EXHIBIT 10.3
Barclays Capital
5 The North Colonnade
Canary Wharf
London E14 4BB
Tel +44 (0)20 7623 2323
To:
Wells Fargo Bank, N.A. as master servicer on behalf of the
Wells
Fargo Mortgage Backed Securities 2006-16 Trust (such trust, the
"Issuing Entity") created under the Pooling and Servicing
Agreement (as defined below)
Attn:
Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Client Manager - Wells Fargo Mortgage Backed Securities,
Series 2006-16
Telephone: 410-884-2000
Facsimile: 410-715-2380
From:
BARCLAYS BANK PLC (LONDON HEAD OFFICE)
Attn:
5 The North Colonnade
Canary Wharf
E14 4BB
Facsimile: 44(20) 77736461
Phone: 44(20) 77736810
Date:
October 30, 2006
Reference:
1425591B/1425586B
Dear Sir/Madam,
The purpose of this letter agreement is to confirm the terms and
conditions of
the transaction entered into between Wells Fargo Bank, N.A. as
master servicer
(the "Master Servicer") under the Pooling and Servicing Agreement
(as defined
below) on behalf of the Issuing Entity and Barclays Bank PLC (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 in paragraph 1 below. In this
Confirmation, "Party A"
means Barclays Bank PLC and "Party B" means Wells Fargo Bank, N.A.
as Master
Servicer on behalf of the Issuing Entity.
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.
Other capitalized terms used herein (but not otherwise defined)
shall have the
meaning specified in that certain Pooling and Servicing Agreement
(the "Pooling
and Servicing Agreement"), to be dated as of October 30, 2006,
among Wells Fargo
Asset Securities Corporation, as depositor (the "Depositor"), Wells
Fargo Bank,
N.A., as Master Servicer and HSBC Bank USA, National Association,
as trustee.
1 This
Confirmation evidences a complete binding agreement between the
parties as to the terms of the Transaction to which this
Confirmation
relates. In addition, the parties agree that for the purposes of
this
Transaction, this Confirmation will supplement, form a part of, and
be
subject to an agreement in the form of the 1992 ISDA Master
Agreement
(Multicurrency-Cross Border) as if the parties had executed an
agreement
in
such form (but without any Schedule except for the elections
noted
below) on the Trade Date of the Transaction (such agreement, the
"Form
Master Agreement"). In the event of any inconsistency between
the
provisions of the Form Master Agreement and this Confirmation,
this
Confirmation will prevail for the purpose of this Transaction.
Each
party represents to the other party and will be deemed to
represent
to
the other party on the date on which it enters into this
Transaction
that
(absent a written agreement between the parties that expressly
imposes affirmative obligations to the contrary for that
Transaction):
(a)
Non-Reliance
Each party has made its own independent decisions to enter into
this Transaction and as to whether this Transaction is
appropriate
or proper for it based upon its own judgment and upon advice
from
such advisors as it has deemed necessary. It is not relying on
any
communication (written or oral) of the other party as
investment
advice or as a recommendation to enter into this Transaction;
it
being understood that information and explanations related to
the
terms and conditions of this Transaction shall not be
considered
investment advice or a recommendation to enter into this
Transaction. Further, such party has not received from the
other
party any assurance or guarantee as to the expected results of
this Transaction.
(b)
Evaluation
and Understanding
It is capable of evaluating and understanding (on its own
behalf
or through independent professional advice), and understands
and
accepts, the terms, conditions and risks of this Transaction.
It
is also capable of assuming, and assumes, the financial and
other
risks of this Transaction.
(c)
Status of
Parties
The other party is not acting as an agent, fiduciary or advisor
for it in respect of this Transaction.
2 The terms
of the particular Transaction to which this Confirmation
relates are as follows:
Notional Amount:
With respect to any Calculation Period the
amount set forth on Schedule A attached
hereto.
Trade Date:
October 30, 2006
Effective Date:
October 25, 2006
Termination Date:
August 25, 2013
Fixed Amounts:
Fixed Rate Payer:
Party B
Fixed Rate Payer
Payment Date: October
30, 2006
Fixed Amount:
USD[_____]
Floating Amounts:
Floating Rate Payer:
Party A
Cap Rate:
4.4%
Floating Rate Payer
Period
The 25th day of each
month of each year,
End Dates:
commencing on November 25, 2006, through
and including the Termination Date, subject
to no adjustment.
Floating Rate Payer
Payment Dates: Early
Payment shall be applicable. The
Floating Rate Payer Payment Date shall be
one Business Day prior to each Floating
Rate Payer Period End Date.
Floating Rate for
Initial
To be determined.
Calculation
Period:
Floating Rate Option:
USD-LIBOR-BBA; provided, however, if the
Floating Rate Option for any Calculation
Period is greater than 8.9% then the
Floating Rate Option for such Calculation
Period shall be deemed to be 8.9%.
Floating Amount:
To be determined in accordance with the
following formula: the greater of (i)
(Floating Rate Option - Cap Rate) *
Notional Amount * Floating Rate Day Count
Fraction and (ii) zero.
Designated Maturity:
1 Month
Spread:
None
Floating Rate Day
Count Fraction:
30/360
Reset Dates:
The first day of each Calculation Period.
Business Days for
Payments:
New York
Calculation Agent:
Party A; provided, however, that if an
Event of Default occurs with respect to
Party A, then Party B shall be entitled to
appoint a financial institution which would
qualify as a Reference Market-Maker to act
as Calculation Agent (such financial
institution subject to Party A's consent).
3 Form
Master Agreement
(a)
"Specified
Entity" means, in relation to Party A, for the purpose
of Section 5(a)(v), Section 5(a)(vi), Section 5(a)(vii) and
Section 5(b)(iv): Not Applicable.
(b)
"Specified
Entity" means, in relation to Party B, for the purpose
of Section 5(a)(v), Section 5(a)(vi), Section 5(a)(vii) and
Section 5(b)(iv): Not Applicable.
(c)
"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.
(d)
The
"Breach of Agreement" provisions of Section 5(a)(ii) of the
Agreement will be inapplicable to Party A and Party B.
(e)
The
"Misrepresentation" provisions of Section 5(a)(v) of the
Agreement will be inapplicable to Party A and Party B.
(f)
The "Cross
Default" provisions of Section 5(a)(vi) will not apply
to Party A or Party B.
(g)
The
"Credit Event Upon Merger" provisions of Section 5(b)(iv) of
the Form Master Agreement will not apply to Party A or to Party
B.
(h)
The
"Automatic Early Termination" provision of Section 6(a) of the
Form Master Agreement will not apply to Party A or to Party B.
(i)
The Form
Master 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 provisions (except for
Sections
5-1401 and 5-1402 of the New York General Obligations Law).
(j)
The phrase
"Termination Currency" means United States Dollars.
(k)
For the
purpose of Section 6(e) of the Form Master Agreement,
Market Quotation and Second Method will apply.
4 Recording
of Conversations
Each
party to this Transaction acknowledges and agrees to the tape
(and/or other electronic) recording of conversations between the
parties
to
this Transaction whether by one or other or both of the parties
or
their agents.
5 Credit
Support Document
In
relation to Party A: Credit Support Annex dated
the date hereof and
duly executed and delivered by Party A and
Party B.
In
relation to Party B: Not Applicable.
6 Credit
Support Provider
In
relation to Party A: Not Applicable, unless Party
A has a person
guarantee its payment obligations under this
Agreement in order to remedy a Ratings Event,
in which event such person shall be a Credit
Support Provider.
In
relation to Party B: Not Applicable.
7 Account
Details
Account for payments
to Party A:
Correspondent: BARCLAYS BANK PLC NEW YORK
FEED: 026002574
Beneficiary: BARCLAYS SWAPS
Beneficiary Account: 050-01922-8
Account for payments to Party B:
Bank: Wells Fargo Bank, N.A.
ABA#: 121000248
Account Name: SAS Clearing
Acct #: 3970771416
FFC to: 50958601 - Class A-6 Reserve Fund
8
Offices
The
Office of Party A for this Transaction is:
London
The
Office of Party B for this Transaction is:
Columbia, MD
9 Additional
Provisions
Fully-Paid Transactions
Notwithstanding the terms of Sections 5 and 6 of the Form
Master
Agreement, if at any time and so long as Party B shall have
satisfied in full all its payment and delivery obligations
under
Section 2(a)(i) of the Form Master Agreement and shall at the
time
have no future payment or delivery obligations, whether
absolute
or contingent, under such Section, then unless Party A is
required
pursuant to appropriate proceedings to return to Party B or
otherwise returns to Party B (upon demand of Party B, or
otherwise) any portion of any such payment or delivery: (i) the
occurrence of an event described in Section 5(a) of the Form
Master Agreement with respect to Party B shall not constitute
an
Event of Default or a Potential Event of Default with respect
to
Party B as the Defaulting Party; and (ii) Party A shall be
entitled to designate an Early Termination Date pursuant to
Section 6 of the Form Master Agreement only as a result of the
occurrence of a Termination Event set forth in (i) either
Section
5(b)(i) or 5(b)(ii) of the Form Master Agreement with respect
to
Party A as the Affected Party or (ii) Section 5(b)(iii) of the
Form Master Agreement with respect to Party A as the Burdened
Party.
10
Compliance with Regulation AB
(a)
Party A
acknowledges that for so long as there are reporting
obligations with respect to this Transaction under Regulation
AB,
the Depositor, acting on behalf of the Issuing Entity, is
required
under Regulation AB under the Securities Act of 1933, as
amended,
and the Securities Exchange Act of 1934, as amended
("Regulation
AB"), to disclose certain information set forth in Regulation
AB
regarding Party A or its group of affiliated entities, if
applicable, depending on the aggregate "significance
percentage"
of this Agreement and any other derivative contracts between
Party
A or its group of affiliated entities, if applicable, and Party
B,
as calculated from time to time in accordance with Item 1115 of
Regulation AB.
(b)
If the
Depositor determines, reasonably and in good faith, that
the significance percentage of this Agreement has increased to
eight (8) percent or more but less than eighteen (18) percent,
then the Depositor may request on the date of such
determination
(or, if such date of determination is not a Business Day, the
immediately following Business Day) from Party A the same
information set forth in Item 1115(b)(1) of Regulation AB that
would have been required if the significance percentage had in
fact increased to ten (10) percent, along with any necessary
auditors' consent (such request, a "10% Cap Disclosure Request"
and such requested information, subject to the last sentence of
this paragraph, is the "10% Cap Financial Disclosure"). Party B
or
the Depositor shall provide Party A with the calculations and
any
other information reasonably requested by Party A with respect
to
the Depositor's determination that led to the 10% Cap
Disclosure
Request. The parties hereto further agree that the 10% Cap
Financial Disclosure provided to meet the 10% Cap Disclosure
Request may be, solely at Party A's option, either the
information
set forth in Item 1115(b)(1) or Item 1115(b)(2) of Regulation
AB.
(c)
Upon the
occurrence of a 10% Cap Disclosure Request, Party A, at
its own expense, shall (i) provide the Depositor with the 10%
Cap
Financial Disclosure, (ii) subject to Rating Agency
Confirmation,
secure another entity to replace Party A as party to this
Agreement on terms substantially similar to this Agreement
which
entity is able to (A) provide the 10% Cap Financial Disclosure
and
(B) provide an indemnity to the Depositor, reasonably
satisfactory
to the Depositor, in relation to the 10% Cap Financial
Disclosure
or (iii) subject to Rating Agency Confirmation, obtain a
guaranty
of Party A's obligations under this Agreement from an affiliate
of
Party A that is able to (A) provide the 10% Cap Financial
Disclosure, such that disclosure provided in respect of the
affiliate will, in the judgment of counsel to the Depositor,
satisfy any disclosure requirements applicable to Party A, and
cause such affiliate to provide 10% Cap Financial Disclosure
and
(B) provide an indemnity to the Depositor, reasonably
satisfactory
to the Depositor, in relation to the 10% Cap Financial
Disclosure.
Any such 10% Cap Financial Disclosure provided pursuant to this
paragraph (c) shall be in a form suitable for conversion to the
format required for filing by the Depositor with the Securities
and Exchange Commission via the Electronic Data Gathering and
Retrieval System (EDGAR). If permitted by Regulation AB, any
required 10% Cap Financial Disclosure may be provided by
incorporation by reference from reports filed pursuant to the
Securities Exchange Act.
(d)
If the
Depositor determines, reasonably and in good faith, that
the significance percentage of this Agreement has increased to
eighteen
(18) percent or more, then the Depositor may request on
the date of such determination (or, if such date of
determination
is not a Business Day, the immediately following Business Day)
from Party A the same information set forth in Item 1115(b)(2)
of
Regulation AB that would have been required if the significance
percentage had in fact increased to twenty (20) percent, along
with any necessary auditors consent (such request, a "20% Cap
Disclosure Request" and such requested information is the "20%
Cap
Financial Disclosure"). Party B or the Depositor shall provide
Party A with the calculations and any other information
reasonably
requested by Party A with respect to the Depositor's
determination
that led to the 20% Cap Disclosure Request.
(e)
Upon the
occurrence of a 20% Cap Disclosure Request, Party A, at
its own expense, shall (i) provide the Depositor with the 20%
Cap
Financial Disclosure, (ii) subject to Rating Agency
Confirmation,
secure another entity to replace Party A as party to this
Agreement on terms substantially similar to this Agreement
which
entity is able to (A) provide the 20% Cap Financial Disclosure
and
(B) provide an indemnity to the Depositor, reasonably
satisfactory
to the Depositor, in relation to the 20% Cap Financial
Disclosure
or (iii) subject to Rating Agency Confirmation, obtain a
guaranty
of Party A's obligations under this Agreement from an affiliate
of
Party A that is able to (A) provide the 20% Cap Financial
Disclosure, such that disclosure provided in respect of the
affiliate will, in the judgment of counsel to the Depositor,
satisfy any disclosure requirements applicable to Party A, and
cause such affiliate to provide 20% Cap Financial Disclosure
and
(B) provide an indemnity to the Depositor, reasonably
satisfactory
to the Depositor, in relation to the 20% Cap Financial
Disclosure.
Any such 20% Cap Financial Disclosure provided pursuant to this
paragraph (e) shall be in a form suitable for conversion to the
format required for filing by the Depositor with the Securities
and Exchange Commission via the Electronic Data Gathering and
Retrieval System (EDGAR). If permitted by Regulation AB, any
required 20% Cap Financial Disclosure may be provided by
incorporation by reference from reports filed pursuant to the
Securities Exchange Act.
11
Additional Termination Events
The
following Additional Termination Events will apply:
(a)
a Ratings
Event has occurred and Party A has not, within thirty
(30) days, complied with Section 12 below, then an Additional
Termination Event shall have occurred with respect to Party A
and
Party A shall be the sole Affected Party with respect to such
Additional Termination Event.
(b)
If (A) the
Depositor still has a reporting obligation with respect
to this Transaction pursuant to Regulation AB and (B) Party A
has
not, within 30 days after receipt of a 10% Cap Disclosure
Request
complied with the provisions set forth in clauses (b) and (c)
of
Paragraph 10 above (provided that if the significance
percentage
is 10% or more and less than 20% when the 10% Cap Disclosure
Request is made or reaches 10% after a 10% Cap Disclosure
Request
has
been made to Party A, Party A must comply with the provisions
set forth in clauses (b) and (c) of Paragraph 10 above within 3
calendar days of Party A being informed of the significance
percentage reaching 10% or more), then an Additional
Termination
Event shall have occurred with respect to Party A and Party A
shall be the sole Affected Party with respect to such
Additional
Termination Event.
(c)
If (A) the
Depositor still has a reporting obligation with respect
to this Transaction pursuant to Regulation AB and (B) Party A
has
not, within 30 days after receipt of a 20% Cap Disclosure
Request
complied with the provisions set forth in clauses (d) and (e)
of
Paragraph 10 above (provided that if the significance
percentage
is 20% or more when the 20% Cap Disclosure Request is made or
reaches 20% after a 20% Cap Disclosure Request has been made to
Party A, Party A must comply with the provisions set forth in
clauses (d) and (e) of Paragraph 10 above within 3 calendar
days
of Party A being informed of the significance percentage
reaching
20% or more), then an Additional Termination Event shall have
occurred with respect to Party A and Party A shall be the sole
Affected Party with respect to such Additional Termination
Event.
12
Ratings Event
If a
Ratings Event (as defined below) occurs with respect to Party A
(or
any
applicable Credit Support Provider), then Party A shall, at its
own
expense, (i) assign this Transaction within thirty (30) days of
such
Ratings Event to a third party that meets or exceeds, or as to
which any
applicable credit support provider meets or exceeds, the Approved
Ratings
Thresholds (as defined below) on terms substantially similar to
this
Confirmation, which party is approved by Party B, which approval
shall
not
be unreasonably withheld, (ii) obtain a guaranty of, or a
contingent
agreement of, another person with the Approval Rating Thresholds to
honor
Party A's obligations under this Agreement, provided that such
other
person is approved by Party B, such approval not to be
unreasonably
withheld, (iii) post collateral under agreements and other
instruments
satisfactory to Fitch Ratings ("Fitch"), Standard & Poor's, a
division of
The McGraw-Hill
Companies ("S&P") and Moody's Investor Service, Inc.
("Moody's"), which will be sufficient to restore the immediately
prior
ratings of the Certificates, or (iv) establish any other
arrangement
satisfactory to Fitch, S&P and Moody's which will be sufficient
to
restore the immediately prior ratings of the Certificates. For
avoidance
of
doubt, a downgrade of the ratings on the Certificates could occur
in
the
event that Party A does not post sufficient collateral. For
purposes
of
this Transaction, a "Ratings Event" shall occur with respect to
Party
A
(or any applicable cr
