provisions of Section 5(a)(iii) will
apply to Party A and will not apply to Party B except that Section
5(a)(iii)(1) will apply to Party B solely in respect of Party B's
obligations under Paragraph 3(b) of the Credit Support Annex;
provided, however, that notwithstanding anything to the contrary in
Section 5(a)(iii)(1), any failure by Party A to comply with or
perform any obligation to be complied with or performed by Party A
under the Credit Support Annex shall not constitute an Event of
Default under Section 5(a)(iii) unless (A) a Required Ratings
19
Downgrade Event has occurred and been continuing for 30 or more
Local Business Days and (B) such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to Party A.
(iv) The "Misrepresentation" provisions of Section 5(a)(iv) will apply to
Party A and will not apply to Party B.
(v) The "Default under Specified Transaction" provisions of Section
5(a)(v) will not apply to Party A and will not apply to Party B.
(vi) The "Cross Default" provisions of Section 5(a)(vi) will apply to
Party A and will not apply to Party B. For purposes of Section
5(a)(vi), solely with respect to Party A:
"Specified Indebtedness" will have the meaning specified in Section
14.
"Threshold Amount" means three (3%) of the Shareholders' Equity of
Xxxxxx Brothers Holdings Inc. ("Xxxxxx Brothers Holdings Inc." or
"Holdings"), in the case of Party A (or its equivalent in any other
currency) or, if applicable, the Eligible Guarantor.
"Shareholders' Equity" means with respect to an entity, at any time,
the sum (as shown in the most recent annual audited financial
statements of such entity) of (i) its capital stock (including
preferred stock) outstanding, taken at par value, (ii) its capital
surplus and (iii) its retained earnings, minus (iv) treasury stock,
each to be determined in accordance with generally accepted
accounting principles.
(vii) The "Bankruptcy" provisions of Section 5(a)(vii) will apply to Party
A and will apply to Party B except that the provisions of Section
5(a)(vii)(2), (6) (to the extent that such provisions refer to any
appointment contemplated or effected by the Pooling and Servicing
Agreement or any appointment to which Party B has not become
subject), (7) and (9) will not apply to Party B; provided that, with
respect to Party B only, (i) Section 5(a)(vii)(4) is hereby amended
by adding after the words "against it" the words "(excluding any
proceeding or petition instituted or presented by Party A or its
Affiliates)", and (ii) Section 5(a)(vii)(8) is hereby amended by
deleting the words "to (7) inclusive" and inserting lieu thereof ",
(3), (4) as amended, (5) and (6) as amended".
(viii) The "Merger Without Assumption" provisions of Section 5(a)(viii)
will apply to Party A and will apply to Party B.
(d) Termination Events.
The statement below that a Termination Event will apply to a specific
party means that upon the occurrence of such a Termination Event, if such
specific party is the Affected Party with respect to a Tax Event, the
Burdened Party with respect to a Tax Event Upon Merger (except as noted
below) or the non-Affected Party with respect to a Credit Event Upon
Merger, as the case may be, such specific party shall have the right to
designate an Early Termination Date in accordance with Section 6 of this
Agreement; conversely, the statement below that such an event will not
apply to a specific party means that such party shall not have such right;
provided, however, with respect to "Illegality" the statement that such
event will apply to a specific party means that upon the occurrence of
such a Termination Event with respect to such party, either party shall
have the right to designate an Early Termination Date in accordance with
Section 6 of this Agreement.
(i) The "Illegality" provisions of Section 5(b)(i) will apply to Party A
and will apply to Party B.
(ii) The "Tax Event" provisions of Section 5(b)(ii) will apply to Party
A, except that, for purposes of the application of Section 5(b)(ii),
Section 5(b)(ii) is hereby amended by deleting the words "(x) any
action taken by a taxing authority, or brought in a court of
competent jurisdiction, on or after the date on which a Transaction
is entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (y), and the
"Tax Event" provisions of Section 5(b)(ii) will apply to Party B.".
20
(iii) The "Tax Event Upon Merger" provisions of Section 5(b)(iii) will
apply to Party A and will apply to Party B, provided that Party A
shall not be entitled to designate an Early Termination Date by
reason of a Tax Event upon Merger in respect of which it is the
Affected Party.
(iv) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will
not apply to Party A and will not apply to Party B.
(e) The "Automatic Early Termination" provision of Section 6(a) will not apply
to Party A and will not apply to Party B.
(f) Payments on Early Termination. For the purpose of Section 6(e) of this
Agreement:
(i) Market Quotation will apply, provided, however, that, in the event
of a Derivative Provider Trigger Event, the following provisions
will apply:
(A) The definition of Market Quotation in Section 14 shall
be deleted in its entirety and replaced with the
following:
"Market Quotation" means, with respect to one or more
Terminated Transactions, a Firm Offer which is (1) made
by a Reference Market-maker that is an Eligible
Replacement, (2) for an amount that would be paid to
Party B (expressed as a negative number) or by Party B
(expressed as a positive number) in consideration of an
agreement between Party B and such Reference
Market-maker to enter into a transaction (a "Replacement
Transaction"), and (3) made on the basis that Unpaid
Amounts in respect of the Terminated Transaction or
group of Transactions are to be excluded but, without
limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required
(assuming satisfaction of each applicable condition
precedent) after that Early Termination Date is to be
included.
(B) The definition of Settlement Amount shall be deleted in
its entirety and replaced with the following:
"Settlement Amount" means, with respect to any Early
Termination Date, an amount (as determined by Party B)
equal to:
(a) If a Market Quotation for the relevant Terminated
Transaction or group of Terminated Transactions is
accepted by Party B so as to become legally
binding on or before the day falling ten Local
Business Days after the day on which the Early
Termination Date is designated, or such later day
as Party B may specify in writing to Party A, but
in either case no later than one Local Business
Day prior to the Early Termination Date (such day,
the "Latest Settlement Amount Determination Day"),
the Termination Currency Equivalent of the amount
(whether positive or negative) of such Market
Quotation;
(b) If, on the Latest Settlement Amount Determination
Day, no Market Quotation for the relevant
Terminated Transaction or group of Terminated
Transactions has been accepted by Party B so as to
become legally binding and one or more Market
Quotations from Approved Replacements have been
made and remain capable of becoming legally
binding upon acceptance, the Settlement Amount
shall equal the Termination Currency Equivalent of
the amount (whether positive or negative) of the
lowest of such Market Quotations (for the
avoidance of doubt, the lowest of such Market
Quotations shall be the lowest Market Quotation of
such Market Quotations expressed as a positive
number or, if any of such Market Quotations is
expressed as a negative number, the
21
Market Quotation expressed as a negative number
with the largest absolute value); or
(c) If, on the Latest Settlement Amount Determination
Day, no Market Quotation for the relevant
Terminated Transaction or group of Terminated
Transactions is accepted by Party B so as to
become legally binding and no Market Quotation
from an Approved Replacement remains capable of
becoming legally binding upon acceptance, the
Settlement Amount shall equal Party B's Loss
(whether positive or negative and without
reference to any Unpaid Amounts) for the relevant
Terminated Transaction or group of Terminated
Transactions.
(C) For the purpose of paragraph (4) of the definition of Market
Quotation, Party B shall determine in its sole discretion,
acting in a commercially reasonable manner, whether a Firm
Offer is made in respect of a Replacement Transaction with
commercial terms substantially the same as those of this
Agreement (save for the exclusion of provisions relating to
Transactions that are not Terminated Transactions).
(D) At any time on or before the Latest Settlement Amount
Determination Day at which two or more Market Quotations
remain capable of becoming legally binding upon acceptance,
Party B shall be entitled to accept only the lowest of such
Market Quotations.
(E) If Party B requests Party A in writing to obtain Market
Quotations, Party A shall use its reasonable efforts to do so
before the Latest Settlement Amount Determination Day.
(F) If the Settlement Amount is a negative number, Section
6(e)(i)(3) shall be deleted in its entirety and replaced with
the following:
"(3) Second Method and Market Quotation. If the Second Method
and Market Quotation apply, (I) Party B shall pay to Party A
an amount equal to the absolute value of the Settlement Amount
in respect of the Terminated Transactions, (II) Party B shall
pay to Party A the Termination Currency Equivalent of the
Unpaid Amounts owing to Party A and (III) Party A shall pay to
Party B the Termination Currency Equivalent of the Unpaid
Amounts owing to Party B; provided, however, that (x) the
amounts payable under the immediately preceding clauses (II)
and (III) shall be subject to netting in accordance with
Section 2(c) of this Agreement and (y) notwithstanding any
other provision of this Agreement, any amount payable by Party
A under the immediately preceding clause (III) shall not be
netted-off against any amount payable by Party B under the
immediately preceding clause (I)."
(ii) The Second Method will apply.
(g) "Termination Currency" means USD.
(h) Additional Termination Events. Additional Termination Events will apply as
provided in Part 5(e).
22
Part 2. Tax Matters.
(a) Tax Representations.
(i) Payer Representations. For the purpose of Section 3(e) of this
Agreement:
(A) Party A makes the following representation(s):
It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of
any Relevant Jurisdiction to make any deduction or withholding
for or on account of any Tax from any payment (other than
interest under Section 2(e), 6(d)(ii) or 6(e) of this
Agreement) to be made by it to the other party under this
Agreement. In making this representation, it may rely on: the
accuracy of any representations made by the other party
pursuant to Section 3(f) of this Agreement; (ii) the
satisfaction of the agreement contained in Section 4(a)(i) or
4(a)(iii) of this Agreement and the accuracy and effectiveness
of any document provided by the other party pursuant to
Section 4(a)(i) or 4(a)(iii) of this Agreement; and (iii) the
satisfaction of the agreement of the other party contained in
Section 4(d) of this Agreement, provided that it shall not be
a breach of this representation where reliance is placed on
clause (ii) and the other party does not deliver a form or
document under Section 4(a)(iii) by reason of material
prejudice to its legal or commercial position.
(B) Party B makes the following representation(s):
None.
(ii) Payee Representations. For the purpose of Section 3(f) of this
Agreement:
(A) Party A makes the following representation(s):
it is a corporation duly organized and validly existing under
the laws of the State of Delaware.
(B) Party B makes the following representation(s):
None.
(b) Tax Provisions.
(i) Gross Up. Section 2(d)(i)(4) shall not apply to Party B as X,
and Section 2(d)(ii) shall not apply to Party B as Y, in each
case such that Party B shall not be required to pay any
additional amounts referred to therein.
(ii) Indemnifiable Tax. The definition of "Indemnifiable Tax" in
Section 14 is deleted in its entirety and replaced with the
following:
"Indemnifiable Tax" means, in relation to payments by Party A,
any Tax and, in relation to payments by Party B, no Tax.
23
Part 3. Agreement to Deliver Documents.
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:-
(a) Tax forms, documents or certificates to be delivered are:
Party required to Form/Document/ Date by which
deliver document Certificate to be Delivered
---------------- ----------- ---------------
Party A and Party B Forms and/or documents described in Upon reasonable demand by the other
Section 4(a)(iii) of the Agreement. party.
(b) Other documents to be delivered are:
Party required to Form/Document/ Date by which to Covered by
deliver document Certificate be delivered Section 3(d)
Representation
Party A and Any documents required by the Upon the execution and delivery of Yes
Party B receiving party to evidence the this Agreement
authority of the delivering party or
its Credit Support Provider, if any,
for it to execute and deliver the
Agreement and any Credit Support
Documents to which it is a party, and
to evidence the authority of the
delivering party or its Credit
Support Provider to perform its
obligations under the Agreement, any
Confirmation and any Credit Support
Document, as the case may be
Party A and A certificate of an authorized officer Upon the execution and delivery of Yes
Party B of the party, as to the incumbency this Agreement
and authority of the respective
officers of the party signing the
Agreement and any relevant Credit
Support Document, as the case may be
Party A Annual Report of Party A's Credit Upon the execution and delivery of Yes
Support Provider containing this Agreement
consolidated financial statements
certified by independent certified
public accountants and prepared in
accordance with generally accepted
accounting principles in the country
in which Party A is organized
Party B Copy of any notice delivered under the Upon availability. Yes
Pooling and Servicing Agreement that
impacts this Agreement.
Party B Monthly Report At such time as each Monthly Report is Yes
delivered to the Trustee.
Party A Quarterly Financial Statements of Promptly upon becoming publicly Yes
Party A containing unaudited, available
consolidated financial statements of
24
Party required to Form/Document/ Date by which to Covered by
deliver document Certificate be delivered Section 3(d)
Representation
Party A's fiscal quarter prepared in
accordance with generally accepted
accounting principles in the country
in which Party A is organized
Party A An opinion of counsel to Party A, Upon the execution and delivery of No
substantially in the form of Exhibit this Agreement
C to this Schedule
Party B An opinion of counsel to Party B,
substantially in the form of Exhibit B
to this Schedule
Party A A guarantee of Xxxxxx Brothers Upon the execution and delivery of No
Holdings Inc. ("Holdings") this Agreement
substantially in the form of Exhibit
A to this Schedule.
Party B An executed copy of the Pooling and Upon execution No
Servicing Agreement
Part 4. Miscellaneous.
(a) Address for Notices: For the purposes of Section 12(a) of this Agreement:
Address for notices or communications to Party A:
Address: Xxxxxx Brothers Special Financing Inc.
c/x Xxxxxx Brothers Inc.
Corporate Advisory Division
Transaction Management Group
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Documentation Manager
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
For all purposes.
Address for notices or communications to Party B:
Address: The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Administration MBS Administration,
CWALT, Series 2006-OC10
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
For all purposes.
25
(b) Process Agent. For the purpose of Section 13(c):
Party A appoints as its Process Agent: Not applicable.
Party B appoints as its Process Agent: Not applicable.
(c) Offices. The provisions of Section 10(a) will apply to this
Agreement.
(d) Multibranch Party. For the purpose of Section 10(c) of this
Agreement:
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Party A; provided,
however, that if an Event of Default has occurred and is continuing
with respect to Party A, then the parties will mutually appoint a
financial institution acceptable to both parties which would qualify
as a Reference Market-maker to act as Calculation Agent until the
earlier of (i) a designation under Section 6(c)(ii), or (ii) the
discontinuance of such Event of Default with respect to Party A.
(f) Credit Support Document.
Party A: The Credit Support Annex, and a guarantee of Party
A's obligations hereunder substantially in the form
annexed hereto as Exhibit A to this Schedule.
Party B: From and including the date of its execution, the
Pooling and Servicing Agreement and the Credit
Support Annex, solely in respect of Party B's
obligations under Paragraph 3(b) of the Credit
Support Annex.
(g) Credit Support Provider.
Party A: The guarantor under any guarantee in support of Party
A's obligations under this Agreement.
Party B: None.
(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) Netting of Payments. The parties agree that subparagraph (ii) of
Section 2(c) will apply to each Transaction hereunder.
(j) Affiliate. "Affiliate" shall have the meaning assigned thereto in
Section 14; provided, however, that Party B shall be deemed to have
no Affiliates for purposes of this Agreement, including for purposes
of Section 6(b)(ii) and provided, however, that with respect to
Party A, such definition shall be understood to exclude Xxxxxx
Brothers Derivative Products Inc. and Xxxxxx Brothers Financial
Products Inc.
26
Part 5. Others Provisions.
(a) Definitions. Unless otherwise specified in a Confirmation, this Agreement
and each Transaction under this Agreement are subject to the 2000 ISDA
Definitions as published and copyrighted in 2000 by the International
Swaps and Derivatives Association, Inc. (the "Definitions"), and will be
governed in all relevant respects by the provisions set forth in the
Definitions, without regard to any amendment to the Definitions subsequent
to the date hereof. The provisions of the Definitions are hereby
incorporated by reference in and shall be deemed a part of this Agreement,
except that (i) references in the Definitions to a "Swap Transaction"
shall be deemed references to a "Transaction" for purposes of this
Agreement, and (ii) references to a "Transaction" in this Agreement shall
be deemed references to a "Swap Transaction" for purposes of the
Definitions.
(b) Amendments to ISDA Master Agreement.
(i) Single Agreement. Section 1(c) is hereby amended by the adding the
words "including, for the avoidance of doubt, the Credit Support
Annex" after the words "Master Agreement".
(ii) Conditions Precedent. Section 2(a)(iii) is hereby amended by adding
the following at the end thereof:
Notwithstanding anything to the contrary in Section 2(a)(iii)(1), if
an Event of Default with respect to Party B or Potential Event of
Default with respect to Party B has occurred and been continuing for
more than 30 Local Business Days and no Early Termination Date in
respect of the Affected Transactions has occurred or been
effectively designated by Party A, the obligations of Party A under
Section 2(a)(i) shall cease to be subject to the condition precedent
set forth in Section 2(a)(iii)(1) with respect to such specific
occurrence of such Event of Default or such Potential Event of
Default (the "Specific Event"); provided, however, for the avoidance
of doubt, the obligations of Party A under Section 2(a)(i) shall be
subject to the condition precedent set forth in Section 2(a)(iii)(1)
(subject to the foregoing) with respect to any subsequent occurrence
of the same Event of Default with respect to Party B or Potential
Event of Default with respect to Party B after the Specific Event
has ceased to be continuing and with respect to any occurrence of
any other Event of Default with respect to Party B or Potential
Event of Default with respect to Party B that occurs subsequent to
the Specific Event.
(iii) Change of Account. Section 2(b) is hereby amended by the addition of
the following after the word "delivery" in the first line thereof:
"to another account in the same legal and tax jurisdiction as the
original account".
(iv) Representations. Section 3 is hereby amended by adding at the end
thereof the following subsection (g):
"(g) Relationship Between Parties.
(1) Nonreliance. (i) 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 (ii) it
has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisors
to the extent it has deemed necessary, and 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.
(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
subject to Section 6(n) of this Agreement 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.
27
(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 is an "eligible swap
participant" as such term is defined in, Section
35.1(b)(2) of the regulations (17 C.F.R. 35) promulgated
under, and an "eligible contract participant" as defined
in Section 1(a)(12) of the Commodity Exchange Act, as
amended."
(6) No Agency. It is entering into this Agreement, any
Credit Support Document to which it is a party, and each
Transaction, and any other documentation relating to
this Agreement or any Transaction, as principal (and not
as agent or in any other capacity, fiduciary or
otherwise).
(v) 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) by
deleting the words "to transfer" and inserting the words "to effect
a Permitted Transfer" in lieu thereof.
(vi) 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.
(vii) Local Business Day. The definition of Local Business Day in Section
14 is hereby amended by the addition of the words "or any Credit
Support Document" after "Section 2(a)(i)" and the addition of the
words "or Credit Support Document" after "Confirmation".
(c) Additional Representations and Warranties of Party B. Party B represents
to Party A in accordance with Section 3 of the Agreement (which
representations will be deemed to be repeated by Party B at all times
until the termination of this Agreement) that:
(i) Constitutional Documents. Party B is in compliance, in all material
respects, with its constitutional documents (including, but not
limited to, the Pooling and Servicing Agreement, as amended from
time-to-time, and any and all resolutions, investment policies,
guidelines, procedures or restrictions), and each Transaction
contemplated hereunder is and will be an authorized and permitted
transaction thereunder and an Authorizing Resolution is in full
force and effect.
(ii) Compliance with Laws. Party B is in compliance, in all respects,
with all applicable laws, rules, regulations, interpretations,
guidelines, procedures, and policies of applicable regulatory
authorities affecting Party B, this Agreement, the Transactions, or
the performance of Party B's obligations hereunder.
(d) Third-Party Beneficiary. Party B agrees with Party A that Party A shall be
an express third-party beneficiary of the Pooling and Servicing Agreement
and the Swap Contract Administration Agreement.
(e) Additional Termination Events. The following Additional Termination Events
will apply:
(i) First Rating Trigger Collateral. If (A) it is not the case that a
Xxxxx'x Second Trigger Ratings Event has occurred and been
continuing for 30 or more Local Business Days and (B) Party A has
failed to comply with or perform any obligation to be complied with
or performed by Party A in accordance with the Credit Support Annex,
then an Additional Termination Event shall have occurred with
respect to Party A and Party A shall be the sole Affected Party with
respect to such Additional Termination Event.
28
(ii) Second Rating Trigger Replacement. If (A) a Required Ratings
Downgrade Event has occurred and been continuing for 30 or more
Local Business Days and (B) (i) at least one Eligible Replacement
has made a Firm Offer to be the transferee of all of Party A's
rights and obligations under this Agreement (and such Firm Offer
remains an offer that will become legally binding upon such Eligible
Replacement upon acceptance by the offeree) and/or (ii) an Eligible
Guarantor has made a Firm Offer to provide an Eligible Guarantee
(and such Firm Offer remains an offer that will become legally
binding upon such Eligible Guarantor immediately upon acceptance by
the offeree), then an Additional Termination Event shall have
occurred with respect to Party A and Party A shall be the sole
Affected Party with respect to such Additional Termination Event.
(iii) Amendment of Pooling and Servicing Agreement. If, without the prior
written consent of Party A where such consent is required under the
Pooling and Servicing Agreement (such consent not to be unreasonably
withheld), an amendment is made to the Pooling and Servicing
Agreement which amendment could reasonably be expected to have a
material adverse effect on the interests of Party A under this
Agreement, an Additional Termination Event shall have occurred with
respect to Party B and Party B shall be the sole Affected Party with
respect to such Additional Termination Event.
(f) Required Ratings Downgrade Event. In the event that no Relevant Entity has
credit ratings at least equal to the Required Ratings Threshold (such
event, a "Required Ratings Downgrade Event"), then Party A shall, as soon
as reasonably practicable and so long as a Required Ratings Downgrade
Event is in effect, at its own expense, using commercially reasonable
efforts, procure either (A) a Permitted Transfer or (B) an Eligible
Guarantee from an Eligible Guarantor.
(g) Item 1115 Agreement. Party A and Party B agree that the terms of the Item
1115 Agreement dated as of February 24, 2006, as amended from time to time
(the "Regulation AB Agreement"), between Countrywide Home Loans, Inc.,
CWABS, INC., CWMBS, Inc., CWALT, Inc., CWHEQ, Inc. and Xxxxxx Brothers
Special Financing Inc. shall be incorporated by reference into this
Agreement so that Party B shall be an express third party beneficiary of
the Regulation AB Agreement. A copy of the Item 1115 Agreement is annexed
hereto at Annex D.
29
(h) Transfers.
(i) Transfer and Assignment. Notwithstanding anything to the contrary in
Section 7 and Section 6(b)(ii) of the Agreement, Party A may assign
its rights and obligations under the Agreement, in whole or in part,
to any Affiliate of Holdings effective upon delivery to Party B of
the guarantee by Holdings, in favor of Party B, of the obligations
of such Affiliate, such guarantee to be identical (except for
necessary factual changes as to the identity of the new counterparty
and the effective date of the assignment) as the guarantee then in
effect of the obligations of the transferor. Party A will provide
prior written notice to each Swap Rating Agency of any such
assignment. Any transfer pursuant to the foregoing or Section 7 of
this Agreement shall meet the following requirements:
1. No Event of Default nor Termination Event would occur immediately
as a result of such transfer;
2. Party A delivers to Party B both (a) an executed acceptance and
assumption by the Assignee of this Agreement and all Transactions
(the "Transferred Obligations") and (b) an executed guarantee from
Party A's Credit Support Provider on behalf of the Assignee, with
respect to the Transferred Obligations, substantially and in all
material respects in the form of the guaranty provided hereunder;
3. As a result of the Transfer, on the next scheduled payment date
Party B is not required to make payments (tax or otherwise) that are
more than or receive payments (tax or otherwise) that are less than
the payments that Party B would be required to make or receive under
the Transactions or the Agreement had the transfer not occurred;
4. The Transferee is an Eligible Replacement;
5. Party B shall determine in its sole discretion, acting in a
commercially reasonable manner, whether or not a transfer relates to
all or substantially all of Party A's rights and obligations under
this Agreement.
On the Effective Date, (1) Party A shall be released from all
obligations and liabilities arising under the Transferred
Obligations; (2) the Assignee shall assume all obligations and
liabilities under the Transferred Obligations; and (3) the
Transferred Obligations shall cease to be Transaction(s) under this
Agreement and shall be deemed to be Transaction(s) under the master
agreement between Assignee and Party B.
In addition, any transfer pursuant to Section 7 of this Agreement
other than the foregoing shall be subject to Rating Agency Condition
and Party A and Party B will provide prior written notice to each
Swap Rating Agency of any transfer under Section 6(b)(ii).
(ii) Eligible Replacement. If an Eligible Replacement has made a Firm
Offer (which remains an offer that will become legally binding upon
acceptance by Party B) to be the transferee pursuant to a Permitted
Transfer, Party B shall, at Party A's written request and at Party
A's expense, take any reasonable steps required to be taken by Party
B to effect such transfer.
(i) Non-Recourse. Party A acknowledges and agrees that, notwithstanding any
provision in this Agreement to the contrary, the obligations of Party B
hereunder are limited recourse obligations of Party B, payable solely from
the assets available under the Swap Contract Administration Agreement or
the Pooling and Servicing Agreement, in accordance with the priority of
payments and other terms of the Pooling and Servicing Agreement and that
Party A will not have any recourse to any of the directors, officers,
employees, shareholders or affiliates of Party B with respect to any
claims, losses, damages, liabilities, indemnities or other obligations in
connection with any transactions contemplated hereby. In the event that
these assets should be insufficient to satisfy all claims outstanding, any
claims against or obligations of Party B under the ISDA Master Agreement
or any other confirmation thereunder still outstanding shall be
extinguished and thereafter not revive. This provision will survive the
termination of this Agreement.
(j) Rating Agency Notifications. Notwithstanding any other provision of this
Agreement, no Early Termination Date shall be effectively designated
hereunder by Party B and no transfer of any rights or obligations under
30
this Agreement shall be made by either party unless each Swap Rating
Agency has been given prior written notice of such designation or
transfer.
(k) No Set-off. Except as expressly provided for in Section 2(c), Section 6 or
Part 1(f)(i)(D) hereof, or Paragraph 8(a) or 8(b) of the Credit Support
Annex, 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.".
(l) Amendment. Notwithstanding any provision to the contrary in this
Agreement, no amendment of either this Agreement or any Transaction under
this Agreement shall be permitted by either party unless each of the Swap
Agencies has been provided prior written notice of the same and S&P
confirms in writing (including by facsimile transmission) that it will not
downgrade, withdraw or otherwise modify its then-current ratings of the
Certificates or the Notes.
(m) Amendments to Operative Documents. Party B agrees that it will obtain
Party A's written consent (which consent shall not be unreasonably
withheld) at least ten (10) Business Days prior to amending or
supplementing the Pooling and Servicing Agreement (or any other
transaction document), if such amendment and/or supplement would: (a)
materially adversely affect any of Party A's rights or obligations
hereunder; or (b) modify the obligations of, or impact the ability of,
Party B to fully perform any of Party B's obligations hereunder.
(n) Proceedings. No Relevant Entity shall institute against, or cause any
other person to institute against, or join any other person in instituting
against the trust formed pursuant to the Pooling and Servicing Agreement,
in any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other proceedings under any federal or state bankruptcy or
similar law for a period of one year (or, if longer, the applicable
preference period) and one day following payment in full of the
Certificates and any Notes; provided, that this provision shall not
restrict or prohibit Party A from joining any other person, --------
including, without limitation, the Trustee, in any bankruptcy,
reorganization, arrangement, insolvency, moratorium or liquidation
proceedings already commenced or other analogous proceedings already
commenced under applicable law. This provision will survive the
termination of this Agreement.
(o) Limited Liabilities. Party A and Party B agree to the following: (a) The
Bank of New York ("BNY") is entering into this Agreement not in its
individual or corporate capacity, but solely in its capacity as Swap
Contract Administrator under 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 Party B under the terms of this Agreement, all such liability, if any,
being expressly waived by Party A and any person claiming by, through or
under Party A; and (c) recourse against Party B shall be limited to the
assets available under the Swap Contract Administration Agreement or the
Pooling and Servicing Agreement
(p) 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) in any
respect, 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; provided, however, that this severability provision shall not be
applicable if any provision of Section 2, 5, 6, or 13 (or any definition
or provision in Section 14 to the extent it relates to, or is used in or
in connection with any such Section) shall be so held to be invalid or
unenforceable.
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
31
economic effect of which comes as close as possible to that of the invalid
or unenforceable term, provision, covenant or condition.
(q) Escrow Payments. If (whether by reason of the time difference between the
cities in which payments are to be made or otherwise) it is not possible
for simultaneous payments to be made on any date on which both parties are
required to make payments hereunder, either Party may at its option and in
its sole discretion notify the other Party that payments on that date are
to be made in escrow. In this case deposit of the payment due earlier on
that date shall be made by 2:00 pm (local time at the place for the
earlier payment) on that date with an escrow agent selected by the
notifying party, accompanied by irrevocable payment instructions (i) to
release the deposited payment to the intended recipient upon receipt by
the escrow agent of the required deposit of any corresponding payment
payable by the other party on the same date accompanied by irrevocable
payment instructions to the same effect or (ii) if the required deposit of
the corresponding payment is not made on that same date, to return the
payment deposited to the party that paid it into escrow. The party that
elects to have payments made in escrow shall pay all costs of the escrow
arrangements.
(r) 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 trading, marketing, and operations
personnel of the parties and their Affiliates, waives any further notice
of such monitoring or recording,. Promptly upon the request by a party,
the other party will provide a copy of such recording to the party making
the request.
(s) Waiver of Jury Trial. Each party waives any right it may have to a trial
by jury in respect of any in respect of any suit, action or proceeding
relating to this Agreement or any Credit Support Document.
(t) Payment Instructions. Party A hereby agrees that, unless notified in
writing by Party B of other payment instructions, any and all amounts
payable by Party A to Party B under this Agreement shall be paid to the
account specified in Item 4 of this Confirmation, below.
(u) Accuracy of Specified Information. Section 3(d) is hereby amended by
inserting in the third line thereof after the words "in every material
respect" and before the period the phrase "or, in the case of audited or
unaudited financial statements, a fair presentation, in all material
respects, of the financial condition of the relevant person."
(v) Acknowledgements.
(i) Substantial financial transactions. Each party hereto is hereby
advised and acknowledges as of the date hereof 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 Pooling and Servicing Agreement relating to such
Transaction, as applicable. This paragraph shall be deemed repeated
on the trade date of each Transaction.
(ii) Bankruptcy Code. Subject to Part 5(n), without limiting the
applicability if any, of any other provision of the U.S. Bankruptcy
Code as amended (the "Bankruptcy Code") (including without
limitation Sections 362, 546, 556, and 560 thereof and the
applicable definitions in Section 101 thereof), the parties
acknowledge and agree that all Transactions entered into hereunder
will constitute "forward contracts" or "swap agreements" as defined
in Section 101 of the Bankruptcy Code or "commodity contracts" as
defined in Section 761 of the Bankruptcy Code, that the rights of
the parties under Section 6 of this Agreement will constitute
contractual rights to liquidate Transactions, that any margin or
collateral provided under any margin, collateral, security, pledge,
or similar agreement related hereto will constitute a "margin
payment" as defined in Section 101 of the Bankruptcy Code, and that
the parties are entities entitled to the rights under, and
protections afforded by, Sections 362, 546, 556, and 560 of the
Bankruptcy Code.
(w) Additional Definitions.
As used in this Agreement, the following terms shall have the meanings set
forth below, unless the context clearly requires otherwise:
32
"Approved Ratings Threshold" means each of the S&P Approved Ratings
Threshold and the Moody's First Trigger Ratings Threshold.
"Approved Replacement" means, with respect to a Market Quotation, an
entity making such Market Quotation, which entity would satisfy
conditions (a), (b), (c) and (e) of the definition of Permitted
Transfer (as determined by Party B in its sole discretion, acting in
a commercially reasonable manner) if such entity were a Transferee,
as defined in the definition of Permitted Transfer.
"Derivative Provider Trigger Event" means (i) an Event of Default
with respect to which Party A is a Defaulting Party, (ii) a Tax
Event Upon Merger with respect to which Party A is the sole Affected
Party or (iii) an Additional Termination Event with respect to which
Party A is the sole Affected Party.
"Eligible Guarantee" means an unconditional and irrevocable
guarantee, which is identical, mutatis mutandis, to the exhibit
attached as Exhibit A, of all present and future obligations (for
the avoidance of doubt, not limited to payment obligations) of Party
A or an Eligible Replacement to Party A under this Agreement that is
provided by an Eligible Guarantor as principal debtor rather than
surety and that is directly enforceable by Party B, the form and
substance of which guarantee are provided in advance to S&P and
Fitch, and either (A) a law firm has given a legal opinion
confirming that none of the guarantor's payments to Party B under
such guarantee will be subject to Tax collected by withholding or
(B) such guarantee provides that, in the event that any of such
guarantor's payments to Party B are subject to Tax collected by
withholding, such guarantor is required to pay such additional
amount as is necessary to ensure that the net amount actually
received by Party B (free and clear of any Tax collected by
withholding) will equal the full amount Party B would have received
had no such withholding been required.
"Eligible Guarantor" means an entity that (A) has credit ratings at
least equal to the Approved Ratings Threshold or (B) has credit
ratings at least equal to the Required Ratings Threshold, provided,
for the avoidance of doubt, that an Eligible Guarantee of an
Eligible Guarantor with credit ratings below the Approved Ratings
Threshold will not cause a Collateral Event (as defined in the
Credit Support Annex) not to occur or continue.
"Eligible Replacement" means an entity (A) (i) that has credit
ratings at least equal to the Approved Ratings Threshold, (ii) has
credit ratings at least equal to the Required Ratings Threshold,
provided, for the avoidance of doubt, that an Eligible Guarantee of
an Eligible Guarantor with credit ratings below the Approved Ratings
Threshold will not cause a Collateral Event (as defined in the
Credit Support Annex) not to occur or continue, or (iii) the present
and future obligations (for the avoidance of doubt, not limited to
payment obligations) of which entity to Party B under this Agreement
are guaranteed pursuant to an Eligible Guarantee provided by an
Eligible Guarantor and (B) that has executed an Item 1115 Agreement
with the Depositor.
"Firm Offer" means (A) with respect to an Eligible Replacement, a
quotation from such Eligible Replacement (i) in an amount equal to
the actual amount payable by or to Party B in consideration of an
agreement between Party B and such Eligible Replacement to replace
Party A as the counterparty to this Agreement by way of novation or,
if such novation is not possible, an agreement between Party B and
such Eligible Replacement to enter into a Replacement Transaction
(assuming that all Transactions hereunder become Terminated
Transactions), and (ii) that constitutes an offer by such Eligible
Replacement to replace Party A as the counterparty to this Agreement
or enter a Replacement Transaction that will become legally binding
upon such Eligible Replacement upon acceptance by Party B, and (B)
with respect to an Eligible Guarantor, an offer by such Eligible
Guarantor to provide an Eligible Guarantee that will become legally
binding upon such Eligible Guarantor upon acceptance by the offeree.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor
thereto.
"Moody's First Trigger Ratings Threshold" means, with respect to
Party A, the guarantor under an Eligible Guarantee or an Eligible
Replacement, (i) if such entity has a short-term unsecured and
unsubordinated debt rating from Moody's, a long-term unsecured and
unsubordinated debt rating or
33
counterparty rating from Moody's of "A2" and a short-term unsecured
and unsubordinated debt rating from Moody's of "Prime-1", or (ii) if
such entity does not have a short-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 "A1".
"Moody's Second Trigger Ratings Event" means that no Relevant Entity
has credit ratings from Moody's at least equal to the Moody's Second
Trigger Rating Threshold.
"Moody's Second Trigger Ratings Threshold" means, with respect to
Party A, the guarantor under an Eligible Guarantee or an Eligible
Replacement, (i) if such entity has 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" and a short-term unsecured and unsubordinated debt rating from
Moody's of "Prime-2", or (ii) if such entity does not have 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".
"Permitted Transfer" means a transfer by novation by Party A to a
transferee (the "Transferee") of all, but not less than all, of
Party A's 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 Party B), (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 Party A under the Agreement and the relevant
Transaction, (d) Party B shall have determined, in its sole
discretion, acting in a commercially reasonable manner, that such
Transfer Agreement is effective to transfer to the Transferee all,
but not less than all, of Party A's rights and obligations under the
Agreement and all relevant Transactions; (e) Party A will be
responsible for any costs or expenses incurred in connection with
such transfer (including any replacement cost of entering into a
replacement transaction), (f) Moody's and S&P have been given prior
written notice of such transfer, (g) such transfer otherwise
complies with the terms of the Pooling and Servicing Agreement and
(h) the Swap Contract is identical, mutatis mutandis, to the
existing Swap Contract.
"Rating Agency Condition" means, with respect to any particular
proposed act or omission to act hereunder and each Swap Rating
Agency specified in connection with such proposed act or omission,
that the party acting or failing to act must consult with each of
the specified Swap Rating Agencies and receive from each such Swap
Rating Agency a prior written confirmation that the proposed action
or inaction would not cause a downgrade or withdrawal of the
then-current rating of any Certificates or Notes.
"Relevant Entity" means Party A and, to the extent applicable, a
guarantor under an Eligible Guarantee.
"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 Party B 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, save for the exclusion of provisions relating to
Transactions that are not Terminated Transactions, as determined by
Party B in its sole discretion, acting in a commercially reasonable
manner.
"Required Ratings Downgrade Event" shall have the meaning assigned
thereto in Part 5(f).
34
"Required Ratings Threshold" means each of the S&P Required Ratings
Threshold and the Moody's Second Trigger Ratings Threshold.
"S&P" means Standard & Poor's Rating Services, a division of The
XxXxxx-Xxxx Companies, Inc., or any successor thereto.
"S&P Approved Ratings Threshold" means, with respect to Party A, the
guarantor under an Eligible Guarantee or an Eligible Replacement, a
short-term unsecured and unsubordinated debt rating from S&P of
"A-1", 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+".
"S&P Required Ratings Threshold" means, with respect to Party A, the
guarantor under an Eligible Guarantee or an Eligible Replacement, a
long-term unsecured and unsubordinated debt rating from S&P of
"BBB+".
"Swap Rating Agencies" means, with respect to any date of
determination, each of S&P and Moody's, to the extent that each such
rating agency is then providing a rating for any of the Series
2006-OC10 Mortgage Pass-Through Certificates (the "Certificates") or
any notes backed by the Certificates (the "Notes").
[Remainder of this page intentionally left blank.]
35
The parties executing this Schedule have executed the Master Agreement and have
agreed as to the contents of this Schedule.
XXXXXX BROTHERS THE BANK OF NEW YORK, not in its individual or
SPECIAL FINANCING INC. corporate capacity but solely as Swap Contract
Administrator for CWALT Inc., Alternative Loan
Trust 2006-OC10, pursuant to a Swap Contract
Administration Agreement
Party A Party B
/s/ Xxxxxxxxxx X. Xxxxxx /s/ Xxxxxxxx Xxxxxxxxxxx
------------------------------------------------------- ----------------------------------------------------
Name: Xxxxxxxxxx X. Xxxxxx Name: Xxxxxxxx Xxxxxxxxxxx
Title: Vice President Title: Vice President
Date: Date:
36
XXXXXX BROTHERS
EXHIBIT A to Schedule
---------------------
GUARANTEE OF XXXXXX BROTHERS HOLDINGS INC.
------------------------------------------
XXXXXX BROTHERS SPECIAL FINANCING INC. ("Party A") and THE BANK OF NEW YORK, not
in its individual or corporate capacity but solely as Swap Contract
Administrator for CWALT Inc. Alternative Loan Trust 2006-OC10, pursuant to a
Swap Contract Administration Agreement, ("Party B") have entered into a Master
Agreement dated as of November 30, 2006, (the "Master Agreement"), pursuant to
which Party A and Party B have entered and/or anticipate entering into one or
more transactions (each a "Transaction"), the Confirmation of each of which
supplements, forms part of, and will be read and construed as one with, the
Master Agreement (collectively referred to as the "Agreement"). This Guarantee
is a Credit Support Document as contemplated in the Agreement. For value
received, and in consideration of the financial accommodation accorded to Party
A by Party B under the Agreement, XXXXXX BROTHERS HOLDINGS INC., a corporation
organized and existing under the laws of the State of Delaware ("Guarantor"),
hereby agrees to the following:
(a) Guarantor hereby unconditionally guarantees to Party B the due and
punctual payment of all amounts payable by Party A in connection with each
Transaction when and as Party A's obligations thereunder shall become due and
payable in accordance with the terms of the Agreement (whether at maturity, by
acceleration or otherwise). Guarantor hereby agrees, upon written demand by
Party B, to pay or cause to be paid any such amounts punctually when and as the
same shall become due and payable.
(b) Guarantor hereby agrees that its obligations under this Guarantee
constitute a guarantee of payment when due and not of collection.
(c) Guarantor hereby agrees that its obligations under this Guarantee
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Agreement against Party A (other than as a result of the
unenforceability thereof against Party B), the absence of any action to enforce
Party A's obligations under the Agreement, any waiver or consent by Party B with
respect to any provisions thereof, the entry by Party A and Party B into any
amendments to the Agreement, additional Transactions under the Agreement or any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor (excluding the defense of payment or statute
of limitations, neither of which is waived) provided, however, that Guarantor
shall be entitled to exercise any right that Party A could have exercised under
the Agreement to cure any default in respect of its obligations under the
Agreement or to setoff, counterclaim or withhold payment in respect of any Event
of Default or Potential Event of Default in respect of Party B or any Affiliate,
but only to the extent such right is provided to Party A under the Agreement.
The Guarantor acknowledges that Party A and Party B may from time to time enter
into one or more Transactions pursuant to the Agreement and agrees that the
obligations of the Guarantor under this Guarantee will upon the execution of any
such Transaction by Party A and Party B extend to all such Transactions without
the taking of further action by the Guarantor.
(d) This Guarantee shall remain in full force and effect until the first
to occur of (i) receipt by Party B of a written notice of termination from
Guarantor or (ii) none of the obligations of Party A remain outstanding.
Termination of this Guarantee shall not affect Guarantor's liability hereunder
as to obligations incurred or arising out of Transactions entered into prior to
the termination hereof.
(e) Guarantor further agrees that this Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time, payment, or any
part thereof, of any obligation or interest thereon is rescinded or must
otherwise be restored by Party B upon an Event of Default as set forth in
Section 5(a)(vii) of the Master Agreement affecting Party A or Guarantor.
(f) Guarantor hereby waives (i) promptness, diligence, presentment, demand
of payment, protest, order and, except as set forth in paragraph (a) hereof,
notice of any kind in connection with the Agreement and this Guarantee, or (ii)
any requirement that Party B exhaust any right to take any action against Party
A or any other person prior to or contemporaneously with proceeding to exercise
any right against Guarantor under this Guarantee.
1
XXXXXX BROTHERS HOLDINGS INC.
000 XXXXXXX XXXXXX, XXX XXXX, XXX XXXX 00000
XXXXXX BROTHERS
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of laws principles.
All capitalized terms not defined in this Guarantee, but defined in the
Agreement, shall have the meanings assigned thereto in the Agreement.
IN WITNESS WHEREOF, Guarantor has caused this Guarantee to be executed in
its corporate name by its duly authorized officer as of the date of the
Agreement.
XXXXXX BROTHERS HOLDINGS INC.
By: _______________________________
Name:
Title:
Date:
2
XXXXXX BROTHERS HOLDINGS INC.
000 XXXXXXX XXXXXX, XXX XXXX, XXX XXXX 00000
EXHIBIT B to Schedule
---------------------
[Form of Opinion of Counsel for Party B]
[Date]
Xxxxxx Brothers Special Financing Inc.
c/x Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
XXX
Re: CWALT, Inc.
Mortgage Pass-Through Certificates, Series 2006-OC10
----------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel for CWALT Inc., a Delaware corporation
(the "Depositor"), in connection with the issuance of the CWALT Inc. Mortgage
Pass-Through Certificates of the above-referenced Series (the "Certificates").
The Certificates represent the entire beneficial ownership interest in a trust
fund (the "Trust Fund") created pursuant to a Pooling and Servicing Agreement,
dated as of November 1, 2006 (the "Pooling and Servicing Agreement") among the
Depositor, as depositor, Countrywide Home Loans Inc. ("CHL"), as a seller, Park
Monaco Inc., as a seller, Park Sienna LLC, as a seller, Park Granada LLC, as a
seller, Countrywide Home Loans Servicing LP, as Master Servicer, and The Bank of
New York ("BNY"), as trustee. The assets of the Trust Fund will consist
[primarily of a pool of conventional, credit-blemished mortgage loans secured by
first liens on one- to four-family residential properties.]
In connection with the issuance of the Certificates, we have also acted as
special counsel to the Depositor in connection with the execution and delivery
of the following documents relating to the Certificates: (i) the Swap Contract
Administration Agreement, dated as of November 30, 2006 (the "Swap Contract
Administration Agreement"), between BNY, in its capacity as swap contract
administrator (in such capacity, the "Swap Contract Administrator") and in its
capacity as Trustee under the Pooling and Servicing Agreement, and CHL, (ii) a
confirmation with a reference number of 2747129 and a trade date of November 14,
2006 (the "Confirmation") between CHL and Xxxxxx Brothers Special Financing Inc.
(the "Swap Counterparty"), (iii) the ISDA Master Agreement, Schedule and Credit
Support Annex dated as of November 30, 2006 (collectively, the "Master
Agreement"), between the Swap Counterparty and the Swap Contract Administrator
and (iv) the Swap Contract Assignment Agreement, dated as of November 30, 2006
(the "Swap Contract Assignment Agreement"), between CHL, the Swap Counterparty
and the Swap Contract Administrator. The Master Agreement and the transaction
evidenced by the Confirmation, taken together with the applicable provisions of
the Swap Contract Assignment Agreement, are referred to herein collectively as
the "Swap Agreement".
Capitalized terms not otherwise defined herein have the meanings ascribed
to such terms in the Pooling and Servicing Agreement.
In arriving at the opinion expressed below, we have examined and relied on
originals or copies of the Pooling and Servicing Agreement, the Swap Contract
Administration Agreement, the Swap Contract Assignment Agreement, the Master
Agreement and the Confirmation (collectively, the "Agreements"). In addition, we
have made such investigations of law as we have deemed appropriate as a basis
for the opinion expressed below.
1
Based upon the foregoing, and having regard to legal considerations which
we deem relevant, subject to the assumptions, qualifications and limitations set
forth herein, we are of the opinion that the Swap Agreement constitutes the
valid and binding obligation of the Swap Contract Administrator, enforceable
against the Swap Contract Administrator in accordance with its terms.
The opinion set forth above is subject to certain qualifications,
assumptions and exceptions as set out below.
In rendering the foregoing opinion, we have assumed, without any
independent investigation or verification, the following: (a) the authenticity
of original documents, the legal capacity of all individuals and the genuineness
of all signatures; (b) the conformity to the originals of all documents
submitted to us as certified, conformed or photostatic copies; (c) the truth,
accuracy and completeness of the information, representations and warranties
made in conference or contained in the records, documents, instruments and
certificates we have reviewed; (d) the due organization of the parties to the
Agreements and the power and authority of the parties to the Agreements to enter
into and perform all of their obligations thereunder; (e) the due authorization,
execution and delivery of the Agreements on behalf of the respective parties
thereto; (f) except as expressly covered in the opinion set forth above, the
legal, valid, and binding effect of the Agreements and the enforceability
thereof (in accordance with their terms) against the respective parties thereto;
(g) that the parties have complied and will comply with all material provisions
of the Agreements; (h) the absence of any evidence extrinsic to the provisions
of the written agreements between the parties that the parties intended a
meaning contrary to that expressed by those provisions; (i) the absence of any
agreement or understanding among the parties other than those contained in the
Agreements (or referred to therein or incidental thereto); (j) that the terms
and provisions of the Agreements do not, and the execution, delivery and
performance of the Agreements by any party thereto does not and will not,
violate the organizational documents of such party or any law, rule, regulation,
order or decree of any court, administrative agency or other governmental
authority or agency applicable to such party, or result in the breach of or a
default under any contract or undertaking to which it is a party or by which it
or its property is bound; and (k) that there is nothing in the laws or public
policy of any relevant jurisdiction (other than the State of New York or the
United States of America) that would affect the opinion set forth above.
Our opinion is qualified as to:
(i) limitations imposed by any applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, fraudulent transfer or other
similar law of general application affecting the enforcement of creditors' or
secured creditors' rights generally;
(ii) general principles of equity including, without limitation, concepts
of materiality and fair dealing, the possible unavailability of specific
performance or injunctive relief, and other similar doctrines affecting the
enforceability of agreements generally (regardless of whether considered in a
proceeding in equity or at law);
(iii) rights to indemnification or contribution which may be limited by
applicable law or equitable principles or otherwise unenforceable as against
public policy,
(iv) the effect of any other limitations imposed by public policy,
although (except as noted in sub-paragraph (iii) above and sub-paragraphs (v)
through (viii) below) we are not aware of any limitation that would be relevant
to such enforcement;
(v) the effect of any requirement conditioning enforcement on the party
seeking enforcement having acted in a commercially reasonable manner and in good
faith in performing its obligations and exercising its rights and remedies
thereunder;
(vi) the discretion of a court to invalidate or decline to enforce any
right, remedy or provision of the Swap Agreement, determined by it, in any such
case, to be a penalty;
(vii) the unenforceability of any provision requiring the payment of
attorney's fees, except to the extent that a court determines such fees to be
reasonable; and
(viii)the effect of any requirement that a claim (or a foreign currency
judgment in respect of such claim) be converted into United States dollars at a
rate of exchange prevailing on a date determined pursuant to applicable law.
2
Without in any way limiting the effect of sub-paragraph (viii) above, we
note that a judgment for money in an action in a federal or state court in the
United States ordinarily would be enforced in the United States only in United
States dollars. The date used to determine the rate of conversion of a foreign
currency into United States dollars will depend upon various factors, including
which court renders the judgment. By way of example, under Section 27 of the New
York Judiciary Law, a state court in the State of New York rendering a judgment
on an obligation required to be paid in a foreign currency will be required to
render such judgment in such foreign currency, and such judgment would be
converted into United States dollars at the exchange rate prevailing on the date
of entry of the judgment.
Certain of the remedial provisions of the Swap Agreement may be limited or
rendered ineffective or unenforceable in whole or in part, but the inclusion of
such provisions does not make the remedies provided by such Agreement inadequate
for the practical realization of the respective rights and benefits purported to
be provided thereby (except for the economic consequences of procedural or other
delay, as to which we express no opinion).
We express no opinion:
(a) as to any provision in the Swap Agreement to the extent that such
provision refers to, or incorporates by reference, the provisions of any
agreement other than the Swap Agreement;
(b) regarding any severability provision;
(c) with respect to the creation, perfection or priority of any security
interest or as to the effect thereof or the rights and remedies or obligations
of any party to the Swap Agreement in respect thereof;
(d) as to the effect of: (i) the compliance or non-compliance of Xxxxxx
Brothers Special Financing Inc. with any United States state or federal laws or
regulations or any other laws or regulations applicable to Xxxxxx Brothers
Special Financing Inc., including limitations or restrictions that apply to
financial institutions; or (ii) the failure of Xxxxxx Brothers Special Financing
Inc. to be duly authorized to conduct business in any jurisdiction;
(e) with respect to any federal or state securities, "blue sky" or other
similar laws;
(f) as to the enforceability of any rights to specific performance
provided for in the Swap Agreement; or
(g) as to whether a federal court of the United States of America or a
state court outside the State of New York would give effect to the choice of New
York law provided for in the Swap Agreement.
Our opinion herein, as it pertains to the enforceability of provisions
contained in the Swap Agreement pursuant to which the parties thereto agree to
submit to the jurisdiction of the United States federal courts referred to
herein, is subject to the power of such courts to transfer actions pursuant to
28 U.S.C. ss. 1404(a) or to dismiss such actions or proceedings on the ground
that such a federal court is an inconvenient forum for such an action or
proceeding and we note that such issues may be raised by the court sua sponte.
In addition, we express no opinion as to the subject matter jurisdiction of any
United States federal court to adjudicate any action relating to the Agreements
where jurisdiction based on diversity of citizenship under 27 U.S.C. ss. 1332
does not exist.
As noted above, the conclusions set forth herein are subject to the
accuracy of the factual assumptions described above and the absence of
additional facts that would materially affect the validity of the assumptions
set forth herein. Our conclusions as to any legal matters in this letter speak
only as of the date hereof. We assume no obligation to revise or supplement this
letter should such factual matters change or should such laws or regulations be
changed by legislative or regulatory action, judicial decision or otherwise, and
we hereby express no opinion as to the effect any such changes may have on the
foregoing opinion. We do not express any opinion, either implicitly or
otherwise, on any issue not expressly addressed in the third paragraph of this
letter.
To the extent our opinion herein pertains to the enforceability of Part
4(h) of the Schedule to the Master Agreement pursuant to which the Trust and the
Swap Counterparty have agreed that the laws of the State of New York shall
govern the Agreement, we have relied on Section 5-1401 of the New York General
Obligations Law, which states in pertinent part: "The parties to any contract,
agreement or undertaking,
3
contingent or otherwise, in consideration of, or relating to any obligation
arising out of a transaction covering in the aggregate not less than two hundred
fifty thousand dollars . . . may agree that the law of this state shall govern
their rights and duties in whole or in part, whether or not such contract,
agreement or undertaking bears a reasonable relation to this state."
We express no opinion as to matters of law other than the law of the State
of New York and the federal law of the United States of America. In rendering
the foregoing opinion we have assumed that enforcement of the Swap Agreement in
accordance with New York law would not violate any provision of any law of any
jurisdiction (other than the State of New York) or any public policy of any
jurisdiction that bears a reasonable relation to the Agreements or the
transaction in which the Swap Agreement is being executed and delivered by the
parties thereto.
The opinion expressed herein is solely for your benefit in connection with
the transactions contemplated by the Agreements and may not be relied on in any
manner or for any purpose by any other individual, partnership, corporation or
other governmental or non-governmental entity (each a "Person"), nor may any
copies thereof be published, communicated, filed with or otherwise made
available in whole or in part to any other Person without our specific prior
written consent. By accepting this letter, each Person to whom this letter is
addressed (other than the Depositor) recognizes and acknowledges that (i) no
attorney-client relationship exists or has existed between the lawyers in our
firm representing the Depositor and such Person in connection with the execution
of the Agreements or by virtue of this letter, (ii) in order to permit reliance
by such Person on this letter, the lawyers in our firm representing the
Depositor conducted no activities in addition to those undertaken or conducted
for the purpose of rendering this letter to the Depositor as one of the
addressees hereof and (iii) this letter may not be appropriate or sufficient for
such Person's purposes.
Very truly yours,
4
EXHIBIT C to Schedule
---------------------
[Form of Opinion of Counsel for
Xxxxxx Brothers Special Financing Inc. and
Xxxxxx Brothers Holdings Inc.]
November 30, 0000
XXX XXXX XX XXX XXXX,
not in its individual or corporate capacity
but solely as Swap Contract Administrator for
CWALT Inc., Mortgage Pass-Through Certificates, Series 2006-OC10
pursuant to a Swap Contract Administration Agreement
x/x Xxx Xxxx xx Xxx Xxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Administration MBS Administration,
CWALT, Series 2006-OC10
Ladies and Gentlemen:
I have acted as counsel to Xxxxxx Brothers Special Financing Inc., a
Delaware corporation ("Party A") and Xxxxxx Brothers Holdings Inc., a Delaware
corporation ("Guarantor"), and am familiar with matters pertaining to the
execution and delivery of the Master Agreement (the "Master Agreement") dated as
of November 30, 2006 between Party A and THE BANK OF NEW YORK, not in its
individual or corporate capacity but solely as Swap Contract Administrator for
CWALT Inc. Alternative Loan Trust 2006-OC10, pursuant to a Swap Contract
Administration Agreement and the guarantee of Guarantor (the "Guarantee")
delivered in connection with the Master Agreement.
In connection with this opinion, I have examined, or have had examined on
my behalf, an executed copy of the Master Agreement and the Guarantee,
certificates and statements of public officials and officers of Party A and
Guarantor and such other agreements, instruments, documents and records as I
have deemed necessary or appropriate for the purposes of this opinion.
Except as expressly set forth herein, no independent investigation
(including, without limitation, conducting any review, search or investigation
of any public files, records or dockets) has been undertaken to determine the
existence or absence of the facts that are material to my opinions, and no
inference as to my knowledge concerning such facts should be made.
When used herein the phrase "to my knowledge" means to my actual knowledge
without independent investigation.
References in this letter to "Applicable Laws" are to those laws, rules
and regulations of the State of New York which, in my experience, are normally
applicable to transactions of the type contemplated by the Master Agreement and
the Guarantee. References in this letter to "Governmental Authorities" are to
executive, legislative, judicial, administrative or regulatory bodies of the
State of New York. References in this letter to "Governmental Approval" are to
any consent, approval, license, authorization or validation of, or filing,
recording or registration with, any Governmental Authority pursuant to
Applicable Laws.
1
Based on the foregoing but subject to the assumptions, exceptions,
qualifications and limitations hereinafter expressed, I am of the opinion that:
(i) Each of Party A and Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware.
(ii) The execution, delivery and performance of the Master Agreement in
the case of Party A, and the Guarantee, in the case of Guarantor,
are within its corporate power, have been duly authorized by all
corporate action and do not conflict with any provision of its
certificate of incorporation or by-laws.
(iii) The Master Agreement, in the case of Party A, and the Guarantee, in
the case of Guarantor, have been duly executed and delivered and
each constitutes a legal, valid and binding obligation, enforceable
against it in accordance with its respective terms.
(iv) To the best of my knowledge, no Governmental Approval is required in
connection with the execution, delivery and performance of the
Master Agreement in the case of Party A, or the Guarantee, in the
case of Guarantor, except those that have been obtained and, to my
knowledge, are in effect.
The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations:
A. My opinion in paragraph 3 above is subject to: (i) bankruptcy,
insolvency, reorganization, receivership, moratorium or similar laws affecting
creditors' rights generally (including, without limitation, the effect of
statutory or other laws regarding fraudulent or other similar transfers or
conveyances); (ii) general principles of equity, regardless of whether
enforceability is considered in a proceeding in equity or at law; (iii) laws and
considerations of public policy that may limit the enforceability of provisions
(a) regarding the termination and close-out methodology under the Master
Agreement, including but not limited to Section 6(e), (b) regarding
indemnification and contribution rights and obligations, (c) regarding the
waiver or limitation of rights to trial by jury, oral amendments to written
agreements or rights of setoff, (d) relating to submission to jurisdiction,
venue or service of process, and (e) purporting to prohibit or restrict, or
require the consent of the "account debtor" (as defined in Section 9-102 of the
Uniform Commercial Code as in effect in the State of New York (the "NYUCC" ))
for, the creation, perfection or enforcement of a security interest in
"accounts" or "general intangibles" (in each case, as defined in Section 9-102
of the NYUCC).
B. I am a member of the Bar of the State of New York and render no opinion
on the laws of any jurisdiction other than the laws of the State of New York and
the General Corporation Law of the State of Delaware. Except as described, I
have not examined, or had examined on my behalf, and I do not express any
opinion with respect to, Delaware law.
C. My opinions are limited to the present laws and to the facts as they
presently exist, and no opinion is to be inferred or implied beyond the matters
expressly so stated. I assume no obligation to revise or supplement this opinion
should the present laws of the jurisdictions referred to in paragraph B above be
changed by legislative action, judicial decision or otherwise.
D. This letter is rendered solely to you solely for your benefit in
connection with the Master Agreement and the Guarantee and the transactions
related thereto and may not be relied upon by any other person, entity or agency
or by you in any other context or for any other purpose. This letter may not be
circulated, used or quoted in whole or in part, nor may copies thereof be
furnished or delivered to any other person, without the prior written consent of
Xxxxxx Brothers Holdings Inc., except that you may furnish copies hereof (i) to
your independent auditors and attorneys, (ii) to any United States, state or
local authority having jurisdiction over you or over Party A or Guarantor, (iii)
pursuant to the order of any legal
2
process of any court of competent jurisdiction or any governmental agency, and
(iv) in connection with any legal action arising out of the Master Agreement or
the Guarantee.
E. I have assumed with your permission (i) the genuineness of all
signatures by each party other than Party A or Guarantor, (ii) the authenticity
of documents submitted to me as originals and the conformity to authentic
original documents of all documents submitted to me as copies, (iii) the
accuracy of the matters set forth in the documents, agreements and instruments I
reviewed, (iv) that each party other than Party A and Guarantor is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (v) the due execution and delivery, pursuant to
due authorization, of the Master Agreement by each party other than Party A, and
(vi) that the Master Agreement is the legal, valid, binding and enforceable
obligation of each party other than Party A, enforceable against each such party
in accordance with its terms. F. My opinion in paragraph 3 is subject to the
qualification that certain provisions contained in the Agreement and the
Guarantee may not be enforceable, but such unenforceability will not render the
Agreement or the Guarantee invalid as a whole or substantially interfere with
the practical realization of the principal benefits provided thereby.
The foregoing opinions are given on the express understanding that the
undersigned is an officer of Xxxxxx Brothers Inc. and shall in no event incur
any personal liability in connection with said opinions.
Very truly yours,
3
EXHIBIT D to Schedule
---------------------
[REGULATION AB AGREEMENT]
-------------------------
1
ISDA(R)
CREDIT SUPPORT ANNEX
to the Schedule to the
ISDA Master Agreement
dated as of November 30, 2006 between
XXXXXX BROTHERS SPECIAL FINANCING INC.
(hereinafter referred to as "Party A" or "Pledgor")
and
THE BANK OF NEW YORK, not in its individual or corporate capacity
but solely as Swap Contract Administrator for CWALT Inc., Alternative
Loan Trust 2006-OC10, pursuant to a Swap Contract Administration
Agreement (hereinafter referred to as "Party B" or "Secured Party").
Paragraph 13. Elections and Variables.
(a) Security Interest for "Obligations". The term "Obligations" as used in
this Annex includes the following additional obligations:
With respect to Party A: not applicable.
With respect to Party B: not applicable.
(b) Credit Support Obligations.
(i) Delivery Amount, Return Amount and Credit Support Amount.
(A) "Delivery Amount" has the meaning specified in Paragraph 3(a)
as amended (I) by deleting the words "upon a demand made by
the Secured Party on or promptly following a Valuation Date"
and inserting in lieu thereof the words "not later than the
close of business on each Valuation Date" and (II) by deleting
in its entirety the sentence beginning "Unless otherwise
specified in Paragraph 13" and ending "(ii) the Value as of
that Valuation Date of all Posted Credit Support held by the
Secured Party." and inserting in lieu thereof the following:
The "Delivery Amount" applicable to the Pledgor for any
Valuation Date will equal the greatest of
(1) the amount by which (a) the S&P Credit Support Amount
for such Valuation Date exceeds (b) the S&P Value as of
such Valuation Date of all Posted Credit Support held by
the Secured Party,
(2) the amount by which (a) the Xxxxx'x First Trigger Credit
Support Amount for such Valuation Date exceeds (b) the
Xxxxx'x First Trigger Value as of such Valuation Date of
all Posted Credit Support held by the Secured Party, and
11
(3) the amount by which (a) the Xxxxx'x Second Trigger
Credit Support Amount for such Valuation Date exceeds
(b) the Xxxxx'x Second Trigger Value as of such
Valuation Date of all Posted Credit Support held by the
Secured Party.
(B) "Return Amount" has the meaning specified in Paragraph 3(b) as
amended by deleting in its entirety the sentence beginning
"Unless otherwise specified in Paragraph 13" and ending "(ii)
the Credit Support Amount." and inserting in lieu thereof the
following:
The "Return Amount" applicable to the Secured Party for any
Valuation Date will equal the least of
(1) the amount by which (a) the S&P Value as of such
Valuation Date of all Posted Credit Support held by the
Secured Party exceeds (b) the S&P Credit Support Amount
for such Valuation Date,
(2) the amount by which (a) the Xxxxx'x First Trigger Value
as of such Valuation Date of all Posted Credit Support
held by the Secured Party exceeds (b) the Xxxxx'x First
Trigger Credit Support Amount for such Valuation Date,
and
(3) the amount by which (a) the Xxxxx'x Second Trigger Value
as of such Valuation Date of all Posted Credit Support
held by the Secured Party exceeds (b) the Xxxxx'x Second
Trigger Credit Support Amount for such Valuation Date.
(C) "Credit Support Amount" shall not apply. For purposes of
calculating any Delivery Amount or Return Amount for any
Valuation Date, reference shall be made to the S&P Credit
Support Amount, the Xxxxx'x First Trigger Credit Support
Amount, or the Xxxxx'x Second Trigger Credit Support Amount,
in each case for such Valuation Date, as provided in
Paragraphs 13(b)(i)(A) and 13(b)(i)(B), above.
(ii) Eligible Collateral.
On any date, the following items will qualify as "Eligible
Collateral":
Xxxxx'x Xxxxx'x
First Trigger Second Trigger
S&P Valuation Valuation Valuation
Collateral Percentage Percentage Percentage
----------- ---------- ---------- ----------
(A) Cash, in the form of U.S. Dollars. 100% 100% 100%
(B) Fixed-rate negotiable USD denominated debt
obligations issued by the U.S. Treasury 98.5% 100% 100%
Department having a remaining maturity on such
date of not more than one year
12
(C) Fixed-rate negotiable USD denominated debt
obligations issued by the U.S. Treasury
Department having a remaining maturity on such 89.9% 100% 94%
date of more than one year but not more than
ten years
(D) Fixed-rate negotiable USD denominated debt
obligations issued by the U.S. Treasury
Department having a remaining maturity on such 83.9% 100% 87%
date of more than ten years
(iii) Other Eligible Support.
The following items will qualify as "Other Eligible Support" for the
party specified:
Not applicable.
(iv) Threshold.
(A) "Independent Amount" means zero with respect to Party A and
Party B.
(B) "Threshold" means, with respect to Party A and any Valuation
Date, zero if (i) a Collateral Event has occurred and has been
continuing (x) for at least 30 days or (y) since this Annex
was executed, or (ii) a Required Ratings Downgrade Event has
occurred and is continuing; otherwise, infinity.
"Threshold" means, with respect to Party B and any Valuation
Date, infinity.
(C) "Minimum Transfer Amount" means USD 100,000 with respect to
Party A and Party B; provided, however, that if the aggregate
Class Certificate Balance of the Certificates rated by S&P
ceases to be more than USD 50,000,000, the "Minimum Transfer
Amount" shall be USD 50,000.
(D) Rounding: The Delivery Amount and the Return Amount will be
rounded up and down respectively to the nearest integral
multiple of USD 1,000.
13
(c) Valuation and Timing.
(i) "Valuation Agent" means Party A. All calculations by the
Valuation Agent must be made in accordance with standard
market practice, including, in the event of a dispute as to
the Value of any Eligible Credit Support or Posted Credit
Support, by making reference to quotations received by the
Valuation Agent from commonly accepted third party sources.
(ii) "Valuation Date" means means, for purposes of each time that
Party A is required to post collateral, each Wednesday or, if
such day is not a Local Business Day, the next following Local
Business Day.
(iii) "Valuation Time" means means the close of business in New York
on a Local Business Day 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 3:00 p.m., New York time, on a Local
Business Day.
(v) External Verification. Notwithstanding the definition of
Valuation Agent and Valuation Date, at any time while the
long-term unsecured debt or counterparty rating of Party A's
Credit Support Provider is not above "BBB", the calculations
of Exposure and the Value of any Eligible Credit Support or
Posted Credit Support must be verified by an external xxxx
monthly. The external xxxx must be obtained by an independent
third party, and cannot be verified by the same entity more
than four times in any 12-month period. In addition, the
external xxxx-to-market valuations should reflect the higher
of two bids from counterparties that would be eligible and
willing to provide the swap in the absence of the current
provider. The Value of any Eligible Credit Support or Posted
Credit Support and Exposure should be based on the greater of
the calculations of the Valuation Agent and the external
marks, and any deficiencies in Value and Exposure must be
cured within three days.
(vi) Notice to S&P. At any time at which Party A (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 S&P 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
received pursuant to the preceding paragraph.
(d) Conditions Precedent and Secured Party's Rights and Remedies. The
following Termination Events will be a "Specified Condition" for the
party specified (that party being the Affected Party if the
Termination Event occurs with respect to that party): With respect
to Party A: any Additional Termination Event with respect to which
Party A is the sole Affected Party. With respect to Party B: None.
14
(e) Substitution.
(i) "Substitution Date" has the meaning specified in Paragraph
4(d)(ii).
(ii) Consent. If specified here as applicable, then the Pledgor
must obtain the Secured Party's consent for any substitution
pursuant to Paragraph 4(d): Inapplicable.
(f) Dispute Resolution.
(i) "Resolution Time" means 1:00 p.m. New York time on the Local
Business Day following the date on which the notice of the
dispute is given under Paragraph 5.
(ii) Value. Notwithstanding anything to the contrary in Paragraph
12, for the purpose of Paragraphs 5(i)(C) and 5(ii), the S&P
Value, Xxxxx'x First Trigger Value, and Xxxxx'x Second Trigger
Value, on any date, of Eligible Collateral other than Cash
will be calculated as follows:
With respect to any Eligible Collateral in the form of
securities listed in Paragraph 13(b)(ii) (referred to herein
as "Collateral Obligations") the sum of (I)(x) the bid price
quoted on such date by a mutually acceptable principal market
maker for such Collateral Obligations, or (y) if no such
quotation is available from a principal market maker for such
date, such bid price as of the day, next preceding such date,
on which such quotation was available, in either case
multiplied by the applicable Valuation Percentage, plus (II)
the accrued interest on such Collateral Obligations (except to
the extent Transferred to a party pursuant to any applicable
section of this Agreement or included in the applicable price
referred to in (I) of this Clause) as of such date.
(iii) Alternative. The provisions of Paragraph 5 will apply.
(g) Holding and Using Posted Collateral.
(i) Eligibility to Hold Posted Collateral; Custodians. Party B (or
any Custodian) will be entitled to hold Posted Collateral
pursuant to Paragraph 6(b).
Party B may appoint as Custodian a bank or trust company
located in the United States having total assets of at least
$250,000,000 and a short term unsecured debt or counterparty
rating of "Prime-1" from Xxxxx'x and "A-1" from Standard &
Poor's.
Initially, the Custodian for Party B is: The Bank of New York.
(ii) Use of Posted Collateral. The provisions of Paragraph 6(c)
will not apply with respect to the collateral posted by Party
A.
(h) Distributions and Interest Amount.
(i) Interest Rate. The "Interest Rate" will be the actual interest
rate earned on Posted Collateral in the form of Cash that is
held by Party B or its Custodian. Party B's Custodian shall
hold Posted Collateral in the form of Cash in such deposit or
investment account as specified by Party A to Party B and
reasonably acceptable to Party B's Custodian.
(ii) Transfer of Interest Amount. The Transfer of the Interest
Amount will be made on the first Local Business Day of each
calendar month and on any Local Business Day that Posted
Collateral in the form of Cash is Transferred to the Pledgor
pursuant to Paragraph 3(b); provided, however, that the
15
obligation of Party B to Transfer any Interest Amount to Party
A shall be limited to the extent that Party B has earned and
received such funds.
(iii) Alternative to Interest Amount. The provisions of Paragraph
6(d)(ii) will apply.
(i) Additional Representation(s). There are no additional
representations by either party.
(j) Other Eligible Support and Other Posted Support.
(i) "Value" with respect to Other Eligible Support and Other
Posted Support means: not applicable.
(ii) "Transfer" with respect to Other Eligible Support and Other
Posted Support means: not applicable.
Demands and Notices. All demands, specifications and notices made by
a party to this Annex will be made pursuant to the Notices Section
of this Agreement
Address for Transfers. As agreed upon between the parties from time
to time.
(k) Other Provisions.
(i) Collateral Account. Upon the occurrence of a Collateral Event,
Party B shall open and maintain a segregated account, which
shall be an Eligible Account, and hold, record and identify
all Posted Collateral in such segregated account.
(ii) Agreement as to Single Secured Party and Single Pledgor. Party
A and Party B hereby agree that, notwithstanding anything to
the contrary in this Annex, (a) the term "Secured Party" as
used in this Annex means only Party B, (b) the term "Pledgor"
as used in this Annex means only Party A, (c) only Party A
makes the pledge and grant in Paragraph 2, the acknowledgement
in the final sentence of Paragraph 8(a) and the
representations in Paragraph 9.
(iii) Calculation of Value. Paragraph 4(c) is hereby amended by
deleting the word "Value" and inserting in lieu thereof "S&P
Value, Xxxxx'x First Trigger Value, Xxxxx'x Second Trigger
Value". Paragraph 4(d)(ii) is hereby amended by (A) deleting
the words "a Value" and inserting in lieu thereof "an S&P
Value, Xxxxx'x First Trigger Value, and Xxxxx'x Second Trigger
Value" and (B) deleting the words "the Value" and inserting in
lieu thereof "S&P Value, Xxxxx'x First Trigger Value, and
Xxxxx'x Second Trigger Value". Paragraph 5 is hereby amended
by deleting the word "Value" and inserting in lieu thereof
"S&P Value, Xxxxx'x First Trigger Value, or Xxxxx'x Second
Trigger Value". Paragraph 5(i) is hereby amended by deleting
the word "Value" and inserting in lieu thereof "S&P Value,
Xxxxx'x First Trigger Value, and Xxxxx'x Second Trigger
Value". Paragraph 5(i)(C) is hereby amended by deleting the
word "the Value, if" and inserting in lieu thereof "any one or
more of the S&P Value, Xxxxx'x First Trigger Value, or Xxxxx'x
Second Trigger Value, as may be". Paragraph 5(ii) is hereby
amended by (1) deleting the first instance of the words "the
Value" and inserting in lieu thereof "any one or more of the
S&P Value, Xxxxx'x First Trigger Value, or Xxxxx'x Second
Trigger Value" and (2) deleting the second instance of the
words "the Value" and inserting in lieu thereof "such disputed
S&P Value, Xxxxx'x First Trigger Value, or Xxxxx'x Second
Trigger Value". Each of Paragraph 8(b)(iv)(B) and Paragraph
11(a) is hereby amended by deleting the word "Value" and
inserting in lieu thereof "least of the S&P Value, Xxxxx'x
First Trigger Value, and Xxxxx'x Second Trigger Value".
(iv) Form of Annex. Party A and Party B hereby agree that the text
of Paragraphs 1 through 12, inclusive, of this Annex is
intended to be the printed form of ISDA Credit Support Annex
16
(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.
(v) Events of Default. Paragraph 7 will not apply to cause any
Event of Default to exist with respect to Party B except that
Paragraph 7(i) will apply to Party B solely in respect of
Party B's obligations under Paragraph 3(b) of the Credit
Support Annex. Notwithstanding anything to the contrary in
Paragraph 7, any failure by Party A to comply with or perform
any obligation to be complied with or performed by Party A
under the Credit Support Annex shall only be an Event of
Default if (A) a Required Ratings Downgrade Event has occurred
and been continuing for 30 or more Local Business Days and (B)
such failure is not remedied on or before the third Local
Business Day after notice of such failure is given to Party A.
(vi) Expenses. Notwithstanding anything to the contrary in
Paragraph 10, the Pledgor will be responsible for, and will
reimburse the Secured Party for, all transfer and other taxes
and other costs involved in any Transfer of Eligible
Collateral.
(vii) Withholding. Paragraph 6(d)(ii) is hereby amended by inserting
immediately after "the Interest Amount" in the fourth line
thereof the words "less any applicable withholding taxes."
(viii) Notice of Failure to Post Collateral. Upon any failure by
Party A to post collateral as required under this Agreement,
Party B shall, no later than the next Business Day after the
date such collateral was required to be posted, give a written
notice of such failure to Party A and to the Depositor. For
the avoidance of doubt, notwithstanding anything in this
Agreement to the contrary, the failure of Party B to comply
with the requirements of this paragraph shall not constitute
an Event of Default or Termination Event.
(ix) Additional Definitions. As used in this Annex:
"Collateral Event" means that no Relevant Entity has credit
ratings at least equal to the Approved Ratings Threshold.
"Exposure" has the meaning specified in Paragraph 12, except
that after the word "Agreement" the words "(assuming, for this
purpose only, that Part 1(f) of the Schedule is deleted)"
shall be inserted.
"First Trigger Failure Condition" means that no Relevant
Entity has credit ratings from Xxxxx'x at least equal to the
Xxxxx'x First Trigger Ratings Threshold.
"Local Business Day" means: any day on which (A) commercial
banks are open for business (including dealings in foreign
exchange and foreign currency deposits) in New York and the
location of Party A, Party B and any Custodian, and (B) in
relation to a Transfer of Eligible Collateral, any day on
which the clearance system agreed between the parties for the
delivery of Eligible Collateral is open for acceptance and
execution of settlement instructions (or in the case of a
Transfer of Cash or other Eligible Collateral for which
delivery is contemplated by other means a day on which
commercial banks are open for business (including dealings in
foreign exchange and foreign deposits) in New York and the
location of Party A, Party B and any Custodian.
"Xxxxx'x First Trigger Credit Support Amount" means, for any
Valuation Date, the excess, if any, of
17
(I) (A) for any Valuation Date on which (I) a First
Trigger Failure Condition has occurred and has
been continuing (x) for at least 30 Local Business
Days or (y) since this Annex was executed and (II)
it is not the case that a Xxxxx'x Second Trigger
Event 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
Additional Collateralized Amounts for each
Transaction.
For the purposes of this definition, the "Xxxxx'x
Additional Collateralized Amount" with respect to
any Transaction shall mean:
the product of the applicable Xxxxx'x First
Trigger Factor set forth in Table 1 and the
Notional Amount for such Transaction for the
Calculation Period which includes such Valuation
Date; or
(B) for any other Valuation Date, zero, over
(II) the Threshold for Party A for such Valuation Date.
"Xxxxx'x First Trigger Value" means, on any date and with
respect to any Eligible Collateral other than Cash, the bid
price obtained by the Valuation Agent multiplied by the
Xxxxx'x First Trigger Valuation Percentage for such Eligible
Collateral set forth in Paragraph 13(b)(ii).
"Xxxxx'x Second Trigger Event" means that no Relevant Entity
has credit ratings from Xxxxx'x at least equal to the Xxxxx'x
Second Trigger Ratings Threshold.
"Xxxxx'x Second Trigger Credit Support Amount" means, for any
Valuation Date, the excess, if any, of
(I) (A) for any Valuation Date on which it
is the case that a Second Trigger Failure
Condition 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 due to be paid by Party A under
each Transaction and (c) the sum of the
Secured Party's aggregate Exposure and the
aggregate of Xxxxx'x Additional
Collateralized Amounts for each Transaction.
For the purposes of this definition, the
"Xxxxx'x Additional Collateralized Amount"
with respect to any Transaction shall mean:
the product of the applicable Xxxxx'x Second
Trigger Factor set forth in Table 2 and the
Notional Amount for such Transaction for the
Calculation Period which includes such
Valuation Date; or
(B) for any other Valuation Date, zero, over
(II) the Threshold for Party A for such Valuation Date.
18
"Xxxxx'x Second Trigger Value" means, on any date and with
respect to any Eligible Collateral other than Cash, the bid
price obtained by the Valuation Agent multiplied by the
Xxxxx'x Second Trigger Valuation Percentage for such Eligible
Collateral set forth in Paragraph 13(b)(ii).
"Second Trigger Failure Condition" means that no Relevant
Entity has credit ratings from Xxxxx'x at least equal to the
Xxxxx'x Second Trigger Ratings Threshold.
"S&P Credit Support Amount" means, for any Valuation Date, the
excess, if any, of
(I) (A) for any Valuation Date on which an S&P Rating
Threshold Event, has occurred and been continuing
for at least 30 days, or a Required Ratings Event
has occurred and is continuing, an amount equal to
the sum, for each Transaction to which this Annex
relates, of the sum of (1) 100.0% of the Secured
Party's Transaction Exposure for such Valuation
Date and (2) the product of the Volatility Buffer
for such Transaction and the Notional Amount of
such Transaction for the Calculation Period of
such Transaction which includes such Valuation
Date, or
(B) for any other Valuation Date, zero, over
(II) the Threshold for Party A for such Valuation Date.
"S&P Rating Threshold Event" means, on any date, no Relevant
Entity has credit ratings from S&P which exceed the S&P
Approved Ratings Threshold.
"S&P Value" means, on any date and with respect to any
Eligible Collateral other than Cash, the product of (A) the
bid price obtained by the Valuation Agent for such Eligible
Collateral and (B) the S&P Valuation Percentage for such
Eligible Collateral set forth in paragraph 13(b)(ii).
"Transaction Exposure" means, for any Transaction, Exposure
determined as if such Transaction were the only Transaction
between the Secured Party and the Pledgor.
"Transaction-Specific Hedge" means any Transaction that is an
interest rate cap, interest rate floor or interest rate
swaption, or an interest rate swap if (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.
"Valuation Percentage" shall mean, for purposes of determining
the S&P Value, Xxxxx'x First Trigger Value, or Xxxxx'x Second
Trigger Value with respect to any Eligible Collateral or
Posted Collateral, the applicable S&P Valuation Percentage,
Xxxxx'x First Trigger Valuation Percentage, or Xxxxx'x Second
Trigger Valuation Percentage for such Eligible Collateral or
Posted Collateral, respectively, in each case as set forth in
Paragraph 13(b)(ii).
"Value" shall mean, in respect of any date, the related S&P
Value, the related Xxxxx'x First Trigger Value, and the
related Xxxxx'x Second Trigger Value.
19
"Volatility Buffer" means, for any Transaction, the related
percentage set forth in the following table.
---------------------------- -------------- --------------- --------------- ---------------
The higher of the S&P Remaining Remaining Remaining Remaining
short-term credit rating Weighted Weighted Weighted Weighted
of (i) Party A and (ii) Average Average Average Average
the Credit Support Maturity Maturity Maturity Maturity
Provider of Party A, if up to 3 years up to 5 years up to 10 years up to 30 years
applicable
---------------------------- -------------- --------------- --------------- ---------------
At least "A-2" 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%
---------------------------- -------------- --------------- --------------- ---------------
[Remainder of this page intentionally left blank]
20
Table 1
Xxxxx'x First Trigger Factor
----------------------------
If "Valuation Date" means "each Wednesday or, if such day is
not a Local Business Day, the next following Local Business
Day", the "Weekly Collateral
Posting" column will apply and the Daily Collateral Posting
Column will be deleted.
Remaining Weekly
Weighted Average Life Collateral
of Hedge in Years Posting
1 or less 0.25%
More than 1 but not more than 2 0.50%
More than 2 but not more than 3 0.70%
More than 3 but not more than 4 1.00%
More than 4 but not more than 5 1.20%
More than 5 but not more than 6 1.40%
More than 6 but not more than 7 1.60%
More than 7 but not more than 8 1.80%
More than 8 but not more than 9 2.00%
More than 9 but not more than 10 2.20%
More than 10 but not more than 11 2.30%
More than 11 but not more than 12 2.50%
More than 12 but not more than 13 2.70%
More than 13 but not more than 14 2.80%
More than 14 but not more than 15 3.00%
More than 15 but not more than 16 3.20%
More than 16 but not more than 17 3.30%
More than 17 but not more than 18 3.50%
More than 18 but not more than 19 3.60%
More than 19 but not more than 20 3.70%
More than 20 but not more than 21 3.90%
More than 21 but not more than 22 4.00%
More than 22 but not more than 23 4.00%
More than 23 but not more than 24 4.00%
More than 24 but not more than 25 4.00%
More than 25 but not more than 26 4.00%
More than 26 but not more than 27 4.00%
More than 27 but not more than 28 4.00%
More than 28 but not more than 29 4.00%
More than 29 4.00%
21
Table 2
Xxxxx'x Second Trigger Factor for Transaction-Specific Xxxxxx
-------------------------------------------------------------
If "Valuation Date" means the first Local Business Day in each week, the
"Weekly Collateral Posting" column will apply.
Remaining [Weekly
Weighted Average Life Collateral
of Hedge in Years Posting
1 or less 0.75%
More than 1 but not more than 2 1.50%
More than 2 but not more than 3 2.20%
More than 3 but not more than 4 2.90%
More than 4 but not more than 5 3.60%
More than 5 but not more than 6 4.20%
More than 6 but not more than 7 4.80%
More than 7 but not more than 8 5.40%
More than 8 but not more than 9 6.00%
More than 9 but not more than 10 6.60%
More than 10 but not more than 11 7.00%
More than 11 but not more than 12 7.50%
More than 12 but not more than 13 8.00%
More than 13 but not more than 14 8.50%
More than 14 but not more than 15 9.00%
More than 15 but not more than 16 9.50%
More than 16 but not more than 17 9.90%
More than 17 but not more than 18 10.40%
More than 18 but not more than 19 10.80%
More than 19 but not more than 20 11.00%
More than 20 but not more than 21 11.00%
More than 21 but not more than 22 11.00%
More than 22 but not more than 23 11.00%
More than 23 but not more than 24 11.00%
More than 24 but not more than 25 11.00%
More than 25 but not more than 26 11.00%
More than 26 but not more than 27 11.00%
More than 27 but not more than 28 11.00%
More than 28 but not more than 29 11.00%
More than 29 11.00%
22
IN WITNESS WHEREOF, the parties have executed this Credit Support Annex by
their duly authorized representatives as of the date of the Agreement.
XXXXXX BROTHERS SPECIAL FINANCING INC. THE BANK OF NEW YORK, not in its individual or corporate
capacity but solely as Swap Contract Administrator for
CWALT Inc., Alternative Loan Trust 2006-OC10, pursuant to
a Swap Contract Administration Agreement
By: /s/ Xxxxxxxxxx X. Xxxxxx /s/ Xxxxxxxx Xxxxxxxxxxx
-------------------------------------------- ----------------------------------------------------
Name Xxxxxxxxxx X. Xxxxxx Name: Xxxxxxxx Xxxxxxxxxxx
Title: Vice President Title: Vice President
Date: Date:
23
