EX-10 4 qa8swap.txt EX 10.3 Execution Copy DATE: September 28, 2006 TO: Deutsche Bank Trust Company Americas, not in its individual capacity but solely as Supplemental Interest Trust Trustee for the benefit of RALI Series 2006-QA8 Supplemental Interest Trust, acting on behalf of the Class A Certificateholders and the Class M Certificateholders under the Pooling and Servicing Agreement identified below ("PARTY A") ATTENTION: RALI Series 2006-QA8 FROM: Deutsche Bank Trust Company Americas, not in its individual capacity but solely as Supplemental Interest Trust Trustee for the benefit of RALI Series 2006-QA8 Supplemental Interest Trust, acting on behalf of the Class SB Certificateholders under the Pooling and Servicing Agreement identified below ("PARTY B") SUBJECT: Payment Swap Confirmation and Agreement REFERENCE NUMBER The purpose of this letter agreement (the "Agreement") is to confirm the terms and conditions of the Transaction entered into on the Trade Date specified below (the "Transaction") between Party A and Party B. This Agreement, which evidences a complete and binding agreement between you and us to enter into the Transaction on the terms set forth below, constitutes a "Confirmation" as referred to in the ISDA Form Master Agreement (as defined below), as well as a "Schedule" as referred to in the ISDA Form Master Agreement. 1. This Agreement is subject to and incorporates the 2000 ISDA Definitions (the "Definitions"), as published by the International Swaps and Derivatives Association, Inc. ("ISDA"). You and we have agreed to enter into this Agreement in lieu of negotiating a Schedule to the 1992 ISDA Master Agreement (Multicurrency-Cross Border) form (the "ISDA Form Master Agreement") but, 1 rather, an ISDA Form Master Agreement shall be deemed to have been executed by you and us on the date we entered into the Transaction. In the event of any inconsistency between the provisions of this Agreement and the Definitions or the ISDA Form Master Agreement, this Agreement shall prevail for purposes of the Transaction. Terms used and not otherwise defined herein, in the ISDA Form Master Agreement or the Definitions shall have the meanings assigned to them in the series supplement (the "Series Supplement"), dated as of September 1, 2006, to the standard terms of pooling and servicing agreement, dated as of March 1, 2006 (the "Standard Terms", and together with the Series Supplement, the "Pooling and Servicing Agreement"), among Residential Accredit Loans, Inc., as depositor, Residential Funding Corporation, as master servicer, and Deutsche Bank Trust Company Americas, as trustee. Each reference to a "Section" or to a "Section" "of this Agreement" will be construed as a reference to a Section of the 1992 ISDA Form Master Agreement. Each capitalized term used herein that is not defined herein or in the 1992 ISDA Form Master Agreement shall have the meaning defined in the Pooling and Servicing Agreement. Notwithstanding anything herein to the contrary, should any provision of this Agreement conflict with any provision of the Pooling and Servicing Agreement, the provision of the Pooling and Servicing Agreement shall apply. 2. The terms of the particular Transaction to which this Confirmation relates are as follows: Trade Date: Effective Date: Termination Date: September 25, 2036 subject to adjustment in accordance with the Business Day Convention. Business Days: California, Minnesota, Texas, New York, Illinois. Business Day Convention: Following. PARTY A PAYMENTS: Party A Payment Dates: Each Distribution Date under the Pooling and Servicing Agreement. Party A Payment Amounts: On each Party A Payment Date, the amount, if any, equal to the aggregate amount of Net Swap Payments and Swap Termination Payments owed to the Swap Counterparty remaining unpaid after application of the sum of (A) from the Adjusted Available Distribution Amount that would have remained had the Adjusted Available Distribution Amount been applied on such Distribution Date to make the distributions for such Distribution Date under Section 4.02(c) clauses 2 (i) through (x) of the Pooling and Servicing Agreement, of (I) Accrued Certificate Interest on the Class SB Certificates, (II) the amount of any Overcollateralization Reduction Amount and (III) for each Distribution Date after the Certificate Principal Balance of each Class of Class A Certificates and Class M Certificates has been reduced to zero, the Overcollateralization Amount, (B) from prepayment charges on deposit in the Certificate Amount, any prepayment charges received on the Mortgage Loans during the related Prepayment Period and (C) from the amount distributable with respect to the REMIC III Regular Interest IO. PARTY B PAYMENTS: Party B Payment Dates: Each Distribution Date under the Pooling and Servicing Agreement Party B Payment Amounts: On each Party B Payment Date, an amount equal to the lesser of (a) the Available Distribution Amount remaining on such Distribution Date after the distributions on such Distribution Date under Section 4.02(c) clauses (i) through (vi) of the Pooling and Servicing Agreement and (b) the aggregate unpaid Basis Risk Shortfalls allocated to the Class A Certificateholders and the Class M Certificateholders for such Distribution Date. 3. Additional Provisions: Each party hereto is hereby advised and acknowledges that the other party has engaged in (or refrained from engaging in) substantial financial transactions and has taken (or refrained from taking) other material actions in reliance upon the entry by the parties into the Transaction being entered into on the terms and conditions set forth herein and in the ISDA Form Master Agreement relating to such Transaction, as applicable. 4. Provisions Deemed Incorporated in a Schedule to the ISDA Form Master Agreement: 1) Termination Provisions. For purposes of the ISDA Form Master Agreement: (a) "Specified Entity" is not applicable to Party A or Party B for any purpose. 3 (b) "Specified Transaction" is not applicable to Party A or Party B for any purpose, and, accordingly, Section 5(a)(v) shall not apply to Party A or Party B. (c) The "Cross Default" provisions of Section 5(a)(vi) shall not apply to Party A or Party B. (d) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply to Party A or Party B. (e) With respect to Party A and Party B, the "Bankruptcy" provision of Section 5(a)(vii)(2) of the ISDA Form Master Agreement will be deleted in its entirety. (f) The "Automatic Early Termination" provision of Section 6(a) will not apply to Party A or to Party B. (g) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA Form Master Agreement: (i) Market Quotation will apply. (ii) The Second Method will apply. (h) "Termination Currency" means United States Dollars. (i) The provisions of Sections 5(a)(ii), 5(a)(iii) and 5(a)(iv) shall not apply to Party A or Party B. (j) Tax Event. The provisions of Section 2(d)(i)(4) and 2(d)(ii) of the ISDA Form Master Agreement shall not apply to Party A and Party A shall not be required to pay any additional amounts referred to therein. 2) Tax Representations. (a) Payer Representations. For the purpose of Section 3(e) of the ISDA Form Master Agreement, each of Party A and Party B will make the following representations: It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of the ISDA Form Master Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on: 4 (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of the ISDA Form Master Agreement; (ii) the satisfaction of the agreement contained in Sections 4(a)(i) or 4(a)(iii) of the ISDA Form Master Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Sections 4(a)(i) or 4(a)(iii) of the ISDA Form Master Agreement; and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the ISDA Form Master Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position. (b) Payee Representations. For the purpose of Section 3(f) of the ISDA Form Master Agreement, Party A and Party B make the following representations: None 3) Documents to be Delivered. For the purpose of Section 4(a) (i) and 4(a) (iii): (1) Tax forms, documents, or certificates to be delivered are: PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO DELIVER DOCUMENT CERTIFICATE BE DELIVERED Party A and Party B Any documents required Promptly after the earlier or reasonably requested of (i) reasonable demand by to allow the other party either party or (ii) learning to make payments under that such form or document this Agreement without is required any deduction or withholding for or on the account of any Tax or with such deduction or withholding at a reduced rate 5
(2) Other documents to be delivered are: PARTY REQUIRED FORM/DOCUMENT/ DATE BY WHICH TO COVERED BY TO DELIVER CERTIFICATE BE DELIVERED SECTION 3(D) DOCUMENT REPRESENTATION Party A and Party B Any documents required by Upon execution Yes the receiving party to and delivery of evidence the authority of this Agreement the delivering party for it and such to execute and deliver this Confirmation Agreement, any Confirmation to which it is a party, and to evidence the authority of the delivering party to perform its obligations under this Agreement and such Confirmation. Party A and Party B A certificate of an Upon the Yes authorized officer of the execution and party, as to the incumbency delivery of this and authority of the Agreement and respective officers of the such Confirmation party signing this Agreement
4) Miscellaneous. Miscellaneous (a) Address for Notices: For the purposes of Section 12(a) of this Agreement: Address for notices or communications to Party A: Address: RALI Series 2006-QA8 Trust, acting through Deutsche Bank Trust Company Americas not in its individual capacity but solely in its capacity as Supplemental Interest Trust Trustee for the benefit of the RALI Series 2006-QA8 Supplemental Interest Trust Attn: RALI Series 2006-QA8 Trust Fax: 714-247-6285 6 with a copy to: Residential Funding Corporation 8400 Normandale Lake Blvd., Suite 600 Minneapolis, MN 55437 Attention: Steve Milstein Facsimile: 301-664-6901 (For all purposes) Address for notices or communications to Party B: Address: RALI Series 2006-QA8 Trust, acting through Deutsche Bank Trust Company Americas not in its individual capacity but solely in its capacity as Supplemental Interest Trust Trustee for the benefit of the RALI Series 2006-QA8 Supplemental Interest Trust Attn: RALI Series 2006-QA8 Trust Fax: 714-247-6285 with a copy to: Residential Funding Corporation 8400 Normandale Lake Blvd., Suite 600 Minneapolis, MN 55437 Attention: Steve Milstein Facsimile No.: 301-664-6901 (For all purposes) (b) Process Agent. For the purpose of Section 13(c): Party A: Not Applicable Party B: Not Applicable (c) Offices. The provisions of Section 10(a) will not apply to this Agreement; neither Party A nor Party B have any Offices other than as set forth in the Notices Section. (d) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master Agreement, neither Party A nor Party B is a Multibranch. Party. 7 (e) Calculation Agent. The Calculation Agent is Party B. (f) Credit Support Document. Not Applicable (g) Credit Support Provider. Not Applicable (h) Governing Law. The parties to this ISDA Agreement hereby agree that the law of the State of New York shall govern their rights and duties in whole, without regard to the conflict of law provision thereof, other than New York General Obligations Law Sections 5-1401 and 5-1402. (i) Non-Petition. Party A and Party B each hereby irrevocably and unconditionally agrees that it will not institute against, or join any other person in instituting against or cause any other person to institute against RALI Series 2006-QA8 Trust, Mortgage Asset-Backed Pass-Through Certificates, Series 2006-QA8, or the other party any bankruptcy, reorganization, arrangement, insolvency, or similar proceeding under the laws of the United States, or any other jurisdiction for the non-payment of any amount due hereunder or any other reason until the payment in full of the Certificates and the expiration of a period of one year plus ten days (or, if longer, the applicable preference period) following such payment. (j) Severability. If any term, provision, covenant, or condition of this Agreement, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable (in whole or in part) for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Agreement had been executed with the invalid or unenforceable portion eliminated, so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Agreement and the deletion of such portion of this Agreement will not substantially impair the respective benefits or expectations of the parties. The parties shall endeavor to engage in good faith negotiations to replace any invalid or unenforceable term, provision, covenant or condition with a valid or enforceable term, provision, covenant or condition, the economic effect of which comes as close as possible to that of the invalid or unenforceable term, provision, covenant or condition. 8 (k) Consent to Recording. Each party hereto consents to the monitoring or recording, at any time and from time to time, by the other party of any and all communications between officers or employees of the parties, waives any further notice of such monitoring or recording, and agrees to notify its officers and employees of such monitoring or recording. (l) Waiver of Jury Trial. Each party to this Agreement respectively waives any right it may have to a trial by jury in respect of any Proceedings relating to this Agreement or any Credit Support Document. (m) Set-Off Notwithstanding any provision of this Agreement or any other existing or future agreement, each party irrevocably waives any and all rights it may have to set off, net, recoup or otherwise withhold or suspend or condition payment or performance of any obligation between it and the other party hereunder against any obligation between it and the other party under any other agreements. The provisions for Set-off set forth in Section 6(e) of the ISDA Form Master Agreement shall not apply for purposes of this Transaction. (n) This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. (o) Trustee Liability Limitations. It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and delivered by Deutsche Bank Trust Company Americas, not individually or personally but solely as Trustee of Party A and Party B, in the exercise of the powers and authority conferred and vested in it and that Deutsche Bank Trust Company Americas shall perform its duties and obligations hereunder in accordance with the standard of care set forth in Article VIII of the Pooling and Servicing Agreement, (b) each of the representations, undertakings and agreements herein made on the part of Party A and Party B is made and intended not as personal representations, undertakings and agreements by Deutsche Bank Trust Company Americas but is made and intended for the purpose of binding only Party A and Party B, (c) nothing herein contained shall be construed as creating any liability on Deutsche Bank Trust Company Americas, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto; provided that nothing in this paragraph shall relieve Deutsche Bank Trust Company Americas from performing its duties and obligations hereunder and under the Pooling and Servicing Agreement in accordance with the standard of care set forth therein, and (d) under no circumstances shall Deutsche Bank Trust Company Americas be personally liable for the payment of any indebtedness or expenses of 9 Party A or Party B or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by Party A or Party B under this Agreement or any other related documents; provided, that nothing in this paragraph shall relieve Deutsche Bank Trust Company Americas from performing its duties and obligations hereunder and under the Pooling and Servicing Agreement in accordance with the standard of care set forth herein and therein. 5) "Affiliate". Party A and Party B shall be deemed to not have any Affiliates for purposes of this Agreement, including for purposes of Section 6(b)(ii). 6) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at the end thereof the following subsection (g): "(g) Relationship Between Parties. Each party represents to the other party on each date when it enters into a Transaction that:-- (1) Nonreliance. (i) It is not relying on any statement or representation of the other party regarding the Transaction (whether written or oral), other than the representations expressly made in this Agreement or the Confirmation in respect of that Transaction and (ii) it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent it has deemed necessary, and it has made its own investment, hedging and trading decisions based upon its own judgment and upon any advice from such advisors as it has deemed necessary and not upon any view expressed by the other party. (2) Evaluation and Understanding. (i) It has the capacity to evaluate (internally or through independent professional advice) the Transaction and has made its own decision to enter into the Transaction and has been directed by the Pooling and Servicing Agreement to enter into this Transaction; and (ii) It understands the terms, conditions and risks of the Transaction and is willing and able to accept those terms and conditions and to assume those risks, financially and otherwise. (3) Purpose. It is entering into the Transaction for the purposes of managing its borrowings or investments, hedging its underlying assets or liabilities or in connection with a line of business. (4) Status of Parties. The other party is not acting as agent, fiduciary or advisor for it in respect of the Transaction. 10 (5) Eligible Contract Participant. It is an "eligible swap participant" as such term is defined in Section 35.1(b)(2) of the regulations (17 C.F.R 35) promulgated under, and it constitutes an "eligible contract participant" as such term is defined in Section 1(a)12 of the Commodity Exchange Act, as amended." 7) Account Details and Settlement Information: PAYMENTS TO PARTY A: Deutsche Bank Trust Company Americas ABA Number: 021-001-003 Account Number: [as provided by Party B in writing to Party A] Account Name: [as provided by Party B in writing to Party A] Ref: RALI 2006-QA8 Swap PAYMENTS TO PARTY B: Deutsche Bank Trust Company Americas ABA Number: 021-001-003 Account Number: [as provided by Party B in writing to Party A] Account Name: [as provided by Party B in writing to Party A] Ref: RALI 2006-QA8 Swap 11 Please sign and return to us a copy of this Agreement. Very truly yours, DEUTSCHE BANK TRUST COMPANY AMERICAS, not in its individual capacity but solely as Supplemental Interest Trust Trustee for the benefit of RALI Series 2006-QA8 Supplemental Interest Trust, acting on behalf of the Class SB Certificateholders By: /s/ Amy Stoddard Name: Amy Stoddard Title: Authorized Signer AGREED AND ACCEPTED AS OF THE TRADE DATE DEUTSCHE BANK TRUST COMPANY AMERICAS, not in its individual capacity but solely as Supplemental Interest Trust Trustee for the benefit of RALI Series 2006-QA8 Supplemental Interest Trust, acting on behalf of the Class A Certificateholders, and the Class M Certificateholders By: /s/ Amy Stoddard Name: Amy Stoddard Title: Authorized Signer 12