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 December 29, 2006
DEUTSCHE BANK AG, NEW YORK BRANCH 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-OC11, 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.
10
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.
DEUTSCHE BANK AG, NEW YORK BRANCH 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-OC11, pursuant to a Swap Contract
Administration Agreement
("Party A") ("Party B")
------------------------------- ----------------------------------
(Name of Party) (Name of Party)
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxx Xxxxxxx Name: Xxxxxxx Xxxxxx
Title: Director Title: Assistant Treasurer
By: /s/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: Legal Counsel
18
(Multicurrency-Cross Border)
SCHEDULE
to the
Master Agreement
dated as of December 29, 2006
between
DEUTSCHE BANK AG, NEW YORK BRANCH ("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-OC11, 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 for CWALT, Inc. Alternative Loan Trust
2006-OC11, dated as of December 1, 2006 among CWALT, Inc., as depositor, Park
Monaco Inc., as a seller, Park Granada LLC, as a seller, Park Sienna LLC, as a
seller, Countrywide Home Loans, Inc., as a seller, Countrywide Home Loans
Servicing LP, as master servicer and The Bank of New York, as trustee (the
"Pooling and Servicing Agreement").
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
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:
Section 5(a)(vi) is hereby amended by adding the following words
at the end thereof:
"provided, however, that, notwithstanding the foregoing, an Event
of Default shall not occur under either (1) or (2) above if (A)
(I) the default, or other similar event or condition referred to
in (1) or the failure to pay referred to in (2) is a failure to
pay or deliver caused by an error or omission of an administrative
or operational nature, and (II) funds or the asset to be delivered
were available to such party to enable it to make the relevant
payment or delivery when due and (III) such payment or delivery is
made within three (3) Local Business Days following receipt of
written notice from an interested party of such failure to pay, or
(B) such party was precluded from paying, or was unable to pay,
using reasonable means, through the office of the party through
which it was acting for purposes of the relevant Specified
Indebtedness, by reason of force majeure, act of State, illegality
or impossibility."
"Specified Indebtedness" will have the meaning specified in
Section 14, except that such term shall not include obligations in
respect of deposits received in the ordinary course of Party A's
banking business.
"Threshold Amount" means with respect to Party A an amount equal
to three percent (3%) of the Shareholders' Equity of Party A 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 in the country in which Party A is
organized.
(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
2
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)
to Party A, 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.
(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 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;
3
(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 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) 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.
(D) 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)."
(E) At any time on or before the Latest Settlement Amount
Determination Day at which two or more Market Quotations
from Approved Replacements remain capable of becoming
legally binding upon acceptance, Party B shall be entitled
to accept only 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
Market Quotation expressed as a negative number with the
largest absolute value).
(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(c).
Part 2: Tax Representations
(a) Tax Representations.
4
(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 "foreign person" within the meaning of the
applicable U.S. Treasury Regulations concerning information
reporting and backup withholding tax (as in effect on
January 1, 2001), unless Party A provides written notice to
Party B that it is no longer a foreign person. In respect of
any Transaction it enters into through an office or
discretionary agent in the United States or which otherwise
is allocated for United States federal income tax purposes
to such United States trade or business, each payment
received or to be received by it under such Transaction will
be effectively connected with its conduct of a trade or
business in the United States.
(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.
Part 3: Agreement to Deliver Documents
(a) Tax forms, documents or certificates to be delivered are:
5
-----------------------------------------------------------------------------------------------
Party required to Form/Document/Certificate Date by which to be delivered
deliver document
-----------------------------------------------------------------------------------------------
Party A and Party B Any document required or Promptly after the earlier
reasonably requested to of (i) reasonable demand by
allow the other party to either party or (ii) within
make payments under this 30 days of the execution.
Agreement without any
deduction or withholding
for or on the account of
any Tax or with such
deduction or withholding
at a reduced rate.
-----------------------------------------------------------------------------------------------
(b) Other Documents to be delivered are:
------------------------------------------------------------------------------------------------
Party required to Form/Document/Certificate Date by which Covered by
deliver document to be delivered Section 3(d)
representation
------------------------------------------------------------------------------------------------
Party A and Party B Any documents required Upon execution. Yes
or reasonably
requested by the
receiving party to
evidence authority of
the delivering party
or its Credit Support
Provider, if any, to
execute and deliver
this Agreement, any
Confirmation, and any
Credit Support
Documents to which it
is a party, and to
evidence the authority
of the delivering
party to its Credit
Support Provider to
perform its
obligations under this
Agreement, such
Confirmation and/or
Credit Support
Document, as the case
may be.
------------------------------------------------------------------------------------------------
Party A and Party B A certificate of an Upon execution Yes
authorized officer of
the party, as to the
incumbency and
authority of the
respective officers of
the party signing this
Agreement, any relevant
Credit Support
Document, or any
Confirmation, as the
case may be.
------------------------------------------------------------------------------------------------
Party A Annual Report of Party Annually, Yes
A containing after becoming
consolidated financial publicly
statements certified by available
independent certified
public accountants and
prepared in accordance
with generally accepted
accounting principles
in the country in which
Party A is organized
and delivered via
internet at
xxxx://xxx.xx.xxx/
------------------------------------------------------------------------------------------------
Party A Quarterly Financial Quarterly, Yes
Statements of Party A after becoming
containing unaudited, publicly
consolidated financial available
statements of Party A's
fiscal quarter prepared
in accordance with
generally
------------------------------------------------------------------------------------------------
6
------------------------------------------------------------------------------------------------
accepted accounting
principles in the
country in which Party
A is organized and
delivered via internet
at xxxx://xxx.xx.xxx/
------------------------------------------------------------------------------------------------
Party A An opinion of counsel Upon execution No
to such party
reasonably satisfactory
in form and substance
to the other party
regarding the
enforceability of this
Agreement, any
Confirmation, and any
Credit Support
Documents to which it
is a party.
------------------------------------------------------------------------------------------------
Party B Executed copy of the Upon execution Yes
Pooling and Servicing
Agreement
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Part 4: Miscellaneous
(a) Addresses for Notices. For the purposes of Section 12(a) of this
Agreement:
Party A:
(1) Address for notices or communications to Party A in respect of
Section 5(a)(i) shall be sent to:-
Deutsche Bank AG, New York Branch
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
In addition, with respect to Party A, all notices under Sections 5 or 6 of
this Agreement (other than notices under Section 5(a)(i)) shall be sent to:
Deutsche Bank AG, Head Office
Xxxxxxxxxxxx 00
00000 Xxxxxxxxx
Xxxxxxx
Attention: Legal Department
Telex No: 411836 or 416731 or 41233
Answerback: DBF-D
Party B:
Address for notices or communications to Party B:-
Address: The Bank of New York
000 Xxxxxxx Xxxxxx - 0X Xxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Administration MBS Administration, CWALT,
Inc., Series 2006-OC11
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) Process Agent. For the purposes of Section 13(c) of this Agreement:
Party A appoints as its Process Agent: Not Applicable.
Party B appoints as its Process Agent: Not Applicable.
7
(c) Offices. The provisions of Section 10(a) will not 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,
if an Event of Default occurs and is continuing with respect to Party A,
then Party B shall be entitled to appoint a financial institution which
would qualify as a Reference Market-maker to act as Calculation Agent,
the cost for which shall be borne by Party A.
(f) Credit Support Document. Credit Support Document means
Party A: The Credit Support Annex, and any guarantee in support of
Party A's obligations under this Agreement.
Party B: 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. Subparagraph (ii) of Section 2(c) of this Agreement
will apply to all Transactions.
(j) "Affiliate" will have the meaning specified in Section 14 of this
Agreement, 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).
Part 5: Other 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:
8
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.
(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."
(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)
9
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 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.
(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) Supplemental Pooling and Servicing Agreement Without Party A's
Prior Written Consent. If Party B enters into an amendment and or
supplement to the Pooling and Servicing Agreement or other
modification to the Pooling and Servicing Agreement that could
reasonably be expected to have a material adverse effect on Party
A (excluding, for the avoidance of doubt, any amendment to the
Pooling and Servicing Agreement that is entered into solely for
the purpose of appointing a successor master servicer or trustee)
without the prior written consent (such consent not to be
unreasonably withheld) of Party A where such consent is required,
then 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. Party B agrees
with Party A that Party A shall be an express third-party
beneficiary of the Pooling and Servicing Agreement.
(iv) [Reserved]
(v) [Reserved]
(d) 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.
(e) Regulation AB Compliance. Party A and Party B hereby agree that the
terms of the Item 1115 Agreement dated as of April 27, 2006 (the
"Regulation AB Agreement"), between Countrywide Home Loans, Inc., CWABS,
Inc., CWMBS, Inc., CWALT, Inc., CWHEQ, Inc. and Deutsche Bank AG, New
York Branch 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 Regulation AB Agreement is
attached hereto as Exhibit A.
10
(f) Transfers.
(i) Section 7 is hereby amended to read in its entirety as follows:
"Subject to Section 6(b)(ii), Part 5(d) and the Regulation AB
Agreement, neither Party A nor Party B is permitted to assign,
novate or transfer (whether by way of security or otherwise) as a
whole or in part any of its rights, obligations or interests under
the Agreement or any Transaction without (a) the prior written
consent of the other party and (b) satisfaction of the Rating
Agency Condition with respect to S&P."
(ii) 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.
(g) 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 Swap Trust and the proceeds thereof, 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 the 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 the Swap Trust and the proceeds thereof,
should be insufficient to satisfy all claims outstanding and following
the realization of the account held by the Swap Trust and the proceeds
thereof, 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. Party B shall not have
liability for any failure or delay in making a payment hereunder to
Party A due to any failure or delay in receiving amounts in the account
held by the Swap Trust from the Trust created pursuant to the Pooling
and Servicing Agreement.
(h) Timing of Payments by Party B upon Early Termination. Notwithstanding
anything to the contrary in Section 6(d)(ii), to the extent that all or
a portion (in either case, the "Unfunded Amount") of any amount that is
calculated as being due in respect of any Early Termination Date under
Section 6(e) from Party B to Party A will be paid by Party B from
amounts other than any upfront payment paid to Party B by an Eligible
Replacement that has entered a Replacement Transaction with Party B,
then such Unfunded Amount shall be due on the next subsequent
Distribution Date following the date on which the payment would have
been payable as determined in accordance with Section 6(d)(ii), and on
any subsequent Distribution Dates until paid in full (or if such Early
Termination Date is the final Distribution Date, on such final
Distribution Date); provided, however, that if the date on which the
payment would have been payable as determined in accordance with Section
6(d)(ii) is a Distribution Date, such payment will be payable on such
Distribution Date.
(i) 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
this Agreement shall be made by either party unless each Swap Rating
Agency has been given prior written notice of such designation or
transfer.
(j) No Set-off. Except as expressly provided for in Section 2(c), Section 6,
Paragraph 8 of the Credit Support Annex or Part 1(f)(i)(D) hereof, and
notwithstanding any other provision of this Agreement or any other
existing or future agreement, each party irrevocably waives any and all
rights it may have to set off, net, recoup or otherwise withhold or
suspend or condition payment or performance of any obligation between it
and the other party hereunder against any obligation between it and the
other party under any other agreements. Section 6(e) shall be amended by
deleting the following sentence: "The amount, if any, payable in respect
of an Early Termination Date and determined pursuant to this Section
will be subject to any Set-off.".
11
(k) 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 Rating 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.
(l) Notice of Certain Events or Circumstances. Each Party agrees, upon
learning of the occurrence or existence of any event or condition that
constitutes (or that with the giving of notice or passage of time or
both would constitute) an Event of Default or Termination Event with
respect to such party, promptly to give the other Party and to each Swap
Rating Agency notice of such event or condition; provided that failure
to provide notice of such event or condition pursuant to this Part 5(l)
shall not constitute an Event of Default or a Termination Event.
(m) Proceedings. No Relevant Entity shall institute against, or cause any
other person to institute against, or join any other person in
instituting against Party B, the Swap Trust, or 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. This
provision will survive the termination of this Agreement.
(n) Swap Contract Administrator Liability Limitations. 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 for CWALT, Inc.
Alternative Loan Trust 2006-OC11; (b) in no case shall BNY (or any
person acting as successor Swap Contract Administrator for CWALT, Inc.
Alternative Loan Trust 2006-OC11) 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
Pooling and Servicing Agreement. This Part 5(n) shall survive the
termination of this Agreement.
(o) 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 economic effect of which comes as close as possible to
that of the invalid or unenforceable term, provision, covenant or
condition.
(p) [Reserved]
(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
12
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, and agrees to notify such personnel of
such monitoring or recording.
(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) [Reserved]
(u) [Reserved]
(v) Additional representations.
(i) Capacity. Party A represents to Party B on the date on which Party
A enters into this Agreement that it is entering into the
Agreement and the Transaction as principal and not as agent of any
person. Party B represents to Party A on the date on which Party B
enters into this Agreement it is entering into the Agreement and
the Transaction in its capacity as Swap Contract Administrator.
(w) 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(m), 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.
(x) [Reserved]
(y) [Reserved]
(z) Additional Definitions.
As used in this Agreement, the following terms shall have the meanings
set forth below, unless the context clearly requires otherwise:
"Approved Ratings Threshold" means each of the S&P Approved Ratings
Threshold and the Moody's First Trigger Ratings Threshold.
13
"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 Termination Event
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 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 subject to the
Rating Agency Condition with respect to S&P, 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 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".
14
"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 has been
given prior written notice of such transfer and the Rating Agency
Condition is satisfied with respect to S&P and (g) such transfer
otherwise complies with the terms of the Pooling and Servicing
Agreement.
"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.
"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(d).
"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
15
"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 Certificates.
16
IN WITNESS WHEREOF, the parties have executed this document by their duly
authorized officers with effect from the date so specified on the first page
hereof.
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-OC11, pursuant to
DEUTSCHE BANK AG, NEW YORK BRANCH a Swap Contract Administration Agreement
("Party A") ("Party B")
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx Xxxxxx
------------------------------- -------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxxxxx Xxxxxx
Title: Director Title: Assistant Treasurer
By: /s/ Xxxxxxx Xxxx
-------------------------------
Name: Xxxxxxx Xxxx
Title: Legal Counsel
17
EXHIBIT A
Regulation AB Agreement
18
(Bilateral Form) (ISDA Agreements Subject to New York Law Only)
ISDA(R)
International Swaps and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the
Master Agreement
dated as of December 29, 2006
between
DEUTSCHE BANK AG, NEW and THE BANK OF NEW YORK, not in
YORK BRANCH its individual or corporate capacity
but solely as Swap Contract
Administrator for CWALT, Inc.
Alternative Loan Trust 2006-OC11,
pursuant to a Swap Contract
Administration Agreement
("Party A") ("Party B")
This Annex supplements, forms part of, and is subject to, the above-referenced
Agreement, is part of its Schedule and is a Credit Support Document under this
Agreement with respect to each party.
Accordingly, the parties agree as follows:
Paragraph 1. Interpretation
(a) Definitions and Inconsistency. Capitalized terms not otherwise defined
herein or elsewhere in this Agreement have the meanings specified pursuant to
Paragraph 12, and all references in this Annex to Paragraphs are to Paragraphs
of this Annex. In the event of any inconsistency between this Annex and the
other provisions of this Schedule, this Annex will prevail and in the event of
any inconsistency between Paragraph 13 and the other provisions of this Annex,
Paragraph 13 will prevail.
(b) Secured Party and Pledgor. All references in this Annex to the "Secured
Party" will be to either party when acting in that capacity and all
corresponding references to the "Pledgor" will be to the other party when
acting in that capacity; provided, however, that if Other Posted Support is
held by a party to this Annex, all references herein to that party as the
Secured Party
with respect to that Other Posted Support will be to that party as the
beneficiary thereof and will not subject that support or that party as the
beneficiary thereof to provisions of law generally relating to security
interests and secured parties.
Paragraph 2. Security Interest
Each party, as the Pledgor, hereby pledges to the other party, as the Secured
Party, as security for its Obligations, and grants to the Secured Party a
first priority continuing security interest in, lien on and right of Set-off
against all Posted Collateral Transferred to or received by the Secured Party
hereunder. Upon the Transfer by the Secured Party to the Pledgor of Posted
Collateral, the security interest and lien granted hereunder on that Posted
Collateral will be released immediately and, to the extent possible, without
further action by either party.
Paragraph 3. Credit Support Obligations
(a) Delivery Amount. Subject to Paragraphs 4 and 5, upon a demand made by
the Secured Party on or promptly following a Valuation Date, if the Delivery
Amount for that Valuation Date equals or exceeds the Pledgor's Minimum
Transfer Amount, then the Pledgor will Transfer to the Secured Party Eligible
Credit Support having a Value as of the date of Transfer at least equal to the
applicable Delivery Amount (rounded pursuant to Paragraph 13). Unless
otherwise specified in Paragraph 13, the "Delivery Amount" applicable to the
Pledgor for any Valuation Date will equal the amount by which:
(i) the Credit Support Amount
exceeds
(ii) the Value as of that Valuation Date of all Posted Credit Support
held by the Secured Party.
(b) Return Amount. Subject to Paragraphs 4 and 5, upon a demand made by the
Pledgor on or promptly following a Valuation Date, if the Return Amount for
that Valuation Date equals or exceeds the Secured Party's Minimum Transfer
Amount, then the Secured Party will Transfer to the Pledgor Posted Credit
Support specified by the Pledgor in that demand having a Value as of the date
of Transfer as close as practicable to the applicable Return Amount (rounded
pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the
"Return Amount" applicable to the Secured Party for any Valuation Date will
equal the amount by which:
(i) the Value as of that Valuation Date of all Posted Credit Support
held by the Secured Party
exceeds
(ii) the Credit Support Amount.
"Credit Support Amount" means, unless otherwise specified in Paragraph 13, for
any Valuation Date (i) the Secured Party's Exposure for that Valuation Date
plus (ii) the aggregate of all Independent Amounts applicable to the Pledgor,
if any, minus (iii) all Independent Amounts
2
applicable to the Secured Party, if any, minus (iv) the Pledgor's Threshold;
provided, however, that the Credit Support Amount will be deemed to be zero
whenever the calculation of Credit Support Amount yields a number less than
zero.
Paragraph 4. Conditions Precedent, Transfer Timing, Calculations and
Substitutions
(a) Conditions Precedent. Each Transfer obligation of the Pledgor under
Paragraphs 3 and 5 and of the Secured Party under Paragraphs 3, 4(d)(ii), 5
and 6(d) is subject to the conditions precedent that:
(i) no Event of Default, Potential Event of Default or Specified
Condition has occurred and is continuing with respect to the other
party; and
(ii) no Early Termination Date for which any unsatisfied payment
obligations exist has occurred or been designated as the result of an
Event of Default or Specified Condition with respect to the other party.
(b) Transfer Timing. Subject to Paragraphs 4(a) and 5 and unless otherwise
specified, if a demand for the Transfer of Eligible Credit Support or Posted
Credit Support is made by the Notification Time, then the relevant Transfer
will be made not later than the close of business on the next Local Business
Day; if a demand is made after the Notification Time, then the relevant
Transfer will be made not later than the close of business on the second Local
Business Day thereafter.
(c) Calculations. All calculations of Value and Exposure for purposes of
Paragraphs 3 and 6(d) will be made by the Valuation Agent as of the Valuation
Time. The Valuation Agent will notify each party (or the other party, if the
Valuation Agent is a party) of its calculations not later than the
Notification Time on the Local Business Day following the applicable Valuation
Date (or in the case of Paragraph 6(d), following the date of calculation).
(d) Substitutions.
(i) Unless otherwise specified in Paragraph 13, upon notice to the
Secured Party specifying the items of Posted Credit Support to be
exchanged, the Pledgor may, on any Local Business Day, Transfer to the
Secured Party substitute Eligible Credit Support (the "Substitute Credit
Support"); and
(ii) subject to Paragraph 4(a), the Secured Party will Transfer to the
Pledgor the items of Posted Credit Support specified by the Pledgor in
its notice not later than the Local Business Day following the date on
which the Secured Party receives the Substitute Credit Support, unless
otherwise specified in Paragraph 13 (the "Substitution Date"); provided
that the Secured Party will only be obligated to Transfer Posted Credit
Support with a Value as of the date of Transfer of that Posted Credit
Support equal to the Value as of that date of the Substitute Credit
Support.
3
Paragraph 5. Dispute Resolution
If a party (a "Disputing Party") disputes (I) the Valuation Agent's
calculation of a Delivery Amount or a Return Amount or (II) the Value of any
Transfer of Eligible Credit Support or Posted Credit Support, then (I) the
Disputing Party will notify the other party and the Valuation Agent (if the
Valuation Agent is not the other party) not later than the close of business
on the Local Business Day following (X) the date that the demand is made under
Paragraph 3 in the case of (I) above or (Y) the date of Transfer in the case
of (II) above, (2) subject to Paragraph 4(a), the appropriate party will
Transfer the undisputed amount to the other party not later than the close of
business on the Local Business Day following (X) the date that the demand is
made under Paragraph 3 in the case of (I) above or (Y) the date of Transfer in
the case of (II) above, (3) the parties will consult with each other in an
attempt to resolve the dispute and (4) if they fail to resolve the dispute by
the Resolution Time, then:
(i) In the case of a dispute involving a Delivery Amount or Return
Amount, unless otherwise specified in Paragraph 13, the Valuation Agent
will recalculate the Exposure and the Value as of the Recalculation Date
by:
(A) utilizing any calculations of Exposure for the
Transactions (or Swap Transactions) that the parties have
agreed are not in dispute;
(B) calculating the Exposure for the Transactions (or Swap
Transactions) in dispute by seeking four actual quotations
at mid-market from Reference Market-makers for purposes of
calculating Market Quotation, and taking the arithmetic
average of those obtained; provided that if four quotations
are not available for a particular Transaction (or Swap
Transaction), then fewer than four quotations may be used
for that Transaction (or Swap Transaction); and if no
quotations are available for a particular Transaction (or
Swap Transaction), then the Valuation Agent's original
calculations will be used for that Transaction (or Swap
Transaction); and
(C) utilizing the procedures specified in Paragraph 13 for
calculating the Value, if disputed, of Posted Credit
Support.
(ii) In the case of a dispute involving the Value of any Transfer of
Eligible Credit Support or Posted Credit Support, the Valuation Agent
will recalculate the Value as of the date of Transfer pursuant to
Paragraph 13.
Following a recalculation pursuant to this Paragraph, the Valuation Agent will
notify each party (or the other party, if the Valuation Agent is a party) not
later than the Notification Time on the Local Business Day following the
Resolution Time. The appropriate party will, upon demand following that notice
by the Valuation Agent or a resolution pursuant to (3) above and subject to
Paragraphs 4(a) and 4(b), make the appropriate Transfer.
4
Paragraph 6. Holding and Using Posted Collateral
(a) Care of Posted Collateral. Without limiting the Secured Party's rights
under Paragraph 6(c), the Secured Party will exercise reasonable care to
assure the safe custody of all Posted Collateral to the extent required by
applicable law, and in any event the Secured Party will be deemed to have
exercised reasonable care if it exercises at least the same degree of care as
it would exercise with respect to its own property. Except as specified in the
preceding sentence, the Secured Party will have no duty with respect to Posted
Collateral, including, without limitation, any duty to collect any
Distributions, or enforce or preserve any rights pertaining thereto.
(b) Eligibility to Hold Posted Collateral; Custodians.
(i) General. Subject to the satisfaction of any conditions specified
in Paragraph 13 for holding Posted Collateral, the Secured Party will be
entitled to hold Posted Collateral or to appoint an agent (a
"Custodian") to hold Posted Collateral for the Secured Party. Upon
notice by the Secured Party to the Pledgor of the appointment of a
Custodian, the Pledgor's obligations to make any Transfer will be
discharged by making the Transfer to that Custodian. The holding of
Posted Collateral by a Custodian will be deemed to be the holding of
that Posted Collateral by the Secured Party for which the Custodian is
acting.
(ii) Failure to Satisfy Conditions. If the Secured Parry or its
Custodian fails to satisfy any conditions for holding Posted Collateral,
then upon a demand made by the Pledgor, the Secured Party will, not
later than five Local Business Days after the demand, Transfer or cause
its Custodian to Transfer all Posted Collateral held by it to a
Custodian that satisfies those conditions or to the Secured Party if it
satisfies those conditions.
(iii) Liability. The Secured Party will be liable for the acts or
omissions of its Custodian to the same extent that the Secured Party
would be liable hereunder for its own acts or omissions.
(c) Use of Posted Collateral Unless otherwise specified in Paragraph 13 and
without limiting the rights and obligations of the parties under Paragraphs 3,
4(d) (ii), 5, 6(d) and 8, if the Secured Party is not a Defaulting Party or an
Affected Party with respect to a Specified Condition and no Early Termination
Date has occurred or been designated as the result of an Event of Default or
Specified Condition with respect to the Secured Xxxxx, then the Secured Party
will, notwithstanding Section 9-207 of the New York Uniform Commercial Code,
have the right to:
(i) sell, pledge, rehypothecate, assign, invest, use, commingle or
otherwise dispose of, or otherwise use in its business any Posted
Collateral it holds, free from any claim or right of any nature
whatsoever of the Pledgor, including any equity or right of redemption
by the Pledgor; and
(ii) register any Posted Collateral in the name of the Secured Party,
its Custodian or a nominee for either.
For purposes of the obligation to Transfer Eligible Credit Support or Posted
Credit Support pursuant to Paragraphs 3 and 5 and any rights or remedies
authorized under this Agreement, the
5
Secured Party will be deemed to continue to hold all Posted Collateral and to
receive Distributions made thereon, regardless of whether the Secured Party
has exercised any rights with respect to any Posted Collateral pursuant to (i)
or (ii) above.
(d) Distributions and Interest Amount
(i) Distributions. Subject to Paragraph 4(a), if the Secured Party
receives or is deemed to receive Distributions on a Local Business Day,
it will Transfer to the Pledgor not later than the following Local
Business Day any Distributions it receives or is deemed to receive to
the extent that a Delivery Amount would not be created or increased by
that Transfer, as calculated by the Valuation Agent (and the date of
calculation will be deemed to be a Valuation Date for this purpose).
(ii) Interest Amount Unless otherwise specified in Paragraph 13 and
subject to Paragraph 4(a), in lieu of any interest, dividends or other
amounts paid or deemed to have been paid with respect to Posted
Collateral in the form of Cash (all of which may be retained by the
Secured Party), the Secured Party will Transfer to the Pledgor at the
times specified in Paragraph 13 the Interest Amount to the extent that a
Delivery Amount would not be created or increased by that Transfer, as
calculated by the Valuation Agent (and the date of calculation will be
deemed to be a Valuation Date for this purpose). The Interest Amount or
portion thereof not Transferred pursuant to this Paragraph will
constitute Posted Collateral in the form of Cash and will be subject to
the security interest granted under Paragraph 2.
Paragraph 7. Events of Default
For purposes of Section 5(a) (iii) (1) of this Agreement, an Event of Default
will exist with respect to a party if:
(i) that party fails (or fails to cause its Custodian) to make, when
due, any Transfer of Eligible Collateral. Posted Collateral or the
Interest Amount, as applicable, required to be made by it and that
failure continues for two Local Business Days after notice of that
failure is given to that party;
(ii) that party fails to comply with any restriction or prohibition
specified in this Annex with respect to any of the rights specified in
Paragraph 6(c) and that failure continues for five Local Business Days
after notice of that failure is given to that party; or
(iii) that party fails to comply with or perform any agreement or
obligation other than those specified in Paragraphs 7(i) and 7(ii) and
that failure continues for 30 days after notice of that failure is given
to that party.
Paragraph 8. Certain Rights and Remedies
(a) Secured Party's Rights and Remedies. If at any time (1) an Event of
Default or Specified Condition with respect to the Pledgor has occurred and is
continuing or (2) an Early Termination Date has occurred or been designated as
the result of an Event of Default or Specified Condition with respect to the
Pledgor, then, unless the Pledgor has paid in full all of its
6
Obligations that are then due, the Secured Party may exercise one or more of
the following rights and remedies:
(i) all rights and remedies available to a secured party under
applicable law with respect to Posted Collateral held by the Secured
Party;
(ii) any other rights and remedies available to the Secured Party
under the terms of Other Posted Support, if any;
(iii) the right to Set-off any amounts payable by the Pledgor with
respect to any Obligations against any Posted Collateral or the Cash
equivalent of any Posted Collateral held by the Secured Party (or any
obligation of the Secured Party to Transfer that Posted Collateral); and
(iv) the right to liquidate any Posted Collateral held by the Secured
Party through one or more public or private sales or other dispositions
with such notice, if any, as may be required under applicable law, free
from any claim or right of any nature whatsoever of the Pledgor,
including any equity or right of redemption by the Pledgor (with the
Secured Party having the right to purchase any or all of the Posted
Collateral to be sold) and to apply the proceeds (or the Cash equivalent
thereof) from the liquidation of the Posted Collateral to any amounts
payable by the Pledgor with respect to any Obligations in that order as
the Secured Party may elect.
Each party acknowledges and agrees that Posted Collateral in the form of
securities may decline speedily in value and is of a type customarily sold on
a recognized market, and, accordingly, the Pledgor is not entitled to prior
notice of any sale of that Posted Collateral by the Secured Party, except any
notice that is required under applicable law and cannot be waived.
(b) Pledgor's Rights and Remedies. If at any time an Early Termination Date
has occurred or been designated as the result of an Event of Default or
Specified Condition with respect to the Secured Party, then (except in the
case of an Early Termination Date relating to less than all Transactions (or
Swap Transactions) where the Secured Party has paid in full all of its
obligations that are then due under Section 6(e) of this Agreement):
(i) the Pledgor may exercise all rights and remedies available to a
pledgor under applicable law with respect to Posted Collateral held by
the Secured Party;
(ii) the Pledgor may exercise any other rights and remedies available
to the Pledgor under the terms of Other Posted Support, if any;
(iii) the Secured Party will be obligated immediately to Transfer all
Posted Collateral and the Interest Amount to the Pledgor; and
(iv) to the extent that Posted Collateral or the Interest Amount is
not so Transferred pursuant to (iii) above, the Pledgor may:
(A) Set-off any amounts payable by the Pledgor with
respect to any Obligations against any Posted Collateral or
the Cash equivalent of any
7
Posted Collateral held by the Secured Party (or any
obligation of the Secured Party to Transfer that Posted
Collateral); and
(B) to the extent that the Pledgor does not Set-off under
(iv)(A) above, withhold payment of any remaining amounts
payable by the Pledgor with respect to any Obligations, up
to the Value of any remaining Posted Collateral held by the
Secured Party, until that Posted Collateral is Transferred
to the Pledgor.
(c) Deficiencies and Excess Proceeds. The Secured Party will Transfer to
the Pledgor any proceeds and Posted Credit Support remaining after
liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b) after
satisfaction in full of all amounts payable by the Pledgor with respect to any
Obligations; the Pledgor in all events will remain liable for any amounts
remaining unpaid after any liquidation, Set-off and/or application under
Paragraphs 8(a) and 8(b).
(d) Final Returns. When no amounts are or thereafter may become payable by
the Pledgor with respect to any Obligations (except for any potential
liability under Section 2(d) of this Agreement), the Secured Party will
Transfer to the Pledgor all Posted Credit Support and the Interest Amount, if
any.
Paragraph 9. Representations
Each party represents to the other party (which representations will be deemed
to be repeated as of each date on which it, as the Pledgor, Transfers Eligible
Collateral) that:
(i) it has the power to grant a security interest in and lien on any
Eligible Collateral it Transfers as the Pledgor and has taken all
necessary actions to authorize the granting of that security interest
and lien;
(ii) it is the sole owner of or otherwise has the right to Transfer
all Eligible Collateral it Transfers to the Secured Party hereunder,
free and clear of any security interest, lien, encumbrance or other
restrictions other than the security interest and lien granted under
Paragraph 2;
(iii) upon the Transfer of any Eligible Collateral to the Secured Party
under the terms of this Annex, the Secured Party will have a valid and
perfected first priority security interest therein (assuming that any
central clearing corporation or any third-party financial intermediary
or other entity not within the control of the Pledgor involved in the
Transfer of that Eligible Collateral gives the notices and takes the
action required of it under applicable law for perfection of that
interest); and
(iv) the performance by it of its obligations under this Annex will
not result in the creation of any security interest, lien or other
encumbrance on any Posted Collateral other than the security interest
and lien granted under Paragraph 2.
8
Paragraph 10. Expenses
(a) General. Except as otherwise provided in Paragraphs 10(b) and 10(c),
each party will pay its own costs and expenses in connection with performing
its obligations under this Annex and neither party will be liable at any costs
and expenses incurred by the other party in connection herewith.
(b) Posted Credit Support. The Pledgor will promptly pay when due all
taxes, assessments or charges of any nature that are imposed with respect to
Posted Credit Support held by the Secured Party upon becoming aware of the
same, regardless of whether any portion of that Posted Credit Support is
subsequently disposed of under Paragraph 6(c), except for those taxes,
assessments and charges that result from the exercise of the Secured Party's
rights under Paragraph 6(c).
(c) Liquidation/Application of Posted Credit Support. All reasonable costs
and expenses incurred by or on behalf of the Secured Party or the Pledgor in
connection with the liquidation and/or application of any Posted Credit
Support under Paragraph 8 will be payable, on demand and pursuant to the
Expenses Section of this Agreement, by the Defaulting Party or, if there is no
Defaulting Party, equally by the parties.
Paragraph 11. Miscellaneous
(a) Default Interest. A Secured Party that fails to make, when due, any
Transfer of Posted Collateral or the Interest Amount will be obligated to pay
the Pledgor (to the extent permitted under applicable law) an amount equal to
interest at the Default Rate multiplied by the Value of the items of property
that were required to be Transferred, from (and including) the date that
Posted Collateral or Interest Amount was required to be Transferred to (but
excluding) the date of Transfer of that Posted Collateral or Interest Amount.
This interest will be calculated on the basis of daily compounding and the
actual number of days elapsed.
(b) Further Assurances. Promptly following a demand made by a party, the
other party will execute, deliver, file and record any financing statement,
specific assignment or other document and take any other action that may be
necessary or desirable and reasonably requested by that party to create,
preserve, perfect or validate any security interest or lien granted under
Paragraph 2, to enable that party to exercise or enforce its rights under this
Annex with respect to Posted Credit Support or an Interest Amount or to effect
or document a release of a security interest on Posted Collateral or an
Interest Amount.
(c) Further Protection. The Pledgor will promptly give notice to the
Secured Party of, and defend against, any suit, action, proceeding or lien
that involves Posted Credit Support Transferred by the Pledgor or that could
adversely affect the security interest and lien granted by it under Paragraph
2, unless that suit, action, proceeding or lien results from the exercise of
the Secured Party's rights under Paragraph 6(c).
(d) Good Faith and Commercially Reasonable Manner. Performance of all
obligations under this Annex, including, but not limited to, all calculations,
valuations and determinations made by either party, will be made in good faith
and in a commercially reasonable manner.
9
(e) Demands and Notices. All demands and notices made by a party under this
Annex will be made as specified in the Notices Section of this Agreement,
except as otherwise provided in Paragraph 13.
(f) Specifications of Certain Matters. Anything referred to in this Annex
as being specified in Paragraph 13 also may be specified in one or more
Confirmations or other documents and this Annex will be construed accordingly.
Paragraph 12. Definitions
As used in this Annex:
"Cash" means the lawful currency of the United States of America.
"Credit Support Amount" has the meaning specified in Paragraph 3.
"Custodian" has the meaning specified in Paragraphs 6(b) (i) and 13.
"Delivery Amount" has the meaning specified in Paragraph 3(a).
"Disputing Party" has the meaning specified in Paragraph 5.
"Distributions" means with respect to Posted Collateral other than Cash, all
principal, interest and other payments and distributions of cash or other
property with respect thereto, regardless of whether the Secured Party has
disposed of that Posted Collateral under Paragraph 6(c). Distributions will
not include any item of property acquired by the Secured Party upon any
disposition or liquidation of Posted Collateral or, with respect to any Posted
Collateral in the form of Cash, any distributions on that collateral, unless
otherwise specified herein.
"Eligible Collateral" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.
"Eligible Credit Support" means Eligible Collateral and Other Eligible
Support.
"Exposure" means for any Valuation Date or other date for which Exposure is
calculated and subject to Paragraph 5 in the case of a dispute, the amount, if
any, that would be payable to a party that is the Secured Party by the other
party (expressed as a positive number) or by a party that is the Secured Party
to the other party (expressed as a negative number) pursuant to Section
6(e)(ii)(2)(A) of this Agreement as if all Transactions (or Swap Transactions)
were being terminated as of the relevant Valuation Time; provided that Market
Quotation will be determined by the Valuation Agent using its estimates at
mid-market of the amounts that would be paid for Replacement Transactions (as
that term is defined in the definition of "Market Quotation").
"Independent Amount" means, with respect to a party, the amount specified as
such for that party in Paragraph 13; if no amount is specified, zero.
"Interest Amount" means, with respect to an Interest Period, the aggregate sum
of the amounts of interest calculated for each day in that Interest Period on
the principal amount of Posted
10
Collateral in the form of Cash held by the Secured Party on that day,
determined by the Secured Party for each such day as follows:
(x) the amount of that Cash on that day; multiplied by
(y) the Interest Rate in effect for that day; divided by
(z) 360.
"Interest Period" means the period from (and including) the last Local
Business Day on which an Interest Amount was Transferred (or, if no Interest
Amount has yet been Transferred, the Local Business Day on which Posted
Collateral in the form of Cash was Transferred to or received by the Secured
Party) to (but excluding) the Local Business Day on which the current Interest
Amount is to be Transferred.
"Interest Rate" means the rate specified in Paragraph 13.
"Local Business Day," unless otherwise specified in Paragraph 13, has the
meaning specified in the Definitions Section of this Agreement, except that
references to a payment in clause (b) thereof will be deemed to include a
Transfer under this Annex.
"Minimum Transfer Amount" means, with respect to a party, the amount specified
as such for that party in Paragraph 13; if no amount is specified, zero.
"Notification Time" has the meaning specified in Paragraph 13.
"Obligations" means, with respect to a party, all present and future
obligations of that party under this Agreement and any additional obligations
specified for that party in Paragraph 13.
"Other Eligible Support" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.
"Other Posted Support" means all Other Eligible Support Transferred to the
Secured Party that remains in effect for the benefit of that Secured Party.
"Pledgor" means either party, when that party (i) receives a demand for or is
required to Transfer Eligible Credit Support under Paragraph 3(a) or (ii) has
Transferred Eligible Credit Support under Paragraph 3(a).
"Posted Collateral" means all Eligible Collateral, other property,
Distributions, and all proceeds thereof that have been Transferred to or
received by the Secured Party under this Annex and not Transferred to the
Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or 6(d)(i) or released by the
Secured Party under Paragraph 8. Any Interest Amount or portion thereof not
Transferred pursuant to Paragraph 6(d) (ii) will constitute Posted Collateral
in the form of Cash.
"Posted Credit Support" means Posted Collateral and Other Posted Support.
11
"Recalculation Date" means the Valuation Date that gives rise to the dispute
under Paragraph 5: provided, however, that if a subsequent Valuation Date
occurs under Paragraph 3 prior to the resolution of the dispute, then the
"Recalculation Date" means the most recent Valuation Date under Paragraph 3.
"Resolution Time" has the meaning specified in Paragraph 13.
"Return Amount" has the meaning specified in Paragraph 3(b).
"Secured Party" means either party, when that party (i) makes a demand for or
is entitled to receive Eligible Credit Support under Paragraph 3(a) or (ii)
holds or is deemed to hold Posted Credit Support.
"Specified Condition" means, with respect to a party, any event specified as
such for that party in Paragraph 13.
"Substitute Credit Support" has the meaning specified in Paragraph 4(d) (i).
"Substitution Date" has the meaning specified in Paragraph 4(d) (ii).
"Threshold" means, with respect to a party, the amount specified as such for
that party in Paragraph 13; if no amount is specified, zero.
"Transfer" means, with respect to any Eligible Credit Support, Posted Credit
Support or Interest Amount, and in accordance with the instructions of the
Secured Party, Pledgor or Custodian, as applicable:
(i) in the case of Cash, payment or delivery by wire transfer into
one or more bank accounts specified by the recipient;
(ii) in the case of certificated securities that cannot be paid or
delivered by book-entry, payment or delivery in appropriate physical
form to the recipient or its account accompanied by any duly executed
instruments of transfer, assignments in blank, transfer tax stamps and
any other documents necessary to constitute a legally valid transfer to
the recipient;
(iii) in the case of securities that can be paid or delivered by
book-entry, the giving of written instructions to the relevant
depository institution or other entity specified by the recipient,
together with a written copy thereof to the recipient, sufficient if
complied with to result in a legally effective transfer of the relevant
interest to the recipient; and
(iv) in the case of Other Eligible Support or Other Posted Support, as
specified in Paragraph 13.
"Valuation Agent" has the meaning specified in Paragraph 13.
"Valuation Date" means each date specified in or otherwise determined pursuant
to Paragraph 13.
12
"Valuation Percentage" means, for any item of Eligible Collateral, the
percentage specified in Paragraph 13.
"Valuation Time" has the meaning specified in Paragraph 13.
"Value" means for any Valuation Date or other date for which Value is
calculated and subject to Paragraph 5 in the case of a dispute, with respect
to:
(i) Eligible Collateral or Posted Collateral that is:
(A) Cash, the amount thereof; and
(B) a security, the bid price obtained by the Valuation
Agent multiplied by the applicable Valuation Percentage, if
any;
(i) Posted Collateral that consists of items that are not specified as
Eligible Collateral, zero; and
(ii) Other Eligible Support and Other Posted Support, as specified in
Paragraph 13.
13
ISDA(R)
CREDIT SUPPORT ANNEX
to the Schedule to the
ISDA Master Agreement
dated as of December 29, 2006 between
DEUTSCHE BANK AG, NEW YORK BRANCH (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-OC11, 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
(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":
2
Xxxxx'x
First Xxxxx'x
S&P Trigger Second Trigger
Valuation Valuation Valuation
Collateral Percentage Percentage Percentage
---------- ---------- ---------- ----------
(A) Cash 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
(C) Fixed-rate negotiable USD
denominated debt obligations
issued by the U.S. Treasury
Department having a remaining 89.9% 100% 94%
maturity on such 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 83.9% 100% 87%
Department having a remaining
maturity on such 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 will be rounded up to the
nearest integral multiple of USD 10,000. The Return Amount
will be rounded down to the nearest integral multiple of USD
1,000.
3
(c) Valuation and Timing.
(i) "Valuation Agent" means Party A; provided, however, that if an
Event of Default shall have occurred with respect to which Party A
is the Defaulting Party, Party B shall have the right to designate
as Valuation Agent an independent party, reasonably acceptable to
Party A, the cost for which shall be borne by 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 one or more Pricing Sources.
(ii) "Valuation Date" means the first Local Business Day in each week
on which any of the S&P Credit Support Amount, the Xxxxx'x First
Trigger Credit Support Amount or the Xxxxx'x Second Trigger Credit
Support Amount is greater than zero.
(iii) "Valuation Time" means the close of business in the city of the
Valuation Agent on the Local Business Day immediately preceding
the Valuation Date or date of calculation, as applicable; provided
that the calculations of Value and Exposure will be made as of
approximately the same time on the same date.
(iv) "Notification Time" means 11:00 a.m., New York time, on a Local
Business Day.
(v) External Verification. Notwithstanding anything to the contrary in
the definitions of Valuation Agent or Valuation Date, 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
(A) calculate the Secured Party's Exposure and the S&P Value of
Posted Credit Suppport on each Valuation Date based on internal
marks and (B) verify such calculations with external marks monthly
by obtaining on the last Local Business Day of each calendar month
two external marks for each Transaction to which this Annex
relates and for all Posted Credit Suport; such verification of the
Secured Party's Exposure shall be based on the higher of the two
external marks. Each external xxxx in respect of a Transaction
shall be obtained from an independent Reference Market-maker that
would be eligible and willing to enter into such Transaction in
the absence of the current derivative provider, provided that an
external xxxx xxx not be obtained from the same Reference
Market-maker more than four times in any 12-month period. The
Valuation Agent shall obtain these external marks directly or
through an independent third party, in either case at no cost to
Party B. The Valuation Agent shall calculate on each Valuation
Date (for purposes of this paragraph, the last Local Business Day
in each calendar month referred to above shall be considered a
Valuation Date) the Secured Party's Exposure based on the greater
of the Valuation Agent's internal marks and the external marks
received. If the S&P Value on any such Valuation Date of all
Posted Credit Support then held by the Secured Party is less than
the S&P Credit Support Amount on such Valuation Date (in each case
as determined pursuant to this paragraph), Party A shall, within
three Local Business Days of such Valuation Date, Transfer to the
Secured Party Eligible Credit Support having an S&P Value as of
the date of Transfer at least equal to such deficiency.
(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.
4
(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.
(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:
For Eligible Collateral in the form of securities listed in
Paragraph 13(b)(ii): the sum of (A) the product of (1)(x) the bid
price at the Valuation Time for such securities on the principal
national securities exchange on which such securities are listed,
or (y) if such securities are not listed on a national securities
exchange, the bid price for such securities quoted at the
Valuation Time by any principal market maker for such securities
selected by the Valuation Agent, or (z) if no such bid price is
listed or quoted for such date, the bid price listed or quoted (as
the case may be) at the Valuation Time for the day next preceding
such date on which such prices were available and (2) the
applicable Valuation Percentage for such Eligible Collateral, and
(B) the accrued interest on such securities (except to the extent
Transferred to the Pledgor pursuant to Paragraph 6(d)(ii) or
included in the applicable price referred to in the immediately
preceding clause (A)) 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); provided that the following conditions applicable
to it are satisfied:
(1) The Custodian is 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)(i) will
not apply to Party B, but the provisions of Paragraph 6(c)(ii)
will apply to Party B.
5
(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.
(ii) Transfer of Interest Amount. The Transfer of the Interest Amount
will be made on the second Local Business Day following the end of
each calendar month and on any other Local Business Day on which
Posted Collateral in the form of Cash is Transferred to the
Pledgor pursuant to Paragraph 3(b); provided, however, that the
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 and such funds are available to Party B.
(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.
(k) Demands and Notices.All demands, specifications and notices under this
Annex will be made pursuant to the Notices Section of this Agreement,
except that any demand, specification or notice shall be given to or
made at the following addresses, or at such other address as the
relevant party may from time to time designate by giving notice (in
accordance with the terms of this paragraph) to the other party:
If to Party A, at the address specified pursuant to the Notices Section
of this Agreement.
If to Party B, at the address specified pursuant to the Notices Section
of this Agreement.
If to Party B's Custodian, at the address specified for Party B pursuant
to the Notices Section of this Agreement
(l) Address for Transfers. Each Transfer hereunder shall be made to an
address specified in writing from time to time by the party to which
such Transfer will be made.
(m) 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
6
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
(flush language) 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) (flush
language) 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) [Reserved]
(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.
"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
7
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
(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.
"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.
"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:
8
if such Transaction is not a Transaction-Specific
Hedge,
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
if such Transaction is a Transaction-Specific Hedge,
the product of the applicable Xxxxx'x Second Trigger
Factor set forth in Table 3 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.
"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.
"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).
"Pricing Sources" means the sources of financial information
commonly known as Bloomberg, Bridge Information Services, Data
Resources Inc., Interactive Data Services, International
Securities Market Association, Xxxxxxx Xxxxx Securities Pricing
Service, Xxxxxx Data Corporation, Reuters, Wood Gundy, Trepp
Pricing, XX Xxxxx, S&P and Telerate.
"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 Downgrade Event
has occurred and been 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).
9
"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.
"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) the Average Average Average Average
Credit Support Provider Maturity Maturity Maturity Maturity
of Party A, if applicable up to 3 years up to 5 years up to 10 years up to 30 years
---------------------------------------------------------------------------------------------------------
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]
10
Table 1
-------
Xxxxx'x First Trigger Factor
----------------------------
If "Valuation Date" means each Local Business Day, the "Daily Collateral
Posting" column will apply and the Weekly Collateral Posting Column will be
deleted.
If "Valuation Date" means the first Local Business Day in each week, the
"Weekly Collateral Posting" column will apply and the Daily Collateral Posting
Column will be deleted.
Remaining Daily Weekly
Weighted Average Life Collateral Collateral
of Hedge in Years Posting Posting
1 or less 0.15% 0.25%
More than 1 but not more than 2 0.30% 0.50%
More than 2 but not more than 3 0.40% 0.70%
More than 3 but not more than 4 0.60% 1.00%
More than 4 but not more than 5 0.70% 1.20%
More than 5 but not more than 6 0.80% 1.40%
More than 6 but not more than 7 1.00% 1.60%
More than 7 but not more than 8 1.10% 1.80%
More than 8 but not more than 9 1.20% 2.00%
More than 9 but not more than 10 1.30% 2.20%
More than 10 but not more than 11 1.40% 2.30%
More than 11 but not more than 12 1.50% 2.50%
More than 12 but not more than 13 1.60% 2.70%
More than 13 but not more than 14 1.70% 2.80%
More than 14 but not more than 15 1.80% 3.00%
More than 15 but not more than 16 1.90% 3.20%
More than 16 but not more than 17 2.00% 3.30%
More than 17 but not more than 18 2.00% 3.50%
More than 18 but not more than 19 2.00% 3.60%
More than 19 but not more than 20 2.00% 3.70%
More than 20 but not more than 21 2.00% 3.90%
More than 21 but not more than 22 2.00% 4.00%
More than 22 but not more than 23 2.00% 4.00%
More than 23 but not more than 24 2.00% 4.00%
More than 24 but not more than 25 2.00% 4.00%
More than 25 but not more than 26 2.00% 4.00%
More than 26 but not more than 27 2.00% 4.00%
More than 27 but not more than 28 2.00% 4.00%
More than 28 but not more than 29 2.00% 4.00%
More than 29 2.00% 4.00%
11
Table 2
-------
Xxxxx'x Second Trigger Factor for Interest Rate Swaps with Fixed Notional
-------------------------------------------------------------------------
Amounts
-------
If "Valuation Date" means each Local Business Day, the "Daily Collateral
Posting" column will apply and the Weekly Collateral Posting Column will be
deleted.
If "Valuation Date" means the first Local Business Day in each week, the
"Weekly Collateral Posting" column will apply and the Daily Collateral Posting
Column will be deleted.
Remaining Daily Weekly
Weighted Average Life Collateral Collateral
of Hedge in Years Posting Posting
1 or less 0.50% 0.60%
More than 1 but not more than 2 1.00% 1.20%
More than 2 but not more than 3 1.50% 1.70%
More than 3 but not more than 4 1.90% 2.30%
More than 4 but not more than 5 2.40% 2.80%
More than 5 but not more than 6 2.80% 3.30%
More than 6 but not more than 7 3.20% 3.80%
More than 7 but not more than 8 3.60% 4.30%
More than 8 but not more than 9 4.00% 4.80%
More than 9 but not more than 10 4.40% 5.30%
More than 10 but not more than 11 4.70% 5.60%
More than 11 but not more than 12 5.00% 6.00%
More than 12 but not more than 13 5.40% 6.40%
More than 13 but not more than 14 5.70% 6.80%
More than 14 but not more than 15 6.00% 7.20%
More than 15 but not more than 16 6.30% 7.60%
More than 16 but not more than 17 6.60% 7.90%
More than 17 but not more than 18 6.90% 8.30%
More than 18 but not more than 19 7.20% 8.60%
More than 19 but not more than 20 7.50% 9.00%
More than 20 but not more than 21 7.80% 9.00%
More than 21 but not more than 22 8.00% 9.00%
More than 22 but not more than 23 8.00% 9.00%
More than 23 but not more than 24 8.00% 9.00%
More than 24 but not more than 25 8.00% 9.00%
More than 25 but not more than 26 8.00% 9.00%
More than 26 but not more than 27 8.00% 9.00%
More than 27 but not more than 28 8.00% 9.00%
More than 28 but not more than 29 8.00% 9.00%
More than 29 8.00% 9.00%
12
Table 3
-------
Xxxxx'x Second Trigger Factor for Transaction-Specific Xxxxxx
-------------------------------------------------------------
If "Valuation Date" means each Local Business Day, the "Daily Collateral
Posting" column will apply and the Weekly Collateral Posting Column will be
deleted.
If "Valuation Date" means the first Local Business Day in each week, the
"Weekly Collateral Posting" column will apply and the Daily Collateral Posting
Column will be deleted.
Remaining Daily Weekly
Weighted Average Life Collateral Collateral
of Hedge in Years Posting Posting
1 or less 0.65% 0.75%
More than 1 but not more than 2 1.30% 1.50%
More than 2 but not more than 3 1.90% 2.20%
More than 3 but not more than 4 2.50% 2.90%
More than 4 but not more than 5 3.10% 3.60%
More than 5 but not more than 6 3.60% 4.20%
More than 6 but not more than 7 4.20% 4.80%
More than 7 but not more than 8 4.70% 5.40%
More than 8 but not more than 9 5.20% 6.00%
More than 9 but not more than 10 5.70% 6.60%
More than 10 but not more than 11 6.10% 7.00%
More than 11 but not more than 12 6.50% 7.50%
More than 12 but not more than 13 7.00% 8.00%
More than 13 but not more than 14 7.40% 8.50%
More than 14 but not more than 15 7.80% 9.00%
More than 15 but not more than 16 8.20% 9.50%
More than 16 but not more than 17 8.60% 9.90%
More than 17 but not more than 18 9.00% 10.40%
More than 18 but not more than 19 9.40% 10.80%
More than 19 but not more than 20 9.70% 11.00%
More than 20 but not more than 21 10.00% 11.00%
More than 21 but not more than 22 10.00% 11.00%
More than 22 but not more than 23 10.00% 11.00%
More than 23 but not more than 24 10.00% 11.00%
More than 24 but not more than 25 10.00% 11.00%
More than 25 but not more than 26 10.00% 11.00%
More than 26 but not more than 27 10.00% 11.00%
More than 27 but not more than 28 10.00% 11.00%
More than 28 but not more than 29 10.00% 11.00%
More than 29 10.00% 11.00%
13
IN WITNESS WHEREOF, the parties have executed this Annex by their duly
authorized representatives as of the date of the Agreement.
THE BANK OF NEW YORK, not in its
individual or corporate capacity but solely as
DEUTSCHE BANK AG, NEW YORK BRANCH Swap Contract Administrator for CWALT Inc.
Alternative Loan Trust 2006-OC11, pursuant to
a Swap Contract Administration Agreement
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx Xxxxxx
------------------------------- -------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxxxxx Xxxxxx
Title: Director Title: Assistant Treasurer
Date: Date:
By: /s/ Xxxxxxx Xxxx
-------------------------------
Name: Xxxxxxx Xxxx
Title: Legal Counsel
Date:
14
