EXHIBIT 99.3
The Swap Contract Administration Agreement
SWAP CONTRACT ADMINISTRATION AGREEMENT
This SWAP CONTRACT ADMINISTRATION AGREEMENT, dated as of August 30,
2006 (this "Agreement"), among THE BANK OF NEW YORK ("BNY"), as Swap Contract
Administrator (in such capacity, the "Swap Contract Administrator") and not in
its individual or corporate capacity but solely as Trustee under the Pooling and
Servicing Agreement referred to below (in such capacity, the "Trustee"), and
COUNTRYWIDE HOME LOANS, INC. ("CHL").
WHEREAS, CHL is a party to an interest rate swap agreement between
CHL and Xxxxxx Brothers Special Financing Inc. (the "Counterparty"), with a
Trade Date of August 24, 2006 and a reference number of Global Deal ID 2640101
(the "Swap Contract"), a copy of which is attached to this Agreement at Exhibit
A;
WHEREAS, CHL is conveying certain mortgage loans and other related
assets to a trust fund, CWALT, Inc. Alternative Loan Trust 0000-XX0 (xxx "Xxxxx
Xxxx") created pursuant to a Pooling and Servicing Agreement, dated as of August
1, 2006 (the "Pooling and Servicing Agreement"), among CWALT, Inc., as
depositor, CHL, as a seller, Park Granada LLC, as a seller, Park Monaco Inc., as
a seller, Park Sienna LLC, as a seller, Countrywide Home Loans Servicing LP, as
master servicer (the "Master Servicer"), and the Trustee;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, CHL is assigning all of its rights, and delegating all of its duties
and obligations under the Swap Contract to the Swap Contract Administrator,
pursuant to the Assignment Agreement, dated as of the date hereof (the
"Assignment Agreement"), among CHL, as assignor, the Swap Contract
Administrator, as assignee, and the Counterparty;
WHEREAS, the parties hereto desire that the Trustee make remittances
to the Swap Contract Administrator as contemplated by and to the extent provided
in the Pooling and Servicing Agreement to cover payments due to the Counterparty
under the Swap Contract;
WHEREAS, CHL desires that the Net Payments (as defined below)
payable by the Counterparty on the Swap Contract be distributed to the Trustee
under the Pooling and Servicing Agreement to be applied for the purposes
specified in the Pooling and Servicing Agreement and that the Excess Payments
(as defined below) on the Swap Contract be distributed to CHL;
WHEREAS, CHL and the Trustee desire to appoint the Swap Contract
Administrator, and the Swap Contract Administrator desires to accept such
appointment, to distribute funds received under the Swap Contract to the Trustee
and to CHL as provided in this Agreement, and, in the case of a NIM Issuance, to
distribute Excess Payments in accordance with the related Swap Excess Assignment
Agreement (each as defined below).
NOW, THEREFORE, in consideration of the mutual covenants contained
in this Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties agree as follows:
1. Definitions. Capitalized terms used but not otherwise defined in this
Agreement shall have the respective meanings assigned thereto in the Pooling and
Servicing Agreement.
Benefited Certificates: The LIBOR Certificates.
Excess Payment: For any Distribution Date on or prior to the Swap
Contract Termination Date and as to which the Swap Contract or a replacement
swap contract is in effect, an amount equal to the excess, if any, of (i) the
Net Swap Payment (as defined in the Pooling and Servicing Agreement) received by
the Swap Contract Administrator from the Counterparty with respect to such
Distribution Date over (ii) the Net Payment for such Distribution Date. For any
Distribution Date on or prior to the Swap Contract Termination Date but only if
neither the Swap Contract nor a replacement swap contract is in effect, zero.
For any Distribution Date after the Swap Contract Termination Date, an amount
equal to all remaining funds on deposit in the Swap Administration Account.
Indenture Trustee: With respect to a NIM Issuance (if any), the
indenture trustee under the indenture pursuant to which the notes related to
such NIM Issuance are issued.
ISDA Credit Support Annex: An ISDA Credit Support Annex negotiated
and established as provided in Section 5.
Net Payment: With respect to any Distribution Date on or prior to
the Swap Contract Termination Date, an amount equal to the sum of (i) any
Current Interest and Interest Carry Forward Amounts in respect of the Benefited
Certificates, (ii) any Net Rate Carryover in respect of the Benefited
Certificates, (iii) any Unpaid Realized Loss Amounts in respect of the Benefited
Certificates and (iv) any remaining Overcollateralization Deficiency Amount, in
each case remaining unpaid following the distribution to the Benefited
Certificates of Excess Cashflow pursuant to Section 4.02(c)(i) through (iv) of
the Pooling and Servicing Agreement. With respect to any Distribution Date after
the Swap Contract Termination Date, zero.
NIM Issuance: An issuance by a NIM Trust, on or after the date
hereof, of asset-backed notes secured by the Class C Certificates and/or Class P
Certificates.
NIM Trust: A Delaware statutory trust or other special-purpose
entity that is the issuer of the securities issued in connection with a NIM
Issuance (if any).
Responsible Officer: When used with respect to the Swap Contract
Administrator, any Vice President, any Assistant Vice President, the Secretary,
any Assistant Secretary, any Trust Officer or any other officer of the Swap
Contract Administrator customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
Swap Administration Account: The separate account created and
maintained by the Swap Contract Administrator pursuant to Section 3 with a
depository institution in the name of the Swap Contract Administrator for the
benefit of the Counterparty, CHL and the Trustee on behalf of the Holders of the
Benefited Certificates and designated "The Bank of New York for Countrywide Home
Loans, Inc., Xxxxxx Brothers Special Financing Inc. and certain registered
Holders of CWALT, Inc., Mortgage Pass-Through Certificates, Series 2006-OC7".
Funds in the Swap Administration Account shall be held for the Counterparty, CHL
and the Trustee on behalf of the Holders of the Benefited Certificates as set
forth in this Agreement.
Swap Excess Assignment Agreement: With respect to a NIM Issuance (if
any), an agreement executed on or after the date hereof by CHL, the related NIM
Trust and the Swap Contract Administrator (in form and substance reasonably
satisfactory to the Swap Contract Administrator), pursuant to which rights to
receive certain portions of Excess Payments shall be assigned to such NIM Trust
and pursuant to which the Swap Contract Administrator shall agree to distribute
Excess Payments to the related Indenture Trustee and CHL (in accordance with the
terms of such agreement).
2. Appointment of Swap Contract Administrator.
CHL and the Trustee hereby appoint BNY to serve as Swap Contract
Administrator pursuant to this Agreement and pursuant to the related Swap Excess
Assignment Agreement (if any). The Swap Contract Administrator accepts such
appointment and acknowledges the transfer and assignment to it of CHL's rights
and obligations under the Swap Contract pursuant to the Assignment Agreement.
The Swap Contract Administrator agrees to exercise the rights referred to above
for the benefit of CHL, the Trustee and the Counterparty and to perform the
duties set forth in this Agreement. In the event of a NIM Issuance, the Swap
Contract Administrator further agrees to perform the duties set forth in the
related Swap Excess Assignment Agreement for the benefit of CHL, the related NIM
Trust and the related Indenture Trustee.
3. Receipt of Funds; Swap Administration Account.
The Swap Contract Administrator hereby agrees to receive (i) on
behalf of CHL and the Trustee, all amounts paid by the Counterparty under the
Swap Contract and (ii) on behalf of the Counterparty, all amounts remitted by
the Trustee pursuant to the Pooling and Servicing Agreement for payment to the
Counterparty. The Swap Contract Administrator shall establish and maintain a
Swap Administration Account into which the Swap Contract Administrator shall
deposit or cause to be deposited on the Business Day of receipt, (x) all amounts
remitted by the Trustee for payment to the Counterparty pursuant to the Swap
Contract and (y) all amounts payable by the Counterparty under the Swap
Contract. All funds deposited in the Swap Administration Account shall be held
for the benefit of the Counterparty, CHL and the Trustee on behalf of the
Holders of the Benefited Certificates until withdrawn in accordance with this
Section 3. The Swap Administration Account shall be an "Eligible Account" as
defined in the Pooling and Servicing Agreement.
Funds in the Swap Administration Account shall remain uninvested.
The Swap Contract Administrator shall give at least 30 days' advance
notice to the Counterparty, CHL and the Trustee of any proposed change of
location of the Swap Administration Account prior to any change thereof.
4. Calculations; Distribution of Payments; Delivery of Notices.
The Swap Contract Administrator hereby agrees to make payments based
on the information provided by the Trustee and the Counterparty, and the Swap
Contract Administrator shall, absent manifest error, be entitled to rely on
information provided by the Trustee and the Counterparty.
On the Business Day of receipt of any payment from the Counterparty,
the Swap Contract Administrator shall withdraw the amount of such payment from
the Swap Administration Account and distribute such amounts sequentially, as
follows:
(a) first, to the Trustee for deposit into the Swap Account, the
applicable Net Payment; and
(b) second, to CHL, the applicable Excess Payment, in accordance with
the following wiring instructions:
Bank: Bank of New York
Account Name: Countrywide Home Loans
Account No: 8900038632
ABA No: 000000000
REF: CWALT 2006-OC7 X'S SwapPyt
On the Business Day of receipt of any payment from the Trustee for
payment to the Counterparty, the Swap Contract Administrator shall withdraw the
amount of such payment from the Swap Administration Account and distribute such
amounts to the Counterparty in accordance with the wiring instructions specified
in the Assignment Agreement.
The Swap Contract Administrator shall prepare and deliver any
notices required to be delivered under the Swap Contract.
On the Business Day of receipt of any notices, information or
reports received by the Swap Contract Administrator from the Counterparty, the
Swap Contract Administrator shall provide the same to the Trustee, including
without limitation information regarding any Net Swap Payment or Swap
Termination Payment that will be payable by the Swap Contract Administrator to
the Counterparty with respect to the next Distribution Date.
5. Control Rights; Credit Support Annex; Replacement Swap Contract.
The Trustee shall have the right to direct the Swap Contract
Administrator with respect to the exercise of any right under the Swap Contract
(such as the right to designate an Early Termination Date following an Event of
Default (each such term as defined in the Swap Contract).
Upon the Swap Contract Administrator obtaining actual knowledge of
the rating of the Counterparty falling below the Approved Rating Thresholds (as
defined in the Swap Contract) or
upon the Swap Contract Administrator obtaining actual knowledge of a Ratings
Event (as defined in the Swap Contract), the Swap Contract Administrator, at the
direction of the Trustee, shall demand payment of the Delivery Amount (as
defined in the ISDA Credit Support Annex) on each Valuation Date (as defined in
the ISDA Credit Support Annex) and perform its other obligations in accordance
with the ISDA Credit Support Annex or (ii) take such other action required under
the Swap Contract. If a Delivery Amount is demanded, the Swap Contract
Administrator shall establish an account to hold cash or other eligible
investments pledged under such ISDA Credit Support Annex. Any such account shall
be an "Eligible Account" as defined in the Pooling and Servicing Agreement. Any
cash or other eligible investments pledged under an ISDA Credit Support Annex
shall not be part of the Swap Administration Account unless they are applied in
accordance with such ISDA Credit Support Annex to make a payment due to the Swap
Contract Administrator pursuant to the Swap Contract.
In the event that the Swap Contract is terminated, CHL shall assist
the Swap Contract Administrator in procuring a replacement swap contract with
terms approximating those of the original Swap Contract, and the Swap Contract
Administrator shall enter into a replacement swap contract procured by CHL and
continue to serve as Swap Contract Administrator pursuant to the terms hereof.
Any Swap Termination Payment received from the Counterparty shall be used to pay
any upfront amount required under any replacement swap contract, and any excess
shall be distributed to CHL. In the event that a replacement swap contract
cannot be procured, any Swap Termination Payment received from the Counterparty
in respect of the termination of the original Swap Contract shall be held in the
Swap Administration Account and distributed as provided in Section 4. In the
event that a replacement swap is procured and the replacement counterparty pays
an upfront amount to the Swap Contract Administrator in connection with the
execution of the replacement swap contract, the Swap Contract Administrator
shall use such upfront amount to pay any remaining Swap Termination Payment due
to the Counterparty in respect of the original Swap Contract, and shall remit to
the Trustee the remaining portion of such upfront amount (based on information
provided by the Trustee) to be included in Interest Funds for Loan Group 1 and
Loan Group 2 and the Principal Distribution Amount for Loan Group 1 and Loan
Group 2 for the following Distribution Date to the extent that a Swap
Termination Payment was payable to the Counterparty in connection with the
termination of the original Swap Contract and Interest Funds for Loan Group 1
and Loan Group 2 and the Principal Distribution Amount for Loan Group 1 and Loan
Group 2 for one or more preceding Distribution Dates were used to cover such
Swap Termination Payment. Any upfront amount paid by a replacement counterparty
that is not (x) used by the Swap Contract Administrator to cover any remaining
Swap Termination Payment payable to the Counterparty in respect of the original
Swap Contract or (y) remitted by the Swap Contract Administrator to the Trustee
to be included in the Interest Funds for Loan Group 1 and Loan Group 2 and the
Principal Distribution Amount for Loan Group 1 and Loan Group 2 for the
following Distribution Date shall be distributed to CHL.
6. Representations and Warranties of the Swap Contract Administrator. The Swap
Contract Administrator represents and warrants as follows:
(a) BNY is duly organized and validly existing as a banking corporation
under the laws of the State of New York and has all requisite power
and authority to
execute and deliver this Agreement and to perform its obligations as
Swap Contract Administrator under this Agreement.
(b) The execution, delivery and performance of this Agreement by BNY as
Swap Contract Administrator has been duly authorized by BNY.
(c) This Agreement has been duly executed and delivered by BNY as Swap
Contract Administrator and is enforceable against BNY in accordance
with its terms, except as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law).
7. Certain Matters Concerning the Swap Contract Administrator.
(a) The Swap Contract Administrator shall undertake to perform such
duties and only such duties as are specifically set forth in this
Agreement.
(b) No provision of this Agreement shall be construed to relieve the
Swap Contract Administrator from liability for its own grossly
negligent action, its own gross negligent failure to act or its own
misconduct, its grossly negligent failure to perform its obligations
in compliance with this Agreement, or any liability that would be
imposed by reason of its willful misfeasance or bad faith; provided
that:
(i) the duties and obligations of the Swap Contract Administrator
shall be determined solely by the express provisions of this
Agreement, the Swap Contract Administrator shall not be
liable, individually or as Swap Contract Administrator, except
for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against the
Swap Contract Administrator and the Swap Contract
Administrator may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Swap Contract Administrator and conforming to the requirements
of this Agreement that it reasonably believed in good faith to
be genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder;
(ii) the Swap Contract Administrator shall not be liable,
individually or as Swap Contract Administrator, for an error
of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Swap Contract Administrator,
unless the Swap Contract Administrator was grossly negligent
or acted in bad faith or with willful misfeasance; and
(iii) the Swap Contract Administrator shall not be liable,
individually or as Swap Contract Administrator, with respect
to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of
the Controlling Party, or exercising any power conferred upon
the Swap Contract Administrator under this Agreement.
(c) Except as otherwise provided in Sections 7(a) and 7(b):
(i) the Swap Contract Administrator may request and rely upon and
shall be protected in acting or refraining from acting upon
any resolution, officer's certificate, certificate of auditors
or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(ii) the Swap Contract Administrator may consult with counsel and
any opinion of counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in
accordance with such opinion of counsel;
(iii) the Swap Contract Administrator shall not be liable,
individually or as Swap Contract Administrator, for any action
taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(iv) the Swap Contract Administrator shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing so to do
by the Counterparty, CHL or the Trustee; provided, however,
that if the payment within a reasonable time to the Swap
Contract Administrator of the costs, expenses or liabilities
likely to be incurred by it in the making of such
investigation is, in the opinion of the Swap Contract
Administrator not reasonably assured to the Swap Contract
Administrator by the Counterparty, CHL and/or the Trustee, the
Swap Contract Administrator may require reasonable indemnity
against such expense, or liability from the Counterparty, CHL
and/or the Trustee, as the case may be, as a condition to
taking any such action; and
(v) the Swap Contract Administrator shall not be required to
expend its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder if
it shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such liability is
not assured to it.
(d) CHL covenants and agrees to pay or reimburse the Swap Contract
Administrator, upon its request, for all reasonable expenses and
disbursements incurred or made by the Swap Contract Administrator in
accordance with any of the provisions of this Agreement except any
such expense or disbursement as may arise from its negligence, bad
faith or willful misconduct. The Swap Contract Administrator
and any director, officer, employee or agent of the Swap Contract
Administrator shall be indemnified by CHL and held harmless against
any loss, liability or expense incurred in connection with any legal
action relating to this Agreement, the Swap Contract or the
Assignment Agreement, or in connection with the performance of any
of the Swap Contract Administrator's duties hereunder or thereunder,
other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of
any of the Swap Contract Administrator's duties hereunder or
thereunder. Such indemnity shall survive the termination of this
Agreement or the resignation of the Swap Contract Administrator
hereunder and under the Swap Contract and the Assignment Agreement.
Notwithstanding anything to the contrary in this Section 7(a), any
expenses, disbursements, losses or liabilities of the Swap Contract
Administrator or any director, officer, employee or agent thereof
that are made or incurred as a result of any request, order or
direction of any NIM Insurer or any of the Certificateholders made
to the Trustee as contemplated by Section 8.02(ix) of the Pooling
and Servicing Agreement and consequently made to the Swap Contract
Administrator by the Trustee shall be payable by the Trustee out of
the security or indemnity provided by any NIM Insurer or such
Certificateholders pursuant to Section 8.02(ix) of the Pooling and
Servicing Agreement.
(e) Upon the resignation of BNY as Trustee in accordance with the
Pooling and Servicing Agreement, (i) BNY shall resign and be
discharged from its duties as Swap Contract Administrator hereunder
and (ii) the Person that succeeds BNY as Trustee shall be appointed
as successor Swap Contract Administrator hereunder upon its
execution, acknowledgement and delivery of the instrument accepting
such appointment in accordance with Section 8.08 of the Pooling and
Servicing Agreement, whereupon the duties of the Swap Contract
Administrator hereunder shall pass to such Person. In addition, upon
the appointment of a successor Trustee under the Pooling and
Servicing Agreement, such successor Trustee shall succeed to the
rights of the Trustee hereunder.
(f) In the event of a NIM Issuance, nothing in this Section 7 shall
limit or otherwise modify or affect the rights, duties or
obligations of the Swap Contract Administrator under the related
Swap Excess Assignment Agreement.
8. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
(b) Each of BNY and CHL hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in
any legal proceedings arising out of or relating to this Agreement.
(c) The Counterparty shall be an express third party beneficiary of this
Agreement for the purpose of enforcing the provisions hereof to the
extent of the Counterparty's rights explicitly specified herein as
if a party hereto.
(d) This Agreement shall terminate upon the termination of the Swap
Contract and the disbursement by the Swap Contract Administrator of
all funds received under the Swap Contract to CHL and the Trustee on
behalf of the Holders of the Benefited Certificates.
(e) This Agreement may be amended, supplemented or modified in writing
by the parties hereto, provided that no amendment shall adversely
affect in any material respect the Counterparty without the prior
written consent of the Counterparty, which consent shall not be
unreasonably withheld.
(f) This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by
facsimile transmission), and all such counterparts taken together
shall be deemed to constitute one and the same instrument.
(g) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
(h) The representations and warranties made by the parties to this
Agreement shall survive the execution and delivery of this
Agreement. No act or omission on the part of any party hereto shall
constitute a waiver of any such representation or warranty.
(i) The article and section headings in this Agreement are for
convenience of reference only, and shall not limit or otherwise
affect the meaning of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
THE BANK OF NEW YORK,
as Swap Contract Administrator
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
Title: Assistant Treasurer
THE BANK OF NEW YORK,
not in its individual or corporate capacity
but solely as Trustee
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
Title: Assistant Treasurer
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxxx
Title: Managing Director
EXHIBIT A
SWAP CONTRACT
A-1
