Exhibit 10.3
ISDA
International Swaps and Derivatives Association, Inc.
2002 MASTER AGREEMENT
dated as of November 1, 2006
-------------------------
BANK OF AMERICA, N.A., ABFC 2006-0PT3 TRUST,
and
a common law trust organized and
a national banking association existing under the laws of the State
organized under the laws of the of New York, acting via Wells Fargo
United States of America Bank, N.A. (as trustee, the
"Trustee", andnot in its individual
capacity
("Party A") ("Party B")
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this 2002 Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties or otherwise
effective for the purpose of confirming or evidencing those Transactions. This
2002 Master Agreement and the Schedule are together referred to as this "Master
Agreement".
Accordingly, the parties agree as follows:-
1. Interpretation
(a) Definitions. The terms defined in Section 14 and elsewhere in this Master
Agreement 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, 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 condition specified in this Agreement to be a condition
precedent for the purpose of this Section 2(a)(iii).
(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 Settlement 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 of Payments. 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 which 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
and payment obligation will be determined in respect of all amounts payable on
the same date in the same currency in respect of those Transactions, regardless
of whether such amounts are payable in respect of the same Transaction. The
election may be made in the Schedule or any Confirmation by specifying that
"Multiple Transaction Payment Netting" applies to the Transactions identified as
being subject to the election (in which case clause (ii) above will not apply to
such Transactions). If Multiple Transaction Payment Netting is applicable to
Transactions, it will apply to those Transactions with effect from the starting
date specified in the Schedule or such Confirmation, or, if a starting date is
not specified in the Schedule or such Confirmation, the starting date otherwise
agreed by the parties in writing. 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,
after 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.
(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)).
3. Representations
Each party makes the representations contained in Sections 3(a), 3(b), 3(c),
3(d), 3(e) and 3(f) and, if specified in the Schedule as applying, 3(g) 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). If any "Additional Representation" is specified in the Schedule or
any Confirmation as applying, the party or parties specified for such Additional
Representation will make and, if applicable, be deemed to repeat such Additional
Representation at the time or times specified for such Additional
Representation.
(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)).
(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 performing 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, any of its Credit Support Providers or any of its
applicable Specified Entities 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.
(g) No Agency. It is entering into this Agreement, including each Transaction,
as principal and not as agent of any person or entity.
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 clause (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, organised, managed and
controlled or considered to have its seat, or where an 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 (subject to Sections
5(c) and 6(e)(iv)) 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
9(h)(i)(2) or (4) required to be made by it if such failure is not
remedied on or before the first Local Business Day in the case of any such
payment or the first Local Delivery Day in the case of any such delivery
after, in each case, notice of such failure is given to the party;
(ii) Breach of Agreement; Repudiation of Agreement.
(1) 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 9(h)(i)(2) or
(4) 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 within 30 days after notice of such
failure is given to the party; or
(2) the party disaffirms, disclaims, repudiates or rejects, in
whole or in part, or challenges the validity of, this Master
Agreement, any Confirmation executed and delivered by that party or
any Transaction evidenced by such a Confirmation (or such action is
taken by any person or entity appointed or empowered to operate it
or act on its behalf);
(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, or any
security interest granted by such party or such Credit Support
Provider to the other party pursuant to any such Credit Support
Document, to be in full force and effect for the purpose of this
Agreement (in each 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 (or such action is
taken by any person or entity appointed or empowered to operate it
or act on its behalf);
(iv) Misrepresentation. A representation (other than a representation
under Section 3(e) or 3(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 (other than by failing to make a delivery) under a
Specified Transaction or any credit support arrangement relating to
a Specified Transaction and, after giving effect to any applicable
notice requirement or grace period, such default results in 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 due on the last
payment or exchange date of, or any payment on early termination of,
a Specified Transaction (or, if there is no applicable notice
requirement or grace period, such default continues for at least one
Local Business Day);
(3) defaults in making any delivery due under (including any
delivery due on the last delivery or exchange date of) a Specified
Transaction or any credit support arrangement relating to a
Specified Transaction and, after giving effect to any applicable
notice requirement or grace period, such default results in a
liquidation of, an acceleration of obligations under, or an early
termination of, all transactions outstanding under the documentation
applicable to that Specified Transaction; or
(4) disaffirms, disclaims, repudiates or rejects, in whole or in
part, or challenges the validity of, a Specified Transaction or any
credit support arrangement relating to a Specified Transaction that
is, in either case, confirmed or evidenced by a document or other
confirming evidence executed and delivered by that party, Credit
Support Provider or Specified Entity (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 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)
where the aggregate principal amount of such agreements or
instruments, either alone or together with the amount, if any,
referred to in clause (2) below, is 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 under such agreements or instruments on the due date
for payment (after giving effect to any applicable notice
requirement or grace period) in an aggregate amount, either alone or
together with the amount, if any, referred to in clause (1) above,
of not less than the applicable Threshold Amount;
(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)(A) institutes or has instituted against it, by a regulator,
supervisor or any similar official with primary insolvency,
rehabilitative or regulatory jurisdiction over it in the
jurisdiction of its incorporation or organisation or the
jurisdiction of its head or home office, 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 by it or such regulator, supervisor or similar official,
or (B) 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 such
proceeding or petition is instituted or presented by a person or
entity not described in clause (A) above and either (I) 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 (II) is not dismissed, discharged, stayed or restrained in each
case within 15 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
15 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) above (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, or reorganises,
reincorporates or reconstitutes into or as, another entity and, at the
time of such consolidation, amalgamation, merger, transfer,
reorganisation, reincorporation or reconstitution:-
(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; 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 (subject to Section 5(c))
an Illegality if the event is specified in clause (i) below, a Force Majeure
Event if the event is specified in clause (ii) below, a Tax Event if the event
is specified in clause (iii) below, a Tax Event Upon Merger if the event is
specified in clause (iv) below, and, if specified to be applicable, a Credit
Event Upon Merger if the event is specified pursuant to clause (v) below or an
Additional Termination Event if the event is specified pursuant to clause (vi)
below:-
(i) Illegality. After giving effect to any applicable provision,
disruption fallback or remedy specified in, or pursuant to, the relevant
Confirmation or elsewhere in this Agreement, due to an event or
circumstance (other than any action taken by a party or, if applicable,
any Credit Support Provider of such party) occurring after a Transaction
is entered into, it becomes unlawful under any applicable law (including
without limitation the laws of any country in which payment, delivery or
compliance is required by either party or any Credit Support Provider, as
the case may be), on any day, or it would be unlawful if the relevant
payment, delivery or compliance were required on that day (in each case,
other than as a result of a breach by the party of Section 4(b)):-
(1) for the Office through which such party (which will be the
Affected Party) makes and receives payments or deliveries with
respect to such Transaction to perform any absolute or contingent
obligation to make a payment or delivery in respect of such
Transaction, 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) for such party or any Credit Support Provider of such party
(which will be the Affected Party) to perform any absolute or
contingent obligation to make a payment or delivery which such party
or Credit Support Provider has under any Credit Support Document
relating to such Transaction, to receive a payment or delivery under
such Credit Support Document or to comply with any other material
provision of such Credit Support Document;
(ii) Force Majeure Event. After giving effect to any applicable
provision, disruption fallback or remedy specified in, or pursuant to, the
relevant Confirmation or elsewhere in this Agreement, by reason of force
majeure or act of state occurring after a Transaction is entered into, on
any day:-
(1) the Office through which such party (which will be the
Affected Party) makes and receives payments or deliveries with
respect to such Transaction is prevented from performing any
absolute or contingent obligation to make a payment or delivery in
respect of such Transaction, from receiving a payment or delivery in
respect of such Transaction or from complying with any other
material provision of this Agreement relating to such Transaction
(or would be so prevented if such payment, delivery or compliance
were required on that day), or it becomes impossible or
impracticable for such Office so to perform, receive or comply (or
it would be impossible or impracticable for such Office so to
perform, receive or comply if such payment, delivery or compliance
were required on that day); or
(2) such party or any Credit Support Provider of such party (which
will be the Affected Party) is prevented from performing any
absolute or contingent obligation to make a payment or delivery
which such party or Credit Support Provider has under any Credit
Support Document relating to such Transaction, from receiving a
payment or delivery under such Credit Support Document or from
complying with any other material provision of such Credit Support
Document (or would be so prevented if such payment, delivery or
compliance were required on that day), or it becomes impossible or
impracticable for such party or Credit Support Provider so to
perform, receive or comply (or it would be impossible or
impracticable for such party or Credit Support Provider so to
perform, receive or comply if such payment, delivery or compliance
were required on that day),
so long as the force majeure or act of state is beyond the control of such
Office, such party or such Credit Support Provider, as appropriate, and
such Office, party or Credit Support Provider could not, after using all
reasonable efforts (which will not require such party or Credit Support
Provider to incur a loss, other than immaterial, incidental expenses),
overcome such prevention, impossibility or impracticability;
(iii) Tax Event. Due to (1) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, after a Transaction is
entered into (regardless of whether such action is taken or brought with
respect to a party to this Agreement) or (2) 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 Settlement Date
(A) 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 9(h)) or (B) 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 9(h)) 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));
(iv) Tax Event Upon Merger. The party (the "Burdened Party") on the next
succeeding Scheduled Settlement 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 9(h)) or (2)
receive a payment from which an amount has been deducted or withheld for
or on account of any 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 (or any substantial part of the assets
comprising the business conducted by it as of the date of this Master
Agreement) to, or reorganising, reincorporating or reconstituting into or
as, another entity (which will be the Affected Party) where such action
does not constitute a Merger Without Assumption;
(v) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, a Designated Event (as defined
below) occurs with respect to such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party (in each case,
"X") and such Designated Event does not constitute a Merger Without
Assumption, and the creditworthiness of X or, if applicable, the
successor, surviving or transferee entity of X, after taking into account
any applicable Credit Support Document, is materially weaker immediately
after the occurrence of such Designated Event than that of X immediately
prior to the occurrence of such Designated Event (and, in any such event,
such party or its successor, surviving or transferee entity, as
appropriate, will be the Affected Party). A "Designated Event" with
respect to X means that:-
(1) X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets (or any substantial
part of the assets comprising the business conducted by X as of the
date of this Master Agreement) to, or reorganises, reincorporates or
reconstitutes into or as, another entity;
(2) any person, related group of persons or entity acquires
directly or indirectly the beneficial ownership of (A) equity
securities having the power to elect a majority of the board of
directors (or its equivalent) of X or (B) any other ownership
interest enabling it to exercise control of X; or
(3) X effects any substantial change in its capital structure by
means of the issuance, incurrence or guarantee of debt or the
issuance of (A) preferred stock or other securities convertible into
or exchangeable for debt or preferred stock or (B) in the case of
entities other than corporations, any other form of ownership
interest; or
(vi) 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 will be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) Hierarchy of Events.
(i) An event or circumstance that constitutes or gives rise to an
Illegality or a Force Majeure Event will not, for so long as that is the
case, also constitute or give rise to an Event of Default under Section
5(a)(i), 5(a)(ii)(1) or 5(a)(iii)(1) insofar as such event or circumstance
relates to the failure to make any payment or delivery or a failure to
comply with any other material provision of this Agreement or a Credit
Support Document, as the case may be.
(ii) Except in circumstances contemplated by clause (i) above, if an
event or circumstance which would otherwise constitute or give rise to an
Illegality or a Force Majeure Event also constitutes an Event of Default
or any other Termination Event, it will be treated as an Event of Default
or such other Termination Event, as the case may be, and will not
constitute or give rise to an Illegality or a Force Majeure Event.
(iii) If an event or circumstance which would otherwise constitute or give
rise to a Force Majeure Event also constitutes an Illegality, it will be
treated as an Illegality, except as described in clause (ii) above, and
not a Force Majeure Event.
(d) Deferral of Payments and Deliveries During Waiting Period. If an
Illegality or a Force Majeure Event has occurred and is continuing with respect
to a Transaction, each payment or delivery which would otherwise be required to
be made under that Transaction will be deferred to, and will not be due until:-
(i) the first Local Business Day or, in the case of a delivery, the
first Local Delivery Day (or the first day that would have been a Local
Business Day or Local Delivery Day, as appropriate, but for the occurrence
of the event or circumstance constituting or giving rise to that
Illegality or Force Majeure Event) following the end of any applicable
Waiting Period in respect of that Illegality or Force Majeure Event, as
the case may be; or
(ii) if earlier, the date on which the event or circumstance constituting
or giving rise to that Illegality or Force Majeure Event ceases to exist
or, if such date is not a Local Business Day or, in the case of a
delivery, a Local Delivery Day, the first following day that is a Local
Business Day or Local Delivery Day, as appropriate.
(e) Inability of Head or Home Office to Perform Obligations of Branch. If (i)
an Illegality or a Force Majeure Event occurs under Section 5(b)(i)(1) or
5(b)(ii)(1) and the relevant Office is not the Affected Party's head or home
office, (ii) Section 10(a) applies, (iii) the other party seeks performance of
the relevant obligation or compliance with the relevant provision by the
Affected Party's head or home office and (iv) the Affected Party's head or home
office fails so to perform or comply due to the occurrence of an event or
circumstance which would, if that head or home office were the Office through
which the Affected Party makes and receives payments and deliveries with respect
to the relevant Transaction, constitute or give rise to an Illegality or a Force
Majeure Event, and such failure would otherwise constitute an Event of Default
under Section 5(a)(i)or 5(a)(iii)(1) with respect to such party, then, for so
long as the relevant event or circumstance continues to exist with respect to
both the Office referred to in Section 5(b)(i)(1) or 5(b)(ii)(1), as the case
may be, and the Affected Party's head or home office, such failure will not
constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1).
6. Early Termination; Close-Out Netting
(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 other than a Force Majeure 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 the other party such other
information about that Termination Event as the other party may reasonably
require. If a Force Majeure Event occurs, each party will, promptly upon
becoming aware of it, use all reasonable efforts to notify the other
party, specifying the nature of that Force Majeure Event, and will also
give the other party such other information about that Force Majeure Event
as the other party may reasonably require.
(ii) Transfer to Avoid Termination Event. If 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, other than 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 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 of such occurrence is given under
Section 6(b)(i) to avoid that Termination Event.
(iv) Right to Terminate.
(1) If:-
(A) 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
(B) 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,
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 are two Affected Parties, or the
Non-affected Party in the case of a Credit Event Upon Merger or an
Additional Termination Event if there is only one Affected Party
may, if the relevant Termination Event is then continuing, by not
more than 20 days notice to the other party, designate a day not
earlier than the day such notice is effective as an Early
Termination Date in respect of all Affected Transactions.
(2) If at any time an Illegality or a Force Majeure Event has
occurred and is then continuing and any applicable Waiting Period
has expired:-
(A) Subject to clause (B) below, either party may, by not
more than 20 days notice to the other party, designate (I) a
day not earlier than the day on which such notice becomes
effective as an Early Termination Date in respect of all
Affected Transactions or (II) by specifying in that notice the
Affected Transactions in respect of which it is designating
the relevant day as an Early Termination Date, a day not
earlier than two Local Business Days following the day on
which such notice becomes effective as an Early Termination
Date in respect of less than all Affected Transactions. Upon
receipt of a notice designating an Early Termination Date in
respect of less than all Affected Transactions, the other
party may, by notice to the designating party, if such notice
is effective on or before the day so designated, designate
that same day as an Early Termination Date in respect of any
or all other Affected Transactions.
(B) An Affected Party (if the Illegality or Force Majeure
Event relates to performance by such party or any Credit
Support Provider of such party of an obligation to make any
payment or delivery under, or to compliance with any other
material provision of, the relevant Credit Support Document)
will only have the right to designate an Early Termination
Date under Section 6(b)(iv)(2)(A) as a result of an Illegality
under Section 5(b)(i)(2) or a Force Majeure Event under
Section 5(b)(ii)(2) following the prior designation by the
other party of an Early Termination Date, pursuant to Section
6(b)(iv)(2)(A), in respect of less than all Affected
Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or 6(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 9(h)(i)
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 will be determined
pursuant to Sections 6(e) and 9(h)(ii).
(d) Calculations; Payment Date.
(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 any quotations, market data or information
from internal sources used in making such calculations), (2) specifying
(except where there are two Affected Parties) any Early Termination Amount
payable and (3) 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 or market data obtained in determining a
Close-out Amount, the records of the party obtaining such quotation or
market data will be conclusive evidence of the existence and accuracy of
such quotation or market data.
(ii) Payment Date. An Early Termination Amount due in respect of any
Early Termination Date will, together with any amount of interest payable
pursuant to Section 9(h)(ii)(2), be payable (1) on the day on which 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
(2) on the day which is two Local Business Days after the day on which
notice of the amount payable is effective (or, if there are two Affected
Parties, after the day on which the statement provided pursuant to clause
(i) above by the second party to provide such a statement is effective) in
the case of an Early Termination Date which is designated as a result of a
Termination Event.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
amount, if any, payable in respect of that Early Termination Date (the "Early
Termination Amount") will be determined pursuant to this Section 6(e) and will
be subject to Section 6(f).
(i) Events of Default. If the Early Termination Date results from an
Event of Default, the Early Termination Amount will be an amount equal to
(1) the sum of (A) the Termination Currency Equivalent of the Close-out
Amount or Close-out Amounts (whether positive or negative) determined by
the Non-defaulting Party for each Terminated Transaction or group of
Terminated Transactions, as the case may be, and (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting
Party less (2) the Termination Currency Equivalent of the Unpaid Amounts
owing to the Defaulting Party. If the Early Termination 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 the Early Termination Amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event:-
(1) One Affected Party. Subject to clause (3) below, if there is
one Affected Party, the Early Termination Amount will be determined
in accordance with Section 6(e)(i), except that references to the
Defaulting Party and to the Non-defaulting Party will be deemed to
be references to the Affected Party and to the Non-affected Party,
respectively.
(2) Two Affected Parties. Subject to clause (3) below, if there
are two Affected Parties, each party will determine an amount equal
to the Termination Currency Equivalent of the sum of the Close-out
Amount or Close-out Amounts (whether positive or negative) for each
Terminated Transaction or group of Terminated Transactions, as the
case may be, and the Early Termination Amount will be an amount
equal to (A) the sum of (I) one-half of the difference between the
higher amount so determined (by party "X") and the lower amount so
determined (by party "Y") and (II) the Termination Currency
Equivalent of the Unpaid Amounts owing to X less (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y. If the Early
Termination Amount is a positive number, Y will pay it to X; if it
is a negative number, X will pay the absolute value of the Early
Termination Amount to Y.
(3) Mid-Market Events. If that Termination Event is an Illegality
or a Force Majeure Event, then the Early Termination Amount will be
determined in accordance with clause (1) or (2) above, as
appropriate, except that, for the purpose of determining a Close-out
Amount or Close-out Amounts, the Determining Party will:-
(A) if obtaining quotations from one or more third parties
(or from any of the Determining Party's Affiliates), ask each
third party or Affiliate (I) not to take account of the
current creditworthiness of the Determining Party or any
existing Credit Support Document and (II) to provide
mid-market quotations; and
(B) in any other case, use mid-market values without regard
to the creditworthiness of the Determining Party.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because Automatic Early Termination applies in
respect of a party, the Early Termination Amount will be subject to such
adjustments as are appropriate and permitted by applicable 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) Adjustment for Illegality or Force Majeure Event. The failure by a
party or any Credit Support Provider of such party to pay, when due, any
Early Termination Amount will not constitute an Event of Default under
Section 5(a)(i) or 5(a)(iii)(1) if such failure is due to the occurrence
of an event or circumstance which would, if it occurred with respect to
payment, delivery or compliance related to a Transaction, constitute or
give rise to an Illegality or a Force Majeure Event. Such amount will (1)
accrue interest and otherwise be treated as an Unpaid Amount owing to the
other party if subsequently an Early Termination Date results from an
Event of Default, a Credit Event Upon Merger or an Additional Termination
Event in respect of which all outstanding Transactions are Affected
Transactions and (2) otherwise accrue interest in accordance with Section
9(h)(ii)(2).
(v) Pre-Estimate. The parties agree that 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 the termination of the Terminated Transactions.
(f) Set-Off. Any Early Termination Amount payable to one party (the "Payee")
by the other party (the "Payer"), in circumstances where there is a Defaulting
Party or where there is one Affected Party in the case where either a Credit
Event Upon Merger has occurred or any other Termination Event in respect of
which all outstanding Transactions are Affected Transactions has occurred, will,
at the option of the Non-defaulting Party or the Non-affected Party, as the case
may be ("X") (and without prior notice to the Defaulting Party or the Affected
Party, as the case may be), be reduced by its set-off against any other amounts
("Other Amounts") payable by the Payee to the Payer (whether or not arising
under this Agreement, matured or contingent and irrespective of the currency,
place of payment or place of booking of the obligation). To the extent that any
Other Amounts are so set off, those Other Amounts will be discharged promptly
and in all respects. X will give notice to the other party of any set-off
effected under this Section 6(f).
For this purpose, either the Early Termination Amount or the Other Amounts (or
the relevant portion of such amounts) may be converted by X into the currency in
which the other is denominated at the rate of exchange at which such party would
be able, in good faith and using commercially reasonable procedures, to purchase
the relevant amount of such currency.
If an obligation is unascertained, X may in good faith estimate that obligation
and set off in respect of the estimate, subject to the relevant party accounting
to the other when the obligation is ascertained.
Nothing in this Section 6(f) will be effective to create a charge or other
security interest. This Section 6(f) will be without prejudice and in addition
to any right of set-off, offset, combination of accounts, lien, right of
retention or withholding or similar right or requirement to which any party is
at any time otherwise entitled or subject (whether by operation of law, contract
or otherwise).
7. Transfer
Subject to Section 6(b)(ii) and to the extent permitted by applicable law,
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
Early Termination Amount payable to it by a Defaulting Party, together with any
amounts payable on or with respect to that interest and any other rights
associated with that interest pursuant to Sections 8, 9(h) and 11.
Any purported transfer that is not in compliance with this Section 7 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 good faith and using
commercially reasonable procedures 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 clause (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
converted into the currency of the judgment or order for the purpose of such
judgment or order and the rate of exchange at which such party is able, acting
in good faith and using commercially reasonable procedures 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.
(c) Separate Indemnities. To the extent permitted by applicable law, the
indemnities in this Section 8 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.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter. Each of the
parties acknowledges that in entering into this Agreement it has not relied on
any oral or written representation, warranty or other assurance (except as
provided for or referred to in this Agreement) and waives all rights and
remedies which might otherwise be available to it in respect thereof, except
that nothing in this Agreement will limit or exclude any liability of a party
for fraud.
(b) Amendments. An amendment, modification or waiver in respect of this
Agreement will only be effective if 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 by an exchange of 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 and by electronic messaging system), 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 will 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, by an exchange of
electronic messages on an electronic messaging system or by an exchange of
e-mails, 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, electronic message or e-mail 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.
(h) Interest and Compensation.
(i) Prior to Early Termination. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction:-
(1) Interest on Defaulted Payments. If a party defaults in the
performance of any payment obligation, it will, to the extent
permitted by applicable law and subject to Section 6(c), pay
interest (before as well as after judgment) on the overdue amount to
the other party on demand in the same currency as the overdue
amount, for the period from (and including) the original due date
for payment to (but excluding) the date of actual payment (and
excluding any period in respect of which interest or compensation in
respect of the overdue amount is due pursuant to clause (3)(B) or
(C) below), at the Default Rate.
(2) Compensation for Defaulted Deliveries. If a party defaults in
the performance of any obligation required to be settled by
delivery, it will on demand (A) compensate the other party to the
extent provided for in the relevant Confirmation or elsewhere in
this Agreement and (B) unless otherwise provided in the relevant
Confirmation or elsewhere in this Agreement, to the extent permitted
by applicable law and subject to Section 6(c), pay to the other
party interest (before as well as after judgment) on an amount equal
to the fair market value of that which was required to be delivered
in the same currency as that amount, for the period from (and
including) the originally scheduled date for delivery to (but
excluding) the date of actual delivery (and excluding any period in
respect of which interest or compensation in respect of that amount
is due pursuant to clause (4) below), at the Default Rate. The fair
market value of any obligation referred to above will be determined
as of the originally scheduled date for delivery, in good faith and
using commercially reasonable procedures, by the party that was
entitled to take delivery.
(3) Interest on Deferred Payments. If:-
(A) a party does not pay any amount that, but for Section
2(a)(iii), would have been payable, it will, to the extent
permitted by applicable law and subject to Section 6(c) and
clauses (B) and (C) below, pay interest (before as well as
after judgment) on that amount to the other party on demand
(after such amount becomes payable) in the same currency as
that amount, for the period from (and including) the date the
amount would, but for Section 2(a)(iii), have been payable to
(but excluding) the date the amount actually becomes payable,
at the Applicable Deferral Rate;
(B) a payment is deferred pursuant to Section 5(d), the
party which would otherwise have been required to make that
payment will, to the extent permitted by applicable law,
subject to Section 6(c) and for so long as no Event of Default
or Potential Event of Default with respect to that party has
occurred and is continuing, pay interest (before as well as
after judgment) on the amount of the deferred payment to the
other party on demand (after such amount becomes payable) in
the same currency as the deferred payment, for the period from
(and including) the date the amount would, but for Section
5(d), have been payable to (but excluding) the earlier of the
date the payment is no longer deferred pursuant to Section
5(d) and the date during the deferral period upon which an
Event of Default or Potential Event of Default with respect to
that party occurs, at the Applicable Deferral Rate; or
(C) a party fails to make any payment due to the occurrence
of an Illegality or a Force Majeure Event (after giving effect
to any deferral period contemplated by clause (B) above), it
will, to the extent permitted by applicable law, subject to
Section 6(c) and for so long as the event or circumstance
giving rise to that Illegality or Force Majeure Event
continues and no Event of Default or Potential Event of
Default with respect to that party has occurred and is
continuing, pay interest (before as well as after judgment) on
the overdue amount to the other party on demand in the same
currency as the overdue amount, for the period from (and
including) the date the party fails to make the payment due to
the occurrence of the relevant Illegality or Force Majeure
Event (or, if later, the date the payment is no longer
deferred pursuant to Section 5(d)) to (but excluding) the
earlier of the date the event or circumstance giving rise to
that Illegality or Force Majeure Event ceases to exist and the
date during the period upon which an Event of Default or
Potential Event of Default with respect to that party occurs
(and excluding any period in respect of which interest or
compensation in respect of the overdue amount is due pursuant
to clause (B) above), at the Applicable Deferral Rate.
(4) Compensation for Deferred Deliveries. If:-
(A) a party does not perform any obligation that, but for
Section 2(a)(iii), would have been required to be settled by
delivery;
(B) a delivery is deferred pursuant to Section 5(d); or
(C) a party fails to make a delivery due to the occurrence
of an Illegality or a Force Majeure Event at a time when any
applicable Waiting Period has expired,
the party required (or that would otherwise have been required) to
make the delivery will, to the extent permitted by applicable law
and subject to Section 6(c), compensate and pay interest to the
other party on demand (after, in the case of clauses (A) and (B)
above, such delivery is required) if and to the extent provided for
in the relevant Confirmation or elsewhere in this Agreement.
(ii) Early Termination. Upon the occurrence or effective designation of
an Early Termination Date in respect of a Transaction:-
(1) Unpaid Amounts. For the purpose of determining an Unpaid
Amount in respect of the relevant Transaction, and to the extent
permitted by applicable law, interest will accrue on the amount of
any payment obligation or the amount equal to the fair market value
of any obligation required to be settled by delivery included in
such determination in the same currency as that amount, for the
period from (and including) the date the relevant obligation was (or
would have been but for Section 2(a)(iii) or 5(d)) required to have
been performed to (but excluding) the relevant Early Termination
Date, at the Applicable Close-out Rate.
(2) Interest on Early Termination Amounts. If an Early Termination
Amount is due in respect of such Early Termination Date, that amount
will, to the extent permitted by applicable law, be paid together
with interest (before as well as after judgment) on that amount in
the Termination Currency, for the period from (and including) such
Early Termination Date to (but excluding) the date the amount is
paid, at the Applicable Close-out Rate.
(iii) Interest Calculation. Any interest pursuant to this Section 9(h)
will be calculated on the basis of daily compounding and the actual number
of days elapsed.
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 and agrees with the other party that, notwithstanding the place of
booking or its jurisdiction of incorporation or organisation, its obligations
are the same in terms of recourse against it as if it had entered into the
Transaction through its head or home office, except that a party will not have
recourse to the head or home office of the other party in respect of any payment
or delivery deferred pursuant to Section 5(d) for so long as the payment or
delivery is so deferred. This representation and agreement will be deemed to be
repeated by each party on each date on which the parties enter into a
Transaction.
(b) If a party is specified as a Multibranch Party in the Schedule, such party
may, subject to clause (c) below, enter into a Transaction through, book a
Transaction in and make and receive payments and deliveries with respect to a
Transaction through any Office listed in respect of that party in the Schedule
(but not any other Office unless otherwise agreed by the parties in writing).
(c) The Office through which a party enters into a Transaction will be the
Office specified for that party in the relevant Confirmation or as otherwise
agreed by the parties in writing, and, if an Office for that party is not
specified in the Confirmation or otherwise agreed by the parties in writing, its
head or home office. Unless the parties otherwise agree in writing, the Office
through which a party enters into a Transaction will also be the Office in which
it books the Transaction and the Office through which it makes and receives
payments and deliveries with respect to the Transaction. Subject to Section
6(b)(ii), neither party may change the Office in which it books the Transaction
or the Office through which it makes and receives payments or deliveries with
respect to a Transaction without the prior written consent of the other party.
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,
execution 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 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 described below (except that a notice or
other communication under Section 5 or 6 may not be given by electronic
messaging system or e-mail) to the address or number or in accordance with the
electronic messaging system or e-mail 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 answerback is
received;
(iii) if sent by facsimile transmission, on the date it 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 it is delivered or
its delivery is attempted;
(v) if sent by electronic messaging system, on the date it is received;
or
(vi) if sent by e-mail, on the date it is delivered,
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 will be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Details. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system or e-mail
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
any dispute arising out of or in connection with this Agreement ("Proceedings"),
each party irrevocably:-
(i) submits:-
(1) if this Agreement is expressed to be governed by English law,
to (A) the non-exclusive jurisdiction of the English courts if the
Proceedings do not involve a Convention Court and (B) the exclusive
jurisdiction of the English courts if the Proceedings do involve a
Convention Court; or
(2) if this Agreement is expressed to be governed by the laws of
the State of New York, 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;
(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; and
(iii) agrees, to the extent permitted by applicable law, that the bringing
of Proceedings in any one or more jurisdictions will not 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 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(a)(i), 12(a)(iii) or 12(a)(iv).
Nothing in this Agreement will affect the right of either party to serve process
in any other manner permitted by applicable law.
(d) Waiver of Immunities. Each party irrevocably waives, to the 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 or order for specific performance or
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 Representation" has the meaning specified in Section 3.
"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, Force Majeure Event, Tax Event or Tax Event Upon
Merger, all Transactions affected by the occurrence of such Termination Event
(which, in the case of an Illegality under Section 5(b)(i)(2) or a Force Majeure
Event under Section 5(b)(ii)(2), means all Transactions unless the relevant
Credit Support Document references only certain Transactions, in which case
those Transactions and, if the relevant Credit Support Document constitutes a
Confirmation for a Transaction, that Transaction) 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.
"Agreement" has the meaning specified in Section 1(c).
"Applicable Close-out Rate" means:-
(a) in respect of the determination of an Unpaid Amount:-
(i) 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;
(ii) in respect of obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate;
(iii) in respect of obligations deferred pursuant to Section 5(d), if
there is no Defaulting Party and for so long as the deferral period
continues, the Applicable Deferral Rate; and
(iv) in all other cases following the occurrence of a Termination Event
(except where interest accrues pursuant to clause (iii) above), the
Applicable Deferral Rate; and
(b) in respect of an Early Termination Amount:-
(i) for the period from (and including) the relevant Early Termination
Date to (but excluding) the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable:-
(1) if the Early Termination Amount is payable by a Defaulting
Party, the Default Rate;
(2) if the Early Termination Amount is payable by a Non-defaulting
Party, the Non-default Rate; and
(3) in all other cases, the Applicable Deferral Rate; and
(ii) for the period from (and including) the date (determined in
accordance with Section 6(d)(ii)) on which that amount is payable to (but
excluding) the date of actual payment:-
(1) if a party fails to pay the Early Termination Amount due to
the occurrence of an event or circumstance which would, if it
occurred with respect to a payment or delivery under a Transaction,
constitute or give rise to an Illegality or a Force Majeure Event,
and for so long as the Early Termination Amount remains unpaid due
to the continuing existence of such event or circumstance, the
Applicable Deferral Rate;
(2) if the Early Termination Amount is payable by a Defaulting
Party (but excluding any period in respect of which clause (1) above
applies), the Default Rate;
(3) if the Early Termination Amount is payable by a Non-defaulting
Party (but excluding any period in respect of which clause (1) above
applies), the Non-default Rate; and
(4) in all other cases, the Termination Rate.
"Applicable Deferral Rate" means:-
(a) for the purpose of Section 9(h)(i)(3)(A), the rate certified by the
relevant payer to be a rate offered to the payer by a major bank in a relevant
interbank market for overnight deposits in the applicable currency, such bank to
be selected in good faith by the payer for the purpose of obtaining a
representative rate that will reasonably reflect conditions prevailing at the
time in that relevant market;
(b) for purposes of Section 9(h)(i)(3)(B) and clause (a)(iii) of the
definition of Applicable Close-out Rate, the rate certified by the relevant
payer to be a rate offered to prime banks by a major bank in a relevant
interbank market for overnight deposits in the applicable currency, such bank to
be selected in good faith by the payer after consultation with the other party,
if practicable, for the purpose of obtaining a representative rate that will
reasonably reflect conditions prevailing at the time in that relevant market;
and
(c) for purposes of Section 9(h)(i)(3)(C) and clauses (a)(iv), (b)(i)(3) and
(b)(ii)(1) of the definition of Applicable Close-out Rate, a rate equal to the
arithmetic mean of the rate determined pursuant to clause (a) above and 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.
"Automatic Early Termination" has the meaning specified in Section 6(a).
"Burdened Party" has the meaning specified in Section 5(b)(iv).
"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 after the parties enter into the relevant
Transaction.
"Close-out Amount" means, with respect to each Terminated Transaction or each
group of Terminated Transactions and a Determining Party, the amount of the
losses or costs of the Determining Party that are or would be incurred under
then prevailing circumstances (expressed as a positive number) or gains of the
Determining Party that are or would be realised under then prevailing
circumstances (expressed as a negative number) in replacing, or in providing for
the Determining Party the economic equivalent of, (a) the material terms of that
Terminated Transaction or group of Terminated Transactions, including the
payments and deliveries by the parties under Section 2(a)(i) in respect of that
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 (assuming satisfaction of the conditions precedent in Section
2(a)(iii)) and (b) the option rights of the parties in respect of that
Terminated Transaction or group of Terminated Transactions.
Any Close-out Amount will be determined by the Determining Party (or its agent),
which will act in good faith and use commercially reasonable procedures in order
to produce a commercially reasonable result. The Determining Party may determine
a Close-out Amount for any group of Terminated Transactions or any individual
Terminated Transaction but, in the aggregate, for not less than all Terminated
Transactions. Each Close-out Amount will be determined as of the Early
Termination Date or, if that would not be commercially reasonable, as of the
date or dates following the Early Termination Date as would be commercially
reasonable.
Unpaid Amounts in respect of a Terminated Transaction or group of Terminated
Transactions and legal fees and out-of-pocket expenses referred to in Section 11
are to be excluded in all determinations of Close-out Amounts.
In determining a Close-out Amount, the Determining Party may consider any
relevant information, including, without limitation, one or more of the
following types of information: -
(i) quotations (either firm or indicative) for replacement transactions
supplied by one or more third parties that may take into account the
creditworthiness of the Determining Party at the time the quotation is provided
and the terms of any relevant documentation, including credit support
documentation, between the Determining Party and the third party providing the
quotation;
(ii) information consisting of relevant market data in the relevant market
supplied by one or more third parties including, without limitation, relevant
rates, prices, yields, yield curves, volatilities, spreads, correlations or
other relevant market data in the relevant market; or
(iii) information of the types described in clause (i) or (ii) above from
internal sources (including any of the Determining Party's Affiliates) if that
information is of the same type used by the Determining Party in the regular
course of its business for the valuation of similar transactions.
The Determining Party will consider, taking into account the standards and
procedures described in this definition, quotations pursuant to clause (i) above
or relevant market data pursuant to clause (ii) above unless the Determining
Party reasonably believes in good faith that such quotations or relevant market
data are not readily available or would produce a result that would not satisfy
those standards. When considering information described in clause (i), (ii) or
(iii) above, the Determining Party may include costs of funding, to the extent
costs of funding are not and would not be a component of the other information
being utilised. Third parties supplying quotations pursuant to clause (i) above
or market data pursuant to clause (ii) above may include, without limitation,
dealers in the relevant markets, end-users of the relevant product, information
vendors, brokers and other sources of market information.
Without duplication of amounts calculated based on information described in
clause (i), (ii) or (iii) above, or other relevant information, and when it is
commercially reasonable to do so, the Determining Party may in addition consider
in calculating a Close-out Amount any loss or cost incurred in connection with
its terminating, liquidating or re-establishing any hedge related to a
Terminated Transaction or group of Terminated Transactions (or any gain
resulting from any of them).
Commercially reasonable procedures used in determining a Close-out Amount may
include the following:-
(1) application to relevant market data from third parties pursuant to clause
(ii) above or information from internal sources pursuant to clause (iii) above
of pricing or other valuation models that are, at the time of the determination
of the Close-out Amount, used by the Determining Party in the regular course of
its business in pricing or valuing transactions between the Determining Party
and unrelated third parties that are similar to the Terminated Transaction or
group of Terminated Transactions; and
(2) application of different valuation methods to Terminated Transactions or
groups of Terminated Transactions depending on the type, complexity, size or
number of the Terminated Transactions or group of Terminated Transactions.
"Confirmation" has the meaning specified in the preamble.
"consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"Contractual Currency" has the meaning specified in Section 8(a).
"Convention Court" means any court which is bound to apply to the Proceedings
either Article 17 of the 1968 Brussels Convention on Jurisdiction and the
Enforcement of Judgments in Civil and Commercial Matters or Article 17 of the
1988 Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil
and Commercial Matters.
"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.
"Cross-Default" means the event specified in Section 5(a)(vi).
"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.
"Defaulting Party" has the meaning specified in Section 6(a).
"Designated Event" has the meaning specified in Section 5(b)(v).
"Determining Party" means the party determining a Close-out Amount.
"Early Termination Amount" has the meaning specified in Section 6(e).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"electronic messages" does not include e-mails but does include documents
expressed in markup languages, and "electronic messaging system" will be
construed accordingly.
"English law" means the law of England and Wales, and "English" will be
construed accordingly.
"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"Force Majeure Event" has the meaning specified in Section 5(b).
"General Business Day" means a day on which commercial banks are open for
general business (including dealings in foreign exchange and foreign currency
deposits).
"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 "unlawful" will be construed accordingly.
"Local Business Day" means (a) in relation to any obligation under Section
2(a)(i), a General Business Day in the place or places specified in the relevant
Confirmation and a day on which a relevant settlement system is open or
operating as specified in the relevant Confirmation or, if a place or a
settlement system is 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) for the purpose of determining when a Waiting
Period expires, a General Business Day in the place where the event or
circumstance that constitutes or gives rise to the Illegality or Force Majeure
Event, as the case may be, occurs, (c) in relation to any other payment, a
General Business Day 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 and, if that currency does not have a single recognised principal
financial centre, a day on which the settlement system necessary to accomplish
such payment is open, (d) in relation to any notice or other communication,
including notice contemplated under Section 5(a)(i), a General Business Day (or
a day that would have been a General Business Day but for the occurrence of an
event or circumstance which would, if it occurred with respect to payment,
delivery or compliance related to a Transaction, constitute or give rise to an
Illegality or a Force Majeure Event) in the place 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
(e) in relation to Section 5(a)(v)(2), a General Business Day in the relevant
locations for performance with respect to such Specified Transaction.
"Local Delivery Day" means, for purposes of Sections 5(a)(i) and 5(d), a day on
which settlement systems necessary to accomplish the relevant delivery are
generally open for business so that the delivery is capable of being
accomplished in accordance with customary market practice, in the place
specified in the relevant Confirmation or, if not so specified, in a location as
determined in accordance with customary market practice for the relevant
delivery.
"Master Agreement" has the meaning specified in the preamble.
"Merger Without Assumption" means the event specified in Section 5(a)(viii).
"Multiple Transaction Payment Netting" has the meaning specified in Section
2(c).
"Non-affected Party" means, so long as there is only one Affected Party, the
other party.
"Non-default Rate" means the rate certified by the Non-defaulting Party to be a
rate offered to the Non-defaulting Party by a major bank in a relevant interbank
market for overnight deposits in the applicable currency, such bank to be
selected in good faith by the Non-defaulting Party for the purpose of obtaining
a representative rate that will reasonably reflect conditions prevailing at the
time in that relevant market.
"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.
"Other Amounts" has the meaning specified in Section 6(f).
"Payee" has the meaning specified in Section 6(f).
"Payer" has the meaning specified in Section 6(f).
"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.
"Proceedings" has the meaning specified in Section 13(b).
"Process Agent" has the meaning specified in the Schedule.
"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.
"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.
"Schedule" has the meaning specified in the preamble.
"Scheduled Settlement Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Specified Entity" has the meaning specified in the Schedule.
"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 to any such transaction) 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 not
a Transaction under this Agreement but (i) which is a rate swap transaction,
swap option, 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, credit protection transaction, credit swap,
credit default swap, credit default option, total return swap, credit spread
transaction, repurchase transaction, reverse repurchase transaction,
buy/sell-back transaction, securities lending transaction, weather index
transaction or forward purchase or sale of a security, commodity or other
financial instrument or interest (including any option with respect to any of
these transactions) or (ii) which is a type of transaction that is similar to
any transaction referred to in clause (i) above that is currently, or in the
future becomes, recurrently entered into in the financial markets (including
terms and conditions incorporated by reference in such agreement) and which is a
forward, swap, future, option or other derivative on one or more rates,
currencies, commodities, equity securities or other equity instruments, debt
securities or other debt instruments, economic indices or measures of economic
risk or value, or other benchmarks against which payments or deliveries are to
be made, (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.
"Stamp Tax Jurisdiction" has the meaning specified in Section 4(e).
"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 an Illegality or a Force Majeure Event, all Affected
Transactions specified in the notice given pursuant to Section 6(b)(iv), (b) if
resulting from any other Termination Event, all Affected Transactions and (c) if
resulting from an Event of Default, all Transactions in effect either
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" means (a) if a Termination Currency is specified in the
Schedule and that currency is freely available, that currency, and (b)
otherwise, euro if this Agreement is expressed to be governed by English law or
United States Dollars if this Agreement is expressed to be governed by the laws
of the State of New York.
"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 Close-out Amount 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 Force Majeure Event, a Tax Event, 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.
"Threshold Amount" means the amount, if any, specified as such in the Schedule.
"Transaction" has the meaning specified in the preamble.
"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) or due but for Section 5(d)) to such party under Section 2(a)(i) or
2(d)(i)(4) on or prior to such Early Termination Date and which remain unpaid as
at such Early Termination Date, (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) or 5(d)) 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 value of that
which was (or would have been) required to be delivered and (c) if the Early
Termination Date results from an Event of Default, a Credit Event Upon Merger or
an Additional Termination Event in respect of which all outstanding Transactions
are Affected Transactions, any Early Termination Amount due prior to such Early
Termination Date and which remains unpaid as of such Early Termination Date, in
each case together with any amount of interest accrued or other compensation in
respect of that obligation or deferred obligation, as the case may be, pursuant
to Section 9(h)(ii)(1) or (2), as appropriate. The fair market value of any
obligation referred to in clause (b) above will be determined as of the
originally scheduled date for delivery, in good faith and using commercially
reasonable procedures, by the party obliged to make the determination under
Section 6(e) or, if each party is so obliged, it will be the average of the
Termination Currency Equivalents of the fair market values so determined by both
parties.
"Waiting Period" means:-
(a) in respect of an event or circumstance under Section 5(b)(i), other than
in the case of Section 5(b)(i)(2) where the relevant payment, delivery or
compliance is actually required on the relevant day (in which case no Waiting
Period will apply), a period of three Local Business Days (or days that would
have been Local Business Days but for the occurrence of that event or
circumstance) following the occurrence of that event or circumstance; and
(b) in respect of an event or circumstance under Section 5(b)(ii), other than
in the case of Section 5(b)(ii)(2) where the relevant payment, delivery or
compliance is actually required on the relevant day (in which case no Waiting
Period will apply), a period of eight Local Business Days (or days that would
have been Local Business Days but for the occurrence of that event or
circumstance) following the occurrence of that event or circumstance.
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.
BANK OF AMERICA, N.A. ABFC 2006-OPT3 TRUST
By: Wells Fargo Bank, N.A., as Trustee,
not in its individual capacity
/s/ Roger Heintzelman By: /s/ Raymond Delli Colli
- ------------------------------------ -------------------------------------
Name: Roger Heintzelman Name: Raymond Delli Colli
Title: Senior Vice President Title: Vice President
Date: 11/14/06 Date: 11/14/06
ISDA (R)
International Swaps and Derivatives Association, Inc.
SCHEDULE
to the
2002 Master Agreement
dated as of November 1, 2006
between
BANK OF AMERICA, N.A.,
a national banking association
organized and existing under the laws of the United States of America,
("Party A")
and
ABFC 2006-OPT3 TRUST,
a common law trust
organized and existing under the laws of the State of New York,
acting via Wells Fargo Bank, N.A. (as trustee, the "Trustee", and not in its
individual capacity)
("Party B")
Capitalized terms used herein and not otherwise defined shall have the meaning
specified in that certain Pooling and Servicing Agreement, dated as of October
1, 2006, (the "PSA"), among Asset Backed Funding Corporation, as depositor (the
"Depositor"), Option One Mortgage Corporation, as Servicer, and Wells Fargo
Bank, N.A. as trustee (the "Trustee"). For the avoidance of doubt, references
herein to a particular "Section" of this Agreement are references to the
corresponding sections of the Master Agreement.
PART 1: Termination Provisions
(a) "Specified Entity" means in relation to Party A for the purpose of
Sections 5(a)(v), 5(a)(vi), 5(a)(vii) and 5(b)(v):
None;
"Specified Entity" means in relation to Party B for the purpose of
Sections 5(a)(v), 5(a)(vi), 5(a)(vii) and 5(b)(v):
None.
(b) "Specified Transaction" will have the meaning specified in Section 14.
(c) (i) The Events of Default specified under Sections 5(a)(ii), 5(a)(iii),
5(a)(iv), 5(a)(v) and 5(a)(vi) of this Agreement will not apply to Party A
or to Party B. With respect to Party B only (and the related Confirmation
only), the provisions of Section 5(a)(vii) clause 2 will not be applicable
as an Event of Default.
(ii) The Termination Event specified under Section 5(b)(ii) of the
Agreement will not apply to Party A or to Party B.
(d) The "Credit Event Upon Merger" provisions of Section 5(b)(v)
will not apply to Party A
will not apply to Party B.
(e) The "Automatic Early Termination" provision of Section 6(a)
will not apply to Party A
will not apply to Party B.
(f) "Termination Currency" means United States Dollars.
(g) Additional Termination Event will apply. Each of the following events
shall constitute an Additional Termination Event hereunder:
(i) (1) Upon the irrevocable direction to dissolve or otherwise
terminate Party B, following which all of Party B's assets will be
liquidated and the proceeds of such liquidation will be distributed
in accordance with the PSA and this Agreement; or (2) an exercise of
an optional termination of the Trust Fund pursuant to the PSA. For
purposes of Section 6 of this Agreement, Party B shall be the sole
Affected Party.
(ii) An amendment and/or supplement to the PSA is made without the prior
written consent of Party A (such consent not to be unreasonably
withheld), where consent of Party A is required under the PSA. For
purposes of Section 6 of this Agreement, Party B shall be the sole
Affected Party.
(iii) Failure by Party A (following the expiration of all notice, grace
and/or cure periods) to comply with its Regulation AB (as defined
herein) requirements as set forth in Part 5(u) hereof. For purposes
of Section 6 of this Agreement, Party A shall be the sole Affected
Party.
(h) Downgrade of Party A. If a Ratings Event (as defined below) shall occur
and be continuing with respect to Party A, then Party A shall (A) within 5
General Business Days of such Ratings Event, give notice to Party B of the
occurrence of such Ratings Event, and (B) use reasonable efforts to
transfer (at its own cost) Party A's rights and obligations under this
Agreement and all Confirmations to another party, subject to satisfaction
of the Rating Agency Condition (as defined below). Unless such a transfer
by Party A has occurred within 20 General Business Days after the
occurrence of a Ratings Event, Party A shall, after the occurrence of a
Ratings Event, post Eligible Collateral (as designated in an approved
Credit Support Annex), to secure Party B's exposure or potential exposure
to Party A, and such Eligible Collateral shall be provided in accordance
with a Credit Support Annex to be attached hereto and made a part hereof
within 20 General Business Days after the occurrence of a Ratings Event.
The Eligible Collateral to be posted and the Credit Support Annex to be
executed and delivered shall be subject to the Rating Agency Condition.
Notwithstanding the addition of the Credit Support Annex and the posting
of Eligible Collateral, Party A shall continue to use reasonable efforts
to transfer its rights and obligations under this Agreement to an
acceptable third party; provided, however, that Party A's obligations to
find a transferee and to post Eligible Collateral under such Credit
Support Annex shall remain in effect only for so long as a Ratings Event
is continuing with respect to Party A. For the purpose of this Part 1(h),
a "Ratings Event" shall occur with respect to Party A if the long-term and
short-term senior unsecured deposit ratings of Party A cease to be at
least A1 and P-1 by Moody's Investors Service, Inc. or any successor
thereto ("Moody's") or at least A and F1 by Fitch, Inc. or any successor
thereto ("Fitch"), to the extent such obligations are rated by Moody's or
Fitch. "Rating Agency Condition" means, with respect to any action taken
or to be taken, a condition that is satisfied when Moody's and Fitch have
confirmed in writing that such action would not result in the downgrade,
qualification (if applicable) or withdrawal of the rating then assigned by
such Rating Agency to the applicable class of Certificates.
In addition, if the long-term unsecured and unsubordinated debt rating of
Party A by Moody's is rated A3 or below, or the short-term senior
unsecured debt rating of Party A by Moody's is rated P-2 or below, then
Party A shall (at its own cost) (A) within 10 General Business Days of
such event use reasonable efforts to transfer Party A's rights and
obligations under this Agreement to another party, subject to satisfaction
of the Rating Agency Condition or (B) obtain a guaranty or contingent
agreement of another person, which has the ratings set forth in the
definition of "Ratings Event" to honor Party A's obligations under this
Agreement, subject to satisfaction of the Rating Agency Condition.
The failure by Party A to post Eligible Collateral in accordance herewith
or to transfer its rights and obligations hereunder shall constitute an
Additional Termination Event for which Party A shall be the sole Affected
Party.
PART 2: Tax Representations
(a) Payer Tax Representations. For the purpose of Section 3(e) of this
Agreement, Party A and Party B will make the following representation:-
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 9(h) of this Agreement) to be
made by it to the other party under this Agreement. In making this
representation, it may rely on (i) 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, except that
it will not be a breach of this representation where reliance is placed on
clause (ii) above 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) Payee Tax Representations. For the purpose of Section 3(f) of this
Agreement, Party A and Party B will make the following representations
specified below, if any:-
(i) The following representations will apply to Party A:
Party A is a national banking association created or organized under
the laws of the United States of America and the federal taxpayer
identification number is 94-1687665.
(ii) The following representations will apply to Party B:
It is a New York law common trust and it is a "U.S. Person" (as that
term is used in section 1.1441-4(a)(3)(ii) of the United States
Treasury Regulations for United States federal income tax purposes
and an "Exempt recipient" (within the meaning of Section
1.6049-4(c)(1)(ii) of United States Treasury Regulations) for United
States federal income tax purposes.
PART 3: Agreement to Deliver Documents
For the purpose of Section 4(a)(i) and (ii) of this Agreement, each party agrees
to deliver the following documents:
(a) Tax forms, documents or certificates to be delivered are:
Party required to Form/Document/Certificate Date by which to be delivered
deliver document
----------------- ------------------------- -----------------------------
Party B Internal Revenue Service Form W-9 (i) Before the first Payment Date under this Agreement,
(ii) promptly upon reasonable demand by Party A and
(iii) promptly upon learning that any such form previously
provided to Party A has become obsolete or incorrect
(b) Other documents to be delivered are:-
Party required Form/Document/Certificate Date by which to Covered by Section
to deliver be delivered 3(d) Representation
document
-------------- ------------------------- ---------------- -------------------
Party A Annual Report of Bank of America To be made Yes
Corporation containing audited, available on
consolidated financial statements www.bankofamerica.
certified by independent certified com/investor/ as
public accountants and prepared in soon as available
accordance with generally accepted and in any event
accounting principles in the country within 90 days after
in which such party is organized the end of each
fiscal year of
Party A
Party A Quarterly Financial Statements of To be made Yes
Bank of America Corporation available on
containing unaudited, consolidated www.bankofamerica.
financial statements of such party's com/investor/ as
fiscal quarter prepared in accordance soon as available
with generally accepted accounting and in any event
principles in the country in which within 30 days after
such party is organized the end of each
fiscal quarter of
Party A
Party A and Certified copies of all corporate, Within 20 days of Yes
Party B partnership, trust or membership the execution and
authorizations, as the case may be, delivery of this
and any other documents with respect Agreement
to the execution, delivery and
performance of this Agreement and any
Credit Support Document
Party A and Certificate of authority and specimen Upon execution and Yes
Party B signatures of individuals executing delivery of this
this Agreement and any Credit Support Agreement and
Document thereafter upon
request of the
other party
Party B Credit Support Document, if any, Within 20 days of Yes
specified in Part 4 hereof, such the execution and
Credit Support Document being duly delivery of this
executed if required Agreement
Party B Legal opinion from counsel for Party Upon execution and No
B concerning due authorization, delivery of this
enforceability and related matters, Agreement
addressed to Party A and acceptable
to Party A.
Party B Monthly statement setting forth the To be made Yes
information specified in Section 4.06 available on
of the PSA www.ctslink.com on
each Distribution
Date as such term
is defined in the
PSA
PART 4: Miscellaneous
(a) Address for Notices. For the purpose of Section 12(a) of this Agreement:-
Address for notice or communications to Party A:
Bank of America, N.A.
Sears Tower
233 South Wacker Drive, Suite 2800
Chicago, IL 60606
Attention: Swap Operations
Telephone No.: 312-234-2732
Facsimile No.: 866-255-1444
with a copy to:
Bank of America, N.A.
100 N. Tryon St., NC1-007-13-01
Charlotte, North Carolina 28255
Attention: Capital Markets Documentation
Facsimile No.: 704-386-4113
Address for monthly statements and any other PSA related documents to
Party A:
Bank of America, N.A.
Mail Code: NC1-027-15-01
214 North Tryon Street
Charlotte, North Carolina 28255
Attention: CR Structured Finance
Address for notice or communications to Party B:
ABFC 2006-OPT3 TRUST
c/o Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Client Manager-Asset Backed Funding Corporation
2006-OPT3 Trust
Telephone No.: (410) 884-2000
Facsimile No.: (410) 715-2380
(b) Process Agent. For the purpose of Section 13(c):
Party A appoints as its Process Agent: Not applicable.
Party B appoints as its Process Agent: Not applicable.
(c) Offices. The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party. For the purpose of Section 10(b) of this Agreement:-
Party A is a Multibranch Party and may enter into a Transaction through
its Charlotte, North Carolina, Chicago, Illinois, San Francisco,
California, New York, New York, Boston, Massachusetts or London, England
Office or such other Office as may be agreed to by the parties in
connection with a Transaction.
Party B is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Party A.
(f) Credit Support Document. Details of any Credit Support Document:-
Each of the following, as amended, extended, supplemented or otherwise
modified in writing from time to time, is a "Credit Support Document":
In relation to Party A, none (unless a Credit Support Annex is entered
into in accordance with the provisions detailed in Part 1(h) of this
Agreement, in which case, such Credit Support Annex)
In relation to Party B, the PSA.
(g) Credit Support Provider.
Credit Support Provider means in relation to Party A: Not applicable.
Credit Support Provider means in relation to Party B: Not applicable.
(h) Governing Law. This Agreement and any and all controversies arising out of
or in relation to this Agreement will be governed by and construed in
accordance with the laws of the State of New York (without reference to
its conflict of laws doctrine).
(i) Netting of Payments. Unless the parties otherwise so agree, "Multiple
Transaction Payment Netting" will apply for the purpose of Section 2(c) of
this Agreement.
(j) "Affiliate" will have the meaning specified in Section 14 of this
Agreement.
(k) Absence of Litigation. For the purpose of Section 3(c):- "Specified
Entity" means in relation to Party A, none;
"Specified Entity" means in relation to Party B, none.
(l) No Agency. The provisions of Section 3(g) will apply to this Agreement.
(m) Additional Representation will apply. For the purpose of Section 3 of this
Agreement, each of the following will constitute an Additional
Representation:-
Relationship Between Parties. Each party will be deemed to represent to
the other party on the date on which it enters into a Transaction (and on
the date of any amendment, extension or other modification of such
Transaction) that (absent a written agreement between the parties that
expressly imposes affirmative obligations to the contrary for that
Transaction):-
(A) Non-Reliance. (1) it is acting for its own account and it has made
its own independent decisions to enter into that Transaction and as
to whether that Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisors as it has
deemed necessary; (2) it is not relying on any communication
(written or oral) of the other party as investment advice or as a
recommendation to enter into that Transaction, it being understood
that information and explanations related to the terms and
conditions of a Transaction shall not be considered investment
advice or a recommendation to enter into that Transaction; (3) no
communication (written or oral) received from the other party will
be deemed to be an assurance or guarantee as to the expected results
of that Transaction; (4) it is capable of evaluating and
understanding (on its own behalf or though independent professional
advice), and understand and accepts, the terms, conditions and risks
of that Transaction; and (5) it is capable of assuming, and assumes
the financial and other risks of that Transaction.
(B) Assessment and Understanding. It is capable of assessing the merits
of and understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms,
conditions and risks of that Transaction. It is also capable of
assuming, and assumes, the risks of that Transaction.
(C) Status of Parties. The other party is not acting as a fiduciary for
or an advisor to it in respect of that Transaction.
(D) Eligible Contract Participant. It is an "eligible contract
participant" as defined in Section 1a (12) of the U.S. Commodity
Exchange Act, 7 U.S.C. Section 1a(12).
(E) It has entered into this Agreement (including each Transaction
evidenced hereby) in conjunction with its line of business
(including financial intermediation services) or the financing of
its business.
(F) It is entering into this Agreement, any Credit Support Document to
which it is a party, each Transaction and any other documentation
relating to this Agreement or any Transaction as principal (and not
as agent or in any other capacity, fiduciary or otherwise).
(n) Recording of Conversations. Each party (i) consents to the recording of
telephone conversations between the trading, marketing and other relevant
personnel of the parties in connection with this Agreement or any
potential Transaction and (ii) agrees, to the extent permitted by
applicable law, that recordings may be submitted in evidence in any
Proceedings.
PART 5: Other Provisions
(a) Delivery of Confirmations. For each Transaction entered into hereunder,
Party A shall promptly send to Party B a Confirmation (which may be via
facsimile transmission). Party B agrees to respond to such Confirmation
within two General Business Days, either confirming agreement thereto or
requesting a correction of any error(s) contained therein. Failure by
Party A to send a Confirmation or of Party B to respond within such period
shall not affect the validity or enforceability of such Transaction.
Absent manifest error, there shall be a presumption that the terms
contained in such Confirmation are the terms of the Transaction.
(b) Waiver of Right to Trial by Jury. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY CREDIT SUPPORT DOCUMENT
OR ANY TRANSACTION CONTEMPLATED HEREBY.
(c) 2002 Master Agreement Protocol. Annexes 1 to 18 and Section 6 of the ISDA
2002 Master Agreement Protocol as published by the International Swaps and
Derivatives Association, Inc. on July 15, 2003 are incorporated into and
apply to this Agreement. References in those definitions and provisions to
any ISDA Master Agreement will be deemed to be references to this Master
Agreement.
(d) Consent to Disclosure. Party B consents to Party A effecting such
disclosure as Party A may deem appropriate to enable Party A to transfer
Party B's records and information to process and execute Party B's
instructions, or in pursuance of Party A's or Party B's commercial
interest, to any of its Affiliates. For the avoidance of doubt, Party B's
consent to disclosure includes the right on the part of Party A to allow
access to any intended recipient of Party B's information to the records
of Party A by any means.
(e) USA PATRIOT Act Notice. Party A hereby notifies Party B that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "Act"), it is required to obtain,
verify and record information that identifies Party B, which information
includes the name and address of Party B and other information that will
allow Party A to identify Party B in accordance with the Act.
(f) Representations. Section 3(a)(iii) is hereby amended by inserting the
words "or investment policies, or guidelines, procedures, or
restrictions," immediately following the word "documents."
(g) Financial Statements. Section 3(d) is hereby amended by adding in the
third line thereof after the word "respect" and before the period:
"or, in the case of financial statements, a fair presentation of the
financial condition of the relevant party."
(h) Furnishing Specified Information. Section 4(a)(iii) is hereby amended by
inserting "promptly upon the earlier of (1)" in lieu of the word "upon" at
the beginning thereof and inserting "or (2) such party learning that the
form or document is required" before the word "any" on the first line
thereof.
(i) Set-off. Without affecting the provisions of this Agreement requiring the
calculation of certain net payment amounts, as a result of an Event of
Default or Additional Termination Event or otherwise, all payments under
this Agreement will be made without setoff or counterclaim. Section 6(f)
of this Agreement is deleted in its entirety.
(j) Additional Acknowledgments and Agreements of the Parties.
(i) No Amendment without Prior Confirmation by Rating Agencies. Section
9(b) of this Agreement is hereby amended by adding the following at
the end of such Section: ", and the Rating Agencies confirm that
such amendment will not cause the reduction, suspension or
withdrawal of the then current rating on any of the Certificates,
unless such amendment clarifies any term or provision, corrects any
inconsistency, cures any ambiguity, or corrects any typographical
error in the Agreement (in which case copies of such proposed
amendment will be provided to the Rating Agencies prior to the
effectiveness of such amendment)."
(ii) Consent by Party A to Amendments to Certain Documents. Before any
amendment or supplement is made to the PSA (where consent of Party A
to such amendment or supplement is required under the PSA), Party B
shall provide Party A with a copy of the proposed amendment or
supplement and shall obtain the written consent of Party A (which
consent shall not be unreasonably withheld) to the extent required
by the PSA.
(k) Method of Notice. Section 12(a)(ii) of this Agreement is deleted in its
entirety.
(l) Definitions. Capitalized terms used within this Agreement or in the
Confirmations to the Transaction but not defined herein or therein shall
have the meanings assigned to such terms in the PSA.
(m) Notices to Certificateholders. Party B shall provide Party A with copies
of all notices given to the holders of the Certificates, and upon request,
shall provide Party A with any other notices which could be requested by
the holders of the Certificates.
(n) Further Representations of Party B:
(i) Party B represents and warrants at all times hereunder that (x) it is
not an "employee benefit plan" subject to Section 406 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or a "plan"
subject to Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any person who is acting on behalf of such an employee
benefit plan or plan (collectively, a "Plan") in connection with any
Transaction under this Agreement or (y) any Plan that purchases a
certificate issued by Party B while this Agreement is in effect (i) shall
represent or shall be deemed to represent that the purchase of such
certificate is in reliance on at least one of Prohibited Transaction Class
Exemption 84-14, 90-1, 91-38, 95-60 or 96-23 or (ii) shall provide an
opinion of counsel which states that such purchase is permissible under
applicable law and will not result in a non-exempt prohibited transaction
under ERISA or Section 4975 of the Code. It is not, and is not controlled
by, an "investment company" within the meaning of, and is not required to
register as an "investment company" under, the Investment Company Act of
1940, as amended.
(ii) Party B represents and warrants at all times hereunder that pursuant
to the terms of the PSA, there is no provision providing for the partial
liquidation of the Trust Fund.
(o) Transfer. Party A may assign its rights and obligations under this
Agreement to any entity so long as the Rating Agency Condition is
satisfied.
(p) Non-Petition. Party A hereby agrees that it will not, prior to the date
which is one year and one day after all Certificates (as such term is
defined in the PSA) issued by Party B pursuant to the PSA have been paid
in full, acquiesce, petition or otherwise invoke or cause Party B to
invoke the process of any court or governmental authority for the purpose
of commencing or sustaining a case against Party B under any federal or
state bankruptcy, insolvency or similar law or for the purpose of
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official for Party B or any substantial part
of the property of Party B, or for the purpose of ordering the winding up
or liquidation of the affairs of Party B. Nothing herein shall prevent
Party A from participating in any such proceeding once commenced.
(q) Limited Recourse. The obligations of Party B under this Agreement are
limited recourse obligations of Party B, payable solely from the Trust
Fund (as such term is defined in the PSA), subject to and in accordance
with the terms of the PSA, and, following realization of the Trust Fund,
any claims of Party A against Party B shall be extinguished. It is
understood that the foregoing provisions shall not (i) prevent recourse to
the Trust Fund for the sums due or to become due under any security,
instrument or agreement which is part of the Trust Fund (subject to the
priority of payments set forth in the PSA) or (ii) constitute a waiver,
release or discharge of any obligation of Party B arising under this
Agreement until the proceeds of the Trust Fund have been realized and the
proceeds applied in accordance with the PSA, whereupon any outstanding
obligation of Party B under this Agreement shall be extinguished.
Notwithstanding the foregoing (or anything to the contrary in this
Agreement), Party B shall be liable for its own fraud, negligence, willful
misconduct and/or bad faith.
(r) Jurisdiction. Section 13(b) of this Agreement is hereby amended by: (i)
deleting the word "non-" in the second line of subparagraph (i)(2)
thereof; (ii) adding the words "except as necessary to pursue enforcement
of the judgment of any such court in other jurisdictions" to the last line
of subparagraph (i)(2) thereof; and (iii) deleting paragraph (iii)
thereof.
(s) Safe Harbors. Each party to this Agreement acknowledges that:
(i) This Agreement, including any Credit Support Document, is a "master
netting agreement" as defined in the U.S. Bankruptcy Code (the
"Code"), and a "netting contract" as defined in the netting
provisions of the Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA"), and this Agreement, including any Credit
Support Document, and each Transaction hereunder is of a type set
forth in Section 561(a)(1)-(5) of the Code;
(ii) Party A is a "master netting agreement participant," a "financial
institution," a "financial participant," a "forward contract
merchant" and a "swap participant" as defined in the Code, and a
"financial institution" as defined in the netting provisions of
FDICIA;
(iii) The remedies provided herein, and in any Credit Support Document,
are the remedies referred to in Section 561(a), Sections 362(b)(6),
(7), (17) and (27), and Section 362(o) of the Code, and in Section
11(e)(8)(A) and (C) of the Federal Deposit Insurance Act;
(iv) All transfers of cash, securities or other property under or in
connection with this Agreement, any Credit Support Document or any
Transaction hereunder are "margin payments," "settlement payments"
and "transfers" under Sections 546(e), (f), (g) or (j), and under
Section 548(d)(2) of the Code; and
(v) Each obligation under this Agreement, any Credit Support Document or
any Transaction hereunder is an obligation to make a "margin
payment," "settlement payment" and "payment" within the meaning of
Sections 362, 560 and 561 of the Code.
(t) Limitation of Trustee's Liability. It is expressly understood and agreed
by the parties hereto that insofar as this Agreement or the Confirmation
is executed by Wells Fargo Bank, N.A. (i) the same is executed and
delivered by it not in its individual capacity but solely as Trustee under
(and as defined in) the PSA referred to in this Agreement, in the exercise
of the powers and authority conferred and vested in it thereunder, and
pursuant to instructions set forth therein (ii) each of the
representations, undertakings and other agreements herein made on behalf
of Party B is made and intended not as a personal representation,
undertaking or agreement of Wells Fargo Bank, N.A., but is made and
intended solely for the purpose of binding only Party B, and (iii) under
no circumstances shall Wells Fargo Bank, N.A. in its individual capacity,
be personally liable for the payment of any indebtedness or expenses or be
personally liable for the breach or failure of any obligation,
representation, warranty, covenant or other agreement made or undertaken
by it on behalf of Party B under this Agreement or any Confirmation
hereunder. Notwithstanding the foregoing (or anything to the contrary in
this Agreement), Wells Fargo Bank, N.A. shall be liable for its own fraud,
negligence, willful misconduct and/or bad faith.
(u) Compliance with Regulation AB. In connection with the PSA, Party B
represents that this Agreement is a derivative instrument as described in Item
1115 of Regulation AB under the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended ("Regulation AB"), and not a credit support
contract described in Item 1114 of Regulation AB.
(a) In accordance with Regulation AB, Party A represents that: (i) the name of
the derivative counterparty is Bank of America, N.A.; (ii) the organizational
form of the derivative counterparty is a national banking association organized
under the laws of the United States; and (iii) the general character of the
business of the derivative counterparty is to be engaged in a general consumer
banking, commercial banking and trust business, offering a wide range of
commercial, corporate, international, financial market, retail and fiduciary
banking services.
(b) Party A has been advised that the Depositor and Party B are required under
Regulation AB to disclose certain financial information regarding Party A
depending on the applicable "significance percentage" of this Agreement, as
calculated from time to time in accordance with Item 1115 of Regulation AB (as
discussed in the PSA). Party A has been advised by the Sponsor (as defined in
the PSA) that the applicable "significance percentage" of this Agreement is less
than 10% as of the date of initial issuance of the Certificates and accordingly,
no financial information regarding Party A need be disclosed in accordance with
Item 1115 of Regulation AB.
(c) If required, Party A shall provide to the Trustee the applicable financial
information described under Item 1115(b)(1) or (b)(2), as applicable, of
Regulation AB, including agreed upon procedures letters and related consents of
certified public accountants with respect thereto (if necessary) (the "Reg AB
Information") within five (5) Business Days of receipt of a written request for
such Reg AB Information by the Trustee or the Depositor (the "Response Period"),
so long as the Sponsor has reasonably determined, in good faith, that such
information is required under Regulation AB; provided, however, that if Party A
is unable to provide the Reg AB Information within the Response Period, then
Party A shall, at its option, either (i) cause a Reg AB Approved Entity (as
defined below) to replace Party A as party to this Agreement on terms
substantially similar to this Agreement and provide the required Reg AB
Information (along with indemnity to the Depositor covering such required Reg AB
Information) prior to the expiration of the Response Period or (ii) subject to
the Rating Agency Condition, obtain a guarantee from an affiliate that is a Reg
AB Approved Entity and cause such affiliate to provide the required Reg AB
Information prior to the expiration of the Response Period.
(d) "Reg AB Approved Entity" means any entity that (i) has the ability to
provide the Reg AB Information and (ii) meets or exceeds the Approved Rating
Thresholds (as defined below). If Party B requests (in writing) the Reg AB
Information from Party A, then Party B shall promptly (and in any event within
two (2) Business Days of the date of the request for the Reg AB Information)
provide Party A with a written explanation of how the significance percentage
was calculated.
(e) "Approved Rating Thresholds" means an entity that has a long-term and
short-term senior unsecured deposit rating of at least AA- and F1 by Fitch, to
the extent such obligations are rated by Fitch.
IN WITNESS WHEREOF, the parties have executed this Schedule by their
duly authorized officers as of the date hereof.
BANK OF AMERICA, N.A. ABFC 2006-OPT3 TRUST
/s/ Roger Heintzelman
- ------------------------------
Name: Roger Heintzelman
Title: Senior Vice President By: Wells Fargo Bank, N.A., as Trustee,
not in its individual capacity
/s/ Raymond Delli Colli
------------------------------
Name: Raymond Delli Colli
Title: Vice President
Signature Page-Schedule to the ISDA Master
[BANK OF AMERICA LOGO]
To: ABFC 2006-OPT3 Trust, acting through Wells Fargo Bank, N.A.
as trustee (not in its individual capacity)
9062 Old Annapolis Road
Columbia, Maryland 21045
Attn: Client Manager - ABFC 2006-OPT3
Telephone: 410-884-2000
Facsimile: 410-715-2380
From: Bank of America, N.A.
233 South Wacker Drive - Suite 2800
Chicago Illinois 60606 U.S.A.
Department: Swaps Operations
Telephone: (+1) 312 234 2732
Fax: (+1) 866 255 1444
Date: 1st November 2006
Our Reference No: 2109160
Reference Name: Pat Duthie
Internal Tracking
No: 2109160
Dear Sir/Madam,
The purpose of this letter agreement is to confirm the terms and conditions of
the Transaction entered into between ABFC 2006-OPT3 Trust, acting through Wells
Fargo Bank, N.A. as trustee (not in its individual capacity) and Bank of
America, N.A. (each a "party" and together "the parties") on the Trade Date
specified below (the "Transaction"). This letter agreement constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below (the
"Agreement").
The definitions and provisions contained in the 2000 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc. (the
"Definitions"), are incorporated into this Confirmation. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern.
This Confirmation constitutes a "Confirmation" as referred to in, and
supplements, forms a part of, and is subject to the ISDA Master Agreement dated
as of 1st November 2006, as amended and supplemented from time to time (the
"Agreement"), between the parties hereto. All provisions contained in the
Agreement govern this Confirmation except as expressly modified below.
In this Confirmation "Party A" means Bank of America, N.A. and "Party B" means
ABFC 2006-OPT3 Trust, acting through Wells Fargo Bank, N.A. as trustee (not in
its individual capacity).
General Terms:
The terms of the particular Transaction to which this Confirmation relates are
as follows:
Notional Amount: As per Schedule A below.
Trade Date: 1st November 2006
Effective Date: 14th November 2006
Termination Date: 25th October 2011
Fixed Amounts:
Fixed Rate Payer: Party B
Early Payment: Applicable, 1 Business Day prior to each Fixed
Rate Payer Period End Date
Fixed Rate Payer
Period End Dates: The 25th of each Month, commencing on 25th
November 2006 and ending on the Termination Date.
No Adjustment
Fixed Rate: 5.02375 per cent
Fixed Rate Day
Count Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Party A
Early Payment: Applicable, 1 Business Day prior to each Floating
Rate Payer Period End Date
Floating Rate Payer
Period End Dates: The 25th of each Month, commencing on 25th
November 2006 and ending on the Termination
Date, subject to adjustment in accordance with
the Following Business Day Convention
Floating Rate for initial
Calculation Period: to be determined
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 1 Month, provided that Linear Interpolation
will apply to the initial Calculation Period
Spread: None
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: First day of each Calculation Period
Business Days: New York
Calculation Agent: Party A
Account Details:
Party A: Payments to Bank of America, N.A:
USD Fedwire
Name: Bank of America, N.A. - New York
ABA #: 026009593
Attn: BOFAUS3N
Name: Bank of America, N.A.
City: Charlotte
Acct#: 6550219386
Attn: Rate Derivative Settlements
Attn: BOFAUS6SGDS
Party B: Wells Fargo Bank, N.A.
San Francisco, CA
ABA: 121000248
ACCT: 3970771416
ACCT Name: Corporate Trust Clearing
FFC: 50963601 - Swap Account
Offices:
The Office of Party A for this
Transaction is: Charlotte - NC, United States
Please send reset notices to fax no.
(+1) 866 218 8487
The Office of Party B for this
Transaction is: Wells Fargo Bank, N.A.
9062 Old Annapolis Rd
Columbia, MD 21045
ATTN: Client Manager - ABFC 2006-OPT3
Trust
SCHEDULE A
Calculation
Period
scheduled to Notional
commence on: Amount (USD):
------------ -------------
11/14/2006 $836,173,837.00
11/25/2006 $826,307,936.00
12/25/2006 $814,574,131.00
1/25/2007 $800,997,057.00
2/25/2007 $785,613,894.00
3/25/2007 $768,474,526.00
4/25/2007 $749,641,590.00
5/25/2007 $729,325,017.00
6/25/2007 $707,651,518.00
7/25/2007 $684,741,318.00
8/25/2007 $662,572,532.00
9/25/2007 $641,123,821.00
10/25/2007 $620,371,731.00
11/25/2007 $600,293,578.00
12/25/2007 $580,867,414.00
1/25/2008 $562,072,009.00
2/25/2008 $543,886,827.00
3/25/2008 $526,292,001.00
4/25/2008 $509,268,311.00
5/25/2008 $492,797,166.00
6/25/2008 $474,970,432.00
7/25/2008 $77,025,785.00
8/25/2008 $73,167,123.00
9/25/2008 $69,540,723.00
10/25/2008 $66,323,214.00
11/25/2008 $64,285,757.00
12/25/2008 $62,336,872.00
1/25/2009 $60,450,412.00
2/25/2009 $58,624,263.00
3/25/2009 $56,856,388.00
4/25/2009 $55,144,822.00
5/25/2009 $53,487,669.00
6/25/2009 $50,515,708.00
7/25/2009 $45,625,022.00
8/25/2009 $44,058,010.00
9/25/2009 $42,791,442.00
10/25/2009 $41,563,155.00
11/25/2009 $40,371,926.00
12/25/2009 $39,216,569.00
1/25/2010 $38,095,942.00
2/25/2010 $37,008,939.00
3/25/2010 $35,954,492.00
4/25/2010 $34,931,569.00
5/25/2010 $33,939,174.00
6/25/2010 $32,976,340.00
7/25/2010 $32,042,138.00
8/25/2010 $31,135,667.00
9/25/2010 $30,256,055.00
10/25/2010 $29,402,461.00
11/25/2010 $28,574,071.00
12/25/2010 $27,770,099.00
1/25/2011 $26,989,784.00
2/25/2011 $26,232,389.00
3/25/2011 $25,497,205.00
4/25/2011 $24,783,542.00
5/25/2011 $24,090,735.00
6/25/2011 $23,033,122.00
7/25/2011 $18,207,076.00
8/25/2011 $17,731,594.00
9/25/2011 $17,292,144.00
Please confirm that the foregoing correctly sets forth the terms and conditions
of our agreement by returning via telecopier an executed copy of this
Confirmation in its entirety to the attention of Global FX and Derivative
Operations (fax no.(+1) 866 255 1444).
Accepted and confirmed as of the date
first written:
Bank of America, N.A. ABFC 2006-OPT3 Trust, acting through
Wells Fargo Bank, N.A. (not in its
individual capacity but solely as
trustee)
By: /s/ Mary Beth Knight By: /s/ Raymond Delli Colli
------------------------ ----------------------------------
Authorized Signatory Name: Raymond Delli Colli
Title: Vice President
Our Reference No: 2109160
Internal Tracking No: 2109160