SWAP CONTRACT ADMINISTRATION AGREEMENT
This
SWAP
CONTRACT ADMINISTRATION AGREEMENT, dated as of June 23, 2006 (this “Agreement”),
among
THE BANK OF NEW YORK (“BNY”),
as
Swap Contract Administrator (in such capacity, the “Swap
Contract Administrator”)
and
not in its individual or corporate capacity but solely as Indenture Trustee
under the Indenture referred to below (in such capacity, the “Indenture
Trustee”),
COUNTRYWIDE HOME LOANS, INC. (“CHL”),
and
GSC Capital Corp. QRS Delaware Real Estate Holdings, Inc. (“GSC”).
WHEREAS,
CHL is a party to an interest rate swap agreement between CHL and Barclays
Bank
PLC (the “Counterparty”),
with
a Trade Date of June 20, 2006 and a reference number of 1254100B, (the
“CHL
Swap Contract”),
a
copy of which is attached to this Agreement at Exhibit A;
WHEREAS,
CHL is conveying through an affiliate of GSC certain mortgage loans and other
related assets to a trust fund (the “Trust
Fund”)
created pursuant to an Amended and Restated Trust Agreement, dated as of June
23, 2006 (the “Trust
Agreement”),
among
CWALT, Inc., as depositor (the “Depositor”), Wilmington Trust Company, as owner
trustee (the “Owner Trustee”) and the Indenture Trustee;
WHEREAS,
simultaneously with the execution and delivery of this Agreement, CHL is
assigning all of its rights, and delegating all of its duties and obligations
(other than its obligation to pay the Upfront Amount (as defined in the CHL
Swap
Contract)) under the CHL Swap Contract to the Swap Contract Administrator,
and
the terms of the CHL Swap Contract are being amended (such CHL Swap Contract,
as
amended, the “Swap
Contract”)
pursuant to the Novation Agreement, dated as of the date hereof (the
“Novation
Agreement”),
among
CHL, as transferor, the Swap Contract Administrator, as transferee, and the
Counterparty, as remaining party, a copy of which is attached to this Agreement
at Exhibit B;
WHEREAS,
the parties hereto desire that the Indenture Trustee make remittances to the
Swap Contract Administrator as contemplated by and to the extent provided in
the
Indenture to cover payments due to the Counterparty under the Swap
Contract;
WHEREAS,
CHL desires that the Net Payments (as defined below) payable by the Counterparty
on the Swap Contract be distributed to the Indenture Trustee on behalf of the
Trust Estate to be applied for the purposes specified in the Indenture and
that
the Excess Payments (as defined below) on the Swap Contract be distributed
to
GSC;
WHEREAS,
CHL and the Indenture Trustee desire to appoint the Swap Contract Administrator,
and the Swap Contract Administrator desires to accept such appointment, to
distribute funds received under the Swap Contract to the Indenture Trustee
and
to CHL as provided in this Agreement, and, in the case of a NIM Issuance, to
distribute Excess Payments in accordance with the related Swap Excess Assignment
Agreement (each as defined below).
NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of
which
are hereby acknowledged, the parties agree as follows:
1. Definitions.
Capitalized terms used but not otherwise defined in this Agreement shall have
the respective meanings assigned thereto in the Swap Agreement or the Indenture,
as the case may be, as in effect on the date hereof.
Benefited
Notes:
The
Class A Notes and the Subordinate Notes.
Excess
Payment:
For any
Payment Date on or prior to the Swap Contract Termination Date and as to which
the Swap Contract or a replacement swap contract is in effect, an amount equal
to the excess, if any, of (i) the Net Swap Payment (as defined in the Indenture)
received by the Swap Contract Administrator from the Counterparty with respect
to such Payment Date over (ii) the Net Payment for such Payment Date. For any
Payment Date on or prior to the Swap Contract Termination Date but only if
neither the Swap Contract nor a replacement swap contract is in effect, zero.
For any Payment Date after the Swap Contract Termination Date, an amount equal
to all remaining funds on deposit in the Swap Administration
Account.
Indenture
Trustee:
With
respect to a NIM Issuance (if any), the indenture trustee under the indenture
pursuant to which the notes related to such NIM Issuance are
issued.
ISDA
Credit Support Annex:
An ISDA
Credit Support Annex negotiated and established as provided in Section
5.
Net
Payment:
With
respect to any Payment Date on or prior to the Swap Contract Termination Date,
an amount equal to the sum of (i) any Current Interest and Interest Carry
Forward Amounts in respect of the Benefited Notes, (ii) any Net Rate Carryover
in respect of the Benefited Notes, (iii) any Unpaid Realized Loss Amounts in
respect of the Benefited Notes and (iv) any Overcollateralization Deficiency
Amount, in each case remaining unpaid (or in the case of Overcollateralization
Deficiency Amount, remaining) following the distribution to the Benefited Notes
of Excess Cashflow pursuant to Section 4.02(c) of the Indenture. With respect
to
any Payment Date after the Swap Contract Termination Date, zero.
NIM
Issuance:
An
issuance by a NIM Trust, on or after the date hereof, of asset-backed notes
secured by the Class C Notes.
NIM
Trust:
A
Delaware statutory trust or other special-purpose entity that is the issuer
of
the securities issued in connection with a NIM Issuance (if any).
Responsible
Officer:
When
used with respect to the Swap Contract Administrator, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, any Trust
Officer or any other officer of the Swap Contract Administrator customarily
performing functions similar to those performed by any of the above designated
officers and also to whom, with respect to a particular matter, such matter
is
referred because of such officer’s knowledge of and familiarity with the
particular subject.
Swap
Administration Account:
The
separate account created and maintained by the Swap Contract Administrator
pursuant to Section 3 hereof with a depository institution in the name of the
Swap Contract Administrator for the benefit of the Counterparty, GSC and the
Indenture Trustee on behalf of the Holders of the Benefited Notes and designated
“The Bank of New York for Countrywide Home Loans, Inc., Barclays Bank PLC and
certain registered Holders of GSC Capital Corp. Mortgage Trust 2006-2, GSC
Alternative Loan Trust Notes, Series 2006-2”. Funds in the Swap Administration
Account shall be held for the Counterparty, CHL and the Indenture Trustee on
behalf of the Holders of the Benefited Notes as set forth in this
Agreement.
Swap
Excess Assignment Agreement:
With
respect to a NIM Issuance (if any), an agreement executed on or after the date
hereof by CHL, the related NIM Trust and the Swap Contract Administrator (in
form and substance reasonably satisfactory to the Swap Contract Administrator),
pursuant to which rights to receive certain portions of Excess Payments shall
be
assigned to such NIM Trust and pursuant to which the Swap Contract Administrator
shall agree to distribute Excess Payments to the related Indenture Trustee
and
CHL (in accordance with the terms of such agreement).
2. Appointment
of Swap Contract Administrator.
CHL,
GSC
and the Indenture Trustee hereby appoint BNY to serve as Swap Contract
Administrator pursuant to this Agreement and pursuant to the related Swap Excess
Assignment Agreement (if any). The Swap Contract Administrator accepts such
appointment, acknowledges the transfer and assignment to it of CHL’s rights and
obligations under the Swap Contract pursuant to the Novation Agreement. The
Swap
Contract Administrator agrees to exercise the rights referred to above for
the
benefit of GSC, the Indenture Trustee on behalf of the Noteholders and the
Counterparty, and to perform the duties set forth in this Agreement. In the
event of a NIM Issuance, the Swap Contract Administrator further agrees to
perform the duties set forth in the related Swap Excess Assignment Agreement
for
the benefit of GSC, the related NIM Trust and the related Indenture
Trustee.
3. Receipt
of Funds; Swap Administration Account.
The
Swap
Contract Administrator hereby agrees to receive (i) on behalf of GSC and the
Indenture Trustee on behalf of the Trust Estate, all amounts paid by the
Counterparty under the Swap Contract and (ii) on behalf of the Counterparty,
all
amounts remitted by the Indenture Trustee pursuant to the Indenture for payment
to the Counterparty. The Swap Contract Administrator shall establish and
maintain a Swap Administration Account into which the Swap Contract
Administrator shall deposit or cause to be deposited on the Business Day of
receipt, (x) all amounts remitted by the Indenture Trustee for payment to the
Counterparty pursuant to the Swap Contract and (y) all amounts payable by the
Counterparty under the Swap Contract. All funds deposited in the Swap
Administration Account shall be held for the benefit of the Counterparty, GSC
and the Indenture Trustee on behalf of the Holders of the Benefited Notes until
withdrawn in accordance with this Section 3. The Swap Administration Account
shall be an “Eligible Account” as defined in the Indenture. The Swap
Administration Account is an “outside reserve fund” within the meaning of
Treasure Regulation 1.860G-2(h) and shall not be an asset of any REMIC.
Funds
in
the Swap Administration Account shall remain uninvested.
The
Swap
Contract Administrator shall give at least 30 days’ advance notice to the
Counterparty, CHL and the Indenture Trustee of any proposed change of location
of the Swap Administration Account prior to any change thereof.
4. Calculations;
Distribution of Payments; Delivery of Notices.
The
Swap
Contract Administrator hereby agrees to make payments based on the information
provided by the Indenture Trustee and the Counterparty, and the Swap Contract
Administrator shall, absent manifest error, be entitled to rely on information
provided by the Indenture Trustee and the Counterparty.
On
the
Business Day of receipt of any payment from the Counterparty, the Swap Contract
Administrator shall withdraw the amount of such payment from the Swap
Administration Account and distribute such amounts sequentially, as
follows:
| (a) |
first,
to the Indenture Trustee for deposit into the Swap Account, the applicable
Net Payment; and
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| (b) |
second,
to GSC, the applicable Excess Payment, in accordance with the following
wiring instructions:
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[WIRING
INSTRUCTIONS TO COME]
On
the
Business Day of receipt of any payment from the Indenture Trustee for payment
to
the Counterparty, the Swap Contract Administrator shall withdraw the amount
of
such payment from the Swap Administration Account and distribute such amounts
to
the Counterparty in accordance with the wiring instructions specified in the
Swap Contract.
The
Swap
Contract Administrator shall prepare and deliver any notices required to be
delivered under the Swap Contract.
On
the
Business Day of receipt of any notices, information or reports received by
the
Swap Contract Administrator from the Counterparty, the Swap Contract
Administrator shall provide the same to the Indenture Trustee, including without
limitation information regarding any Net Swap Payment or Swap Termination
Payment that will be payable by the Swap Contract Administrator to the
Counterparty with respect to the next Payment Date.
5. Control
Rights; ISDA Credit Support Annex; Replacement Swap Contract.
The
Indenture Trustee shall have the right to direct the Swap Contract Administrator
with respect to the exercise of any right under the Swap Contract (such as the
right to designate an Early Termination Date following an Event of Default
(each
such term as defined in the Swap Contract)).
Upon
receiving written notification from CHL of the rating of the Counterparty
falling below the Approved Rating Thresholds (as defined in the Swap Contract),
the Swap Contract Administrator shall demand payment of the Delivery Amount
(as
defined in the ISDA Credit Support Annex). In connection with such demand for
payment, the Swap Contract Administrator shall establish an account to hold
cash
or other eligible investments pledged under such ISDA Credit Support Annex.
Any
such account shall be an “Eligible Account” as defined in the Pooling and
Servicing Agreement. Any cash or other eligible investments pledged under an
ISDA Credit Support Annex shall not be part of the Swap Administration Account
unless they are applied in accordance with such ISDA Credit Support Annex to
make a payment due to the Swap Contract Administrator pursuant to the Swap
Contract.
In
the
event that the Swap Contract is terminated, GSC shall assist the Swap Contract
Administrator in procuring a replacement swap contract with terms approximating
those of the original Swap Contract, and the Swap Contract Administrator shall
enter into a replacement swap contract procured by GSC and continue to serve
as
Swap Contract Administrator pursuant to the terms hereof. Any Swap Termination
Payment received from the Counterparty shall be used to pay any upfront amount
required under any replacement swap contract, and any excess shall be
distributed to GSC. In the event that a replacement swap contract cannot be
procured, any Swap Termination Payment received from the Counterparty in respect
of the termination of the original Swap Contract shall be held in the Swap
Administration Account and distributed as provided in Section 4. In the event
that a replacement swap is procured and the replacement counterparty pays an
upfront amount to the Swap Contract Administrator in connection with the
execution of the replacement swap contract, the Swap Contract Administrator
shall use such upfront amount to pay any remaining Swap Termination Payment
due
to the Counterparty in respect of the original Swap Contract, and shall remit
to
the Indenture Trustee the remaining portion of such upfront amount (based on
information provided by the Indenture Trustee) to be included in Interest Funds
for the Mortgage Loans and the Principal Distribution Amount for the Mortgage
Loans for the following Payment Date to the extent that a Swap Termination
Payment was payable to the Counterparty in connection with the termination
of
the original Swap Contract and Interest Funds for the Mortgage Loans and the
Principal Distribution Amount for the Mortgage Loans for one or more preceding
Payment Dates were used to cover such Swap Termination Payment. Any upfront
amount paid by a replacement counterparty that is not (x) used by the Swap
Contract Administrator to cover any remaining Swap Termination Payment payable
to the Counterparty in respect of the original Swap Contract or (y) remitted
by
the Swap Contract Administrator to the Indenture Trustee to be included in
the
Interest Funds for the Mortgage Loans and the Principal Distribution Amount
for
the Mortgage Loans for the following Payment Date shall be distributed to
GSC.
6. Monitoring
of Significance Percentage.
With
respect to each Payment Date, the Swap Contract Administrator shall calculate
the “significance percentage” (as defined in Item 1115 of Subpart 229.1100 -
Asset Backed Securities (Regulation AB), 17 C.F.R. §§ 229.1100-229.1123) of the
Swap Contract based on the aggregate Certificate Principal Balance of the
Benefited Notes for such Payment Date (after all distributions to be made
thereon on such Payment Date) and based on the methodology provided in writing
by or on behalf of CHL and GSC no later than the fifth Business Day preceding
such Payment Date. On each Payment Date, the Swap Contract Administrator shall
provide to CHL and GSC a written report (which written report may include
similar information with respect to other derivative instruments relating to
securitization transactions sponsored by CHL) specifying the “significance
percentage” of the Swap Contract for that Payment Date. If the “significance
percentage” of the Swap Contract exceeds 7.0% with respect to any Payment Date,
the Swap Contract Administrator shall make a separate notation thereof in the
written report described in the preceding sentence. Such written report may
contain such assumptions and disclaimers as are deemed necessary and appropriate
by the Swap Contract Administrator
7. Representations
and Warranties of the Swap Contract Administrator.
The
Swap Contract Administrator represents and warrants as follows:
| (a) |
BNY
is duly organized and validly existing as a banking corporation under
the
laws of the State of New York and has all requisite power and authority
to
execute and deliver this Agreement and to perform its obligations
as Swap
Contract Administrator under this
Agreement.
|
| (b) |
The
execution, delivery and performance of this Agreement by BNY as Swap
Contract Administrator have been duly authorized by
BNY.
|
| (c) |
This
Agreement has been duly executed and delivered by BNY as Swap Contract
Administrator and is enforceable against BNY in accordance with its
terms,
except as enforceability may be affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws
relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at
law).
|
| (d) |
The
execution, delivery and performance of this Agreement by BNY as Swap
Contract Administrator will not result in a breach of the organizational
documents of BNY and will not violate any applicable law, rule or
regulation of the United States or the State of New
York.
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8. Certain
Matters Concerning the Swap Contract Administrator.
| (a) |
The
Swap Contract Administrator shall undertake to perform such duties
and
only such duties as are specifically set forth in this
Agreement.
|
| (b) |
No
provision of this Agreement shall be construed to relieve the Swap
Contract Administrator from liability for its own grossly negligent
action, its own grossly negligent failure to act or its own misconduct,
its grossly negligent failure to perform its obligations in compliance
with this Agreement, or any liability that would be imposed by reason
of
its willful misfeasance or bad faith; provided
that:
|
(i) the
duties and obligations of the Swap Contract Administrator shall be determined
solely by the express provisions of this Agreement, the Swap Contract
Administrator shall not be liable, individually or as Swap Contract
Administrator, except for the performance of such duties and obligations as
are
specifically set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Swap Contract Administrator and
the Swap Contract Administrator may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Swap Contract Administrator and
conforming to the requirements of this Agreement that it reasonably believed
in
good faith to be genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder;
(ii) the
Swap
Contract Administrator shall not be liable, individually or as Swap Contract
Administrator, for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Swap Contract Administrator, unless
the
Swap Contract Administrator was grossly negligent or acted in bad faith or
with
willful misfeasance; and
(iii) the
Swap
Contract Administrator shall not be liable, individually or as Swap Contract
Administrator, with respect to any action taken, suffered or omitted to be
taken
by it in good faith in accordance with the direction of the Controlling Party,
or exercising any power conferred upon the Swap Contract Administrator under
this Agreement.
| (c) |
Except
as otherwise provided in Sections 8(a) and
8(b):
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| (i) |
the
Swap Contract Administrator may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
officer’s certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or
parties;
|
| (ii) |
the
Swap Contract Administrator may consult with counsel and any opinion
of
counsel shall be full and complete authorization and protection in
respect
of any action taken or suffered or omitted by it hereunder in good
faith
and in accordance with such opinion of
counsel;
|
| (iii) |
the
Swap Contract Administrator shall not be liable, individually or
as Swap
Contract Administrator, for any action taken, suffered or omitted
by it in
good faith and believed by it to be authorized or within the discretion
or
rights or powers conferred upon it by this
Agreement;
|
| (iv) |
the
Swap Contract Administrator shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order,
approval, bond or other paper or document, unless requested in writing
so
to do by the Counterparty, CHL or the Indenture Trustee; provided,
however, that if the payment within a reasonable time to the Swap
Contract
Administrator of the costs, expenses or liabilities likely to be
incurred
by it in the making of such investigation is, in the opinion of the
Swap
Contract Administrator not reasonably assured to the Swap Contract
Administrator by the Counterparty, CHL and/or the Indenture Trustee,
the
Swap Contract Administrator may require reasonable indemnity against
such
expense, or liability from the Counterparty, CHL and/or the Indenture
Trustee, as the case may be, as a condition to taking any such action;
and
|
| (v) |
the
Swap Contract Administrator shall not be required to expend its own
funds
or otherwise incur any financial liability in the performance of
any of
its duties hereunder if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such liability
is not assured to it.
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| (d) |
GSC
covenants and agrees to pay or reimburse the Swap Contract Administrator,
upon its request, for all reasonable expenses and disbursements incurred
or made by the Swap Contract Administrator in
accordance with any of the provisions of this Agreement except
any such expense or disbursement as may arise from its negligence,
bad
faith or willful misconduct. The Swap Contract Administrator and
any
director, officer, employee or agent of the Swap Contract Administrator
shall be indemnified by GSC and held harmless against any loss, liability
or expense incurred in connection with any legal action relating
to this
Agreement, the Swap Contract or the Novation Agreement or in connection
with the performance of any of the Swap Contract Administrator’s duties
hereunder or thereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence
in the
performance of any of the Swap Contract Administrator’s duties hereunder
or thereunder. Such indemnity shall survive the termination of this
Agreement or the resignation of the Swap Contract Administrator hereunder
and under the Swap Contract and the Novation Agreement.
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| (e) |
Upon
the resignation of BNY as Indenture Trustee in accordance with the
Indenture, (i) BNY shall resign and be discharged from its duties
as Swap
Contract Administrator hereunder and (ii) the Person that succeeds
BNY as
Indenture Trustee shall be appointed as successor Swap Contract
Administrator hereunder upon its execution, acknowledgement and delivery
of the instrument accepting such appointment in accordance with Section
6.08 of the Indenture, whereupon the duties of the Swap Contract
Administrator hereunder shall pass to such Person. In addition, upon
the
appointment of a successor Indenture Trustee under the Indenture,
such
successor Indenture Trustee shall succeed to the rights of the Indenture
Trustee hereunder.
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| (f) |
In
the event of a NIM Issuance, nothing in this Section 8 shall limit
or
otherwise modify or affect the rights, duties or obligations of the
Swap
Contract Administrator under the related Swap Excess Assignment
Agreement.
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9. Miscellaneous.
| (a) |
This
Agreement shall be governed by and construed in accordance with the
laws
of the State of New York.
|
| (b) |
Each
of BNY, GSC and CHL hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in
any
legal proceedings arising out of or relating to this
Agreement.
|
| (c) |
The
Counterparty shall be an express third party beneficiary of this
Agreement
for the purpose of enforcing the provisions hereof to the extent
of the
Counterparty’s rights explicitly specified herein as if a party
hereto.
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| (d) |
This
Agreement shall terminate upon the termination of the Swap Contract
and
the disbursement by the Swap Contract Administrator of all funds
received
under the Swap Contract to GSC and the Indenture Trustee on behalf
of the
Holders of the Benefited Notes.
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| (e) |
This
Agreement may be amended, supplemented or modified in writing by
the
parties hereto, provided that no amendment shall adversely affect
in any
material respect the Counterparty without the prior written consent
of the
Counterparty, which consent shall not be unreasonably
withheld.
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| (f) |
This
Agreement may be executed by one or more of the parties to this Agreement
on any number of separate counterparts (including by facsimile
transmission), and all such counterparts taken together shall be
deemed to
constitute one and the same
instrument.
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| (g) |
Any
provision of this Agreement which is prohibited or unenforceable
in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent
of such prohibition or unenforceability without invalidating the
remaining
provisions hereof, and any such prohibition or unenforceability in
any
jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
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| (h) |
The
representations and warranties made by the parties to this Agreement
shall
survive the execution and delivery of this Agreement. No act or omission
on the part of any party hereto shall constitute a waiver of any
such
representation or warranty.
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| (i) |
The
article and section headings in this Agreement are for convenience
of
reference only, and shall not limit or otherwise affect the meaning
of
this Agreement.
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[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and
delivered as of the day and year first above written.
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THE
BANK OF NEW YORK,
as
Swap Contract Administrator
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By:
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Name:
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Title:
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THE
BANK OF NEW YORK,
not
in its individual or corporate capacity but solely as Indenture
Trustee
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By:
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Name:
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Title:
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COUNTRYWIDE
HOME LOANS, INC.
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By:
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Name:
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Title:
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GSC
CAPITAL CORP. QRS
DELAWARE
REAL ESTATE HOLDINGS, INC.
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By:
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Name:
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Title:
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EXHIBIT
A
SWAP
CONTRACT
EXHIBIT
B
NOVATION
AGREEMENT