EXHIBIT 10.3
BEAR STEARNS
BEAR STEARNS FINANCIAL PRODUCTS INC.
383 MADISON AVENUE
NEW YORK, NEW YORK 10179
212-272-4009
DATE:
November 21, 2006
TO:
Wells Fargo Bank,
N.A., not
individually, but
solely as Master Servicer on behalf of Wells
Fargo Mortgage Backed Securities 2006-AR19 Trust
ATTENTION:
Client Manager - WFMBS 2006-AR19 Trust
TELEPHONE:
410-884-2000
FACSIMILE:
410-715-2380
FROM:
Derivatives Documentation
TELEPHONE:
212-272-2711
FACSIMILE:
212-272-9857
SUBJECT:
Fixed Income Derivatives Confirmation and Agreement
REFERENCE NUMBER: FXNEC8904
The purpose of this letter agreement ("Agreement") is to confirm
the terms and
conditions of the Transaction entered into on the Trade Date
specified below
(the "Transaction") between Bear Stearns Financial Products Inc.
("BSFP") and
Wells Fargo Bank, N.A., not individually, but solely as Master
Servicer on
behalf of Wells Fargo Mortgage Backed Securities 2006-AR19 Trust
formed pursuant
to the Pooling and Servicing Agreement dated as of November 21,
2006 among Wells
Fargo Asset Securities Corporation, as depositor (the "Depositor"),
HSBC Bank
USA, National Association, as trustee and Wells Fargo Bank, N.A.,
as master
servicer (the "Pooling and Servicing Agreement") ("Counterparty").
This
Agreement, which evidences a complete and binding agreement between
BSFP and
Counterparty 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"). BSFP and Counterparty 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"). An ISDA Form Master Agreement shall be deemed to
have
been
executed by BSFP and Counterparty on the date we entered into
the
Transaction. All
provisions contained in, or incorporated by reference to,
the ISDA
Form Master Agreement shall govern the Transaction referenced
in
this
Confirmation except as expressly modified herein. 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 capitalized but not defined herein
shall have
the meanings attributed to them in the Pooling and Servicing
Agreement.
2. The
terms of the particular Transaction to which this Confirmation
relates
are as
follows:
Type
of Transaction: Rate Cap
Notional Amount:
With respect to any Calculation Period, the amount
set forth for such period in the Schedule of
Notional Amounts attached hereto.
Trade Date:
November 15, 2006
Effective Date:
November 25, 2006
Termination Date:
March 25, 2012
Fixed Amount (Premium):
Fixed Rate Payer: Deutsche Bank
Securities Inc. on behalf of
Counterparty.
Fixed Rate Payer
Payment Date:
November 21, 2006
Fixed Amount:
USD [_______]
Floating Amounts:
Floating Rate Payer: BSFP
Cap Rate:
With respect to any Calculation Period, the rate
set forth for such period in Schedule I attached
hereto.
Floating Rate Payer
Period End Dates: The 25th calendar day
of each month during the
Term of this Transaction, commencing December 25,
2006 and ending on the Termination Date, with No
Adjustment.
Floating Rate Payer
Payment Dates:
Early Payment shall be applicable. The Floating
Rate Payer Payment Dates shall be one Business Day
preceding each Floating Rate Payer Period End
Date.
Floating Rate Option: USD-LIBOR-BBA, provided, however, that if
the
Floating Rate determined from such Floating Rate
Option for any Calculation Period is greater than
9.05000% then the Floating Rate for such
Calculation Period shall be deemed to be 9.05000%.
Designated Maturity: One month
Floating Rate Day
Count Fraction: 30/360
Reset Dates:
The first day of each Calculation Period.
Compounding:
Inapplicable
Business Days for payments: New York
Business Day Convention: Following
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 Confirmation relating to
such Transaction, as applicable. This paragraph
shall be deemed repeated on the trade date of each
Transaction.
4.
Provisions Deemed Incorporated in a Schedule to the ISDA Form
Master
Agreement:
1) The
parties agree that subparagraph (ii) of Section 2(c) of the ISDA
Form
Master
Agreement will apply to any Transaction.
2)
Termination Provisions. For purposes of the ISDA Form Master
Agreement:
(a) "Specified
Entity" is not applicable to BSFP or Counterparty for any
purpose.
(b) "Specified
Transaction" is not applicable to BSFP or Counterparty for any
purpose,
and, accordingly, Section 5(a)(v) of the ISDA Form Master
Agreement
shall not apply to BSFP or Counterparty.
(c) The "Cross
Default" provisions of Section 5(a)(vi) of the ISDA Form Master
Agreement
will not apply to BSFP or to Counterparty.
(d) The "Credit
Event Upon Merger" provisions of Section 5(b)(iv) of the ISDA
Form
Master Agreement will not apply to BSFP or to Counterparty.
(e) The
"Automatic Early Termination" provision of Section 6(a) of the
ISDA
Form
Master Agreement will not apply to BSFP or to Counterparty.
(f) 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.
(g) "Termination
Currency" means United States Dollars.
3) Tax
Representations. Payer Representations. For the purpose of
Section
3(e) of
the ISDA Form Master Agreement, BSFP and the Counterparty 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:
(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 Section 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
Section 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) of the ISDA Form Master Agreement by reason
of
material prejudice of its legal or commercial position.
4)
Limitation on Events of Default. Notwithstanding the terms of
Sections 5
and 6 of
the ISDA Form Master Agreement, if at any time and so long as
the
Counterparty has satisfied in full all its payment obligations
under
Section
2(a)(i) of the ISDA Form Master Agreement and has at the time
no
future
payment obligations, whether absolute or contingent, under such
Section,
then unless BSFP is required pursuant to appropriate
proceedings
to return
to the Counterparty or otherwise returns to the Counterparty
upon
demand of the Counterparty any portion of any such payment, (a)
the
occurrence
of an event described in Section 5(a) of the ISDA Form Master
Agreement
with respect to the Counterparty shall not constitute an Event
of Default
or Potential Event of Default with respect to the Counterparty
as
Defaulting Party and (b) BSFP shall be entitled to designate an
Early
Termination Date pursuant to Section 6 of the ISDA Form Master
Agreement
only as a
result of the occurrence of a Termination Event set forth in
either
Section 5(b)(i) or 5(b)(ii) of the ISDA Form Master Agreement
with
respect to
BSFP as the Affected Party or Section 5(b)(iii) of the ISDA
Form
Master Agreement with respect to BSFP as the Burdened Party.
For
purposes
of the Transaction to which this Agreement relates,
Counterparty's only obligation under Section 2(a)(i) of the ISDA
Form
Master
Agreement is to cause the Fixed Amount to be paid on the Fixed
Rate
Payer
Payment Date.
5)
Documents to be Delivered. For the purpose of Section 4(a) of the
ISDA
Form
Master Agreement:
(1) Tax forms,
documents, or certificates to be delivered are:
<TABLE>
<CAPTION>
Party required to deliver document
Form/Document/ Certificate
Date by which to be delivered
<S>
<C>
<C>
BSFP and
Any document required or reasonably
Promptly after the earlier of (i)
the Counterparty
requested to allow the other party to
reasonable demand by either party or (ii)
make payments under this Agreement
learning that such form or document is
without any deduction or withholding for
required
or on the account of any Tax or with such
deduction or withholding at a reduced
rate
<CAPTION>
(2) Other
documents to be delivered are:
Party required to
Form/Document/
Date by which to
Covered by Section 3(d)
deliver document
Certificate
be delivered
Representation
<S>
<C>
<C>
<C>
BSFP and
Any documents required by Upon
the execution and
Yes
the Counterparty
the receiving party to
delivery of this Agreement
evidence the authority of and
such Confirmation;
the delivering party or its and, in the case
of the
</TABLE>
<TABLE>
<CAPTION>
Party required to
Form/Document/
Date by which to
Covered by Section 3(d)
deliver document
Certificate
be delivered
Representation
<S>
<C>
<C>
<C>
Credit Support Provider, if Counterparty,
within 30
any, for it to execute and days after
the date of
deliver this Agreement, any this
Agreement
Confirmation, and any
Credit Support Documents to
which it is a party, and to
evidence the authority of
the delivering party or its
Credit Support Provider to
perform its obligations
under this Agreement, such
Confirmation and/or Credit
Support Document, as the
case may be
BSFP and
A certificate of an
Upon the execution and
Yes
the Counterparty
authorized officer of the
delivery of this Agreement
party, as to the incumbency and such
Confirmation
and authority of the
respective officers of the
party signing this Agreement,
any relevant
Credit Support
Document, or any
Confirmation, as the case may
be
Counterparty
An executed copy of the
Within 30 days after the No
Pooling and Servicing
date of this Agreement.
Agreement.
</TABLE>
6)
Miscellaneous. Miscellaneous
(a) Address for
Notices: For the purposes of Section 12(a) of the ISDA Form
Master
Agreement:
Address
for notices or communications to BSFP:
Address:
383 Madison Avenue,
New York, New York 10179
Attention: DPC
Manager
Facsimile: (212)
272-5823
with a
copy to:
Address:
One Metrotech Center North, Brooklyn, New York 11201
Attention: Derivative
Operations - 7th Floor
Facsimile: (212)
272-1634
(For all purposes)
Address
for notices or communications to the Counterparty:
Address:
9062 Old Annapolis Road
Columbia, MD 21045
Attention: Client
Manager - Wells Fargo Mortgage Backed
Securities 2006-AR19 Trust
Facsimile:
410-884-2000
Phone:
410-715-2380
(b) Process
Agent. For the purpose of Section 13(c) of the ISDA Form Master
Agreement:
BSFP appoints as its
Process Agent:
Not Applicable
The Counterparty appoints as its
Process Agent:
Not Applicable
(c) Offices. The
provisions of Section 10(a) of the ISDA Form Master Agreement
will not
apply to this Agreement; neither BSFP nor the Counterparty have
any
Offices other than as set forth in the Notices Section and BSFP
agrees
that, for
purposes of Section 6(b) of the ISDA Form Master Agreement, it
shall not
in future have any Office other than one in the United States.
(d) Multibranch
Party. For the purpose of Section 10(c) of the ISDA Form
Master
Agreement:
BSFP is
not a Multibranch Party.
The
Counterparty is not a Multibranch Party.
(e) Calculation
Agent. The Calculation Agent is BSFP; provided, however, that
if an
Event of Default occurs with respect to BSFP, then the
Counterparty
shall be
entitled to appoint a financial institution which would qualify
as a
Reference Market-maker to act as Calculation Agent.
(f) Credit
Support Document. Not applicable for either BSFP or the
Counterparty.
(g) Credit
Support Provider.
BSFP: Not
Applicable
The
Counterparty: Not Applicable
(h) Governing
Law. The parties to this Agreement hereby agree that the law of
the State
of placeStateNew York shall govern their rights and duties in
whole,
without regard to conflict of law provisions thereof other than
New
York
General Obligations Law Sections 5-1401 and 5-1402.
(i)
Severability. If any term, provision, covenant, or condition of
this
Agreem
