Exhibit 10.6
 
 

5 The North Colonnade
Canary Wharf
London
E14 4BB
United Kingdom
 
   Tel: +44 (0) 20 7623 2323

 
 FM/ATAX II TEBS – Series M-031
 
Barclays Reference Number: nyk0f444ae2/35081863B
 
USI: 1030209452101135081863BZZZZZZZZZZZZZZZZZZZ
 
Seller LEI: G5GSEF7VJP5I7OUK5573
 
Buyer LEI: 54930060N608ZCQZDB93
 

 
RATE CAP AGREEMENT (SIFMA)
 
THIS RATE CAP AGREEMENT (this “Agreement”) is dated as of July 7, 2014 between
BARCLAYS BANK PLC (LONDON HEAD OFFICE) (the “Seller”) and ATAX TEBS II, LLC, a
Delaware limited liability company (the “Buyer”), whereby the parties agree as
follows:
 
Section 1.  Definitions and Incorporated Terms.  For purposes of this Agreement,
the terms set forth below in the Cap Transaction Profile or in Exhibit A shall
have the meanings there indicated and capitalized terms that are used and not
otherwise defined herein shall have the meanings given to them (as completed
herein, where applicable) in the 2006 ISDA Definitions as published by the
International Swaps and Derivatives Association, Inc.
 
Cap Transaction Profile
 
Notional Amount:
USD $31,565,000 (amortizing pursuant to Schedule 1 attached hereto)
   
Trade Date:
July 7, 2014
   
Effective Date:
July 10, 2014
   
Termination Date:
August 15, 2019
   
Fixed Amount:
     
Fixed Rate Payer:
Buyer
   
Buyer’s Payment Date:
July 10, 2014

 
 

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Fixed Amount:
USD $315,200
   
Floating Amounts:
     
Floating Rate Payer:
Seller
   
Cap Rate:
3.00% per annum
   
Payment Dates:
Fifteenth (15th) calendar day of each month, commencing on August 15th, 2014,
and ending on the Termination Date, subject to adjustment in accordance with the
Following Business Day Convention.
   
Period End Dates:
Fifteenth  calendar day of each month, not subject to adjustment.
   
Floating Rate Option:
USD-SIFMA Municipal Swap Index
   
Floating Rate Day
     
Count Fraction:
Actual/Actual
   
Reset Dates:
Effective Date and thereafter Weekly on Thursday.
   
Weighted Average Method:
Applicable
   
Business Days:
A day other than (a) a Saturday or a Sunday, (b) any day on which banking
institutions located in the city of New York, New York are authorized or
required by law to close, (c) a day on which the New York Stock Exchange is
closed or (d) any day on which Freddie Mac is closed.
   
Rounding Convention:
The simple arithmetic mean of rates expressed as a percentage rounded to five
decimal places.
   
Calculation Agent:
The Seller

 
Additional Defined Terms
 
“Credit Support Document” means the Guaranty of the Credit Support Provider, if
any, and the Credit Support Annex, each as identified in Exhibit A hereto.
 
“Credit Support Provider” means the Person (if any) identified as such in Part 3
of Exhibit A.
 
“Damages” means an amount determined as provided in Section 11(b).
 
“Early Termination Date” has the meaning given to that term in Section 10(b).
 

 
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“Local Business Day” in relation to a party means a day on which commercial
banks in the city indicated in that party’s address for notices hereunder are
open for business.
 
“Market Quotation” means an amount determined as provided in Section 12.
 
“Person” means an individual, an estate, a trust, a corporation, a partnership,
a limited liability company, or any other organization or entity, whether
governmental or private.
 
“Reference Market-maker” has the meaning given to that term in Section 12(a).
 
“Taxes,” with respect to payments hereunder by the Seller, means any present or
future taxes, levies, imposts, duties or charges of any nature whatsoever that
are collectible by withholding except for any such tax, levy, impost, duty or
charge that would not have been imposed but for the existence of a connection
between the Buyer and the jurisdiction where the Tax is imposed.
 
“Termination Event” has the meaning given to that term in Section 9.
 
Section 2.  Payments.  On the Payment Date for the Buyer, it shall pay the Fixed
Amount and, on each Payment Date for the Seller, it shall pay the Floating
Amount for the Calculation Period ending on that Payment Date.  The Seller’s
obligation to make any payment hereunder shall be subject to the condition
precedent that the Buyer has paid the Fixed Amount.  If the Buyer fails to pay
the Fixed Amount to the Seller as and when due hereunder and does not remedy the
failure on or before the third Local Business Day after notice from the Seller,
the Seller may, by notice to the Buyer given not later than the fifth Local
Business Day after the end of the Buyer’s cure period, declare this Agreement to
be terminated, whereupon neither party shall have any further obligation
hereunder, except for the Buyer’s obligation to pay interest pursuant to
Section 4.  Notwithstanding the foregoing, the Buyer shall, upon failure to pay
the Fixed Amount, remain liable to the Seller to pay the value of this
Agreement, calculated, on the date Seller declares this Agreement terminated, on
the basis of Market Quotation, which, for purposes of this Section 2 only, shall
be determined pursuant to Section 12, substituting the word “Seller” in each
instance when the word “Buyer” is utilized in such section and the quotation
referred to in Section 12(b) shall be the amount in Dollars that a Reference
Market-Maker would charge as a Fixed Amount on such date of declaration of
termination; provided, however, that if a Market Quotation cannot be determined,
the Seller shall reasonably determine in good faith an amount equal to its total
losses and costs in connection with this Agreement, including any loss of
bargain, cost of funding or, at the election of the Seller but without
duplication, loss or cost incurred as a result of its terminating, liquidating,
obtaining or reestablishing any hedge or related trading position.  The value of
this Agreement, if any, shall be the original Fixed Amount less the amount of
the Market Quotation determined in the manner described in the previous
sentence.  If the difference is a negative number, the value of this Agreement
shall be zero.
 
Section 3.  Making of Payments.  All payments hereunder shall be made to the
account of the intended payee specified in Exhibit A, or to such other account
in New York City as that party may have last specified by notice to the party
required to make the payment.  All such payments shall be made in funds settled
through the New York Clearing House Interbank
 

 
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Payments System or such other same-day funds as are customary at the time for
the settlement in New York City of banking transactions denominated in Dollars.
 
Section 4.  Interest on Overdue Amounts.  If any amount due hereunder is not
paid when due, interest shall accrue on that amount to the extent permitted by
applicable law at a rate per annum equal for each day that amount remains unpaid
to the sum of 1% and the rate per annum equal to the cost (without proof or
evidence of any actual cost) to the intended payee (as certified by it) if it
were to fund or of funding the relevant amount for that day.
 
Section 5.  Supervening Illegality.  If it becomes unlawful for either party to
make any payment to be made by it hereunder, as a result of the adoption of, or
any change in, or change in the interpretation of, any law, regulation or
treaty, that party shall give notice to that effect to the other party and shall
use reasonable efforts (a) to assign or transfer its rights and obligations
under this Agreement, subject to Section 14, to another of its branches, offices
or affiliates, or to any leading participant in the interest rate cap market,
that may make those payments lawfully and without withholding for or on account
of Taxes or (b) to agree with that other party to modify this Agreement or
change the method of payment hereunder so that the payment will not be
unlawful.  If an assignment or agreement is not made as provided herein on or
before the tenth Business Day after that notice becomes effective, either party
may give notice of termination as provided in Section 10.
 
Section 6.  Taxes.
 
(a)           Except as otherwise required by law, each payment hereunder shall
be made without withholding for or on account of Taxes.  If a party is required
to make any withholding from any payment under this Agreement for or on account
of Taxes, it shall:
 
(i)           make that withholding;
 
(ii)           make timely payment of the amount withheld to the appropriate
governmental authority;
 
(iii)           forthwith pay the other party such additional amount as may be
necessary to ensure that the net amount actually received by it free and clear
of Taxes (including any Taxes on the additional amount) is equal to the amount
that it would have received had no Taxes been withheld; and
 
(iv)           on or before the thirtieth day after payment, send the payee the
original or a certified copy of an official tax receipt evidencing that payment;
provided, however, that if the representation and warranty made by a party in
Section 7(c) proves not to have been true when made or, if repeated on each
Payment Date, would not then be true, or if a party fails to perform or observe
any of its covenants set forth in Section 7 or Section 8, the other party shall
be under no obligation to pay any additional amount hereunder to the extent that
the withholding would not have been required if the representation and warranty
had been true when made, or would have been true if so repeated, or if the
failure had not occurred.
 

 
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(b)           If a party would be required to make any withholding for or on
account of Taxes and pay any additional amount as provided in Section 6(a) with
respect to any payment to be made by it in accordance with Section 2, it shall
give notice to that effect to the other party and shall use reasonable efforts
 
(i)           to assign or transfer its rights and obligations under this
Agreement, subject to Section 14, to another of its branches, offices or
affiliates, or to any leading participant in the interest rate cap market, that
may make the payments to be made by it hereunder lawfully and without
withholding for or on account of Taxes; or
 
(ii)           to agree with that other party to modify this Agreement or change
the method of payment hereunder so that those payments will not be subject to
the withholding.  If an assignment or agreement is not made as provided herein
on or before the tenth day after that notice becomes effective, the party that
would be required to make the withholding may give notice of termination as
provided in Section 10.
 
Section 7.  Representations and Warranties.
 
(a)           Each of the parties makes the representations and warranties set
forth below to the other as of the date hereof:
 
(i)           It is duly organized and validly existing and has the corporate,
partnership or other power as a company and the authority to execute and deliver
this Agreement and to perform its obligations hereunder;
 
(ii)           It has taken all necessary action to authorize its execution and
delivery of this Agreement and the performance of its obligations hereunder;
 
(iii)           All governmental authorizations and actions necessary in
connection with its execution and delivery of this Agreement and the performance
of its obligations hereunder have been obtained or performed and remain valid
and in full force and effect;
 
(iv)           This Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with the terms of this Agreement, subject to all applicable
bankruptcy, insolvency, moratorium and similar laws affecting creditors’ rights
generally;
 
(v)           There are no actions, proceedings or claims pending or, to its
knowledge, threatened, the adverse determination of which might have a
materially adverse effect on its ability to perform its obligations under, or
affect the validity or enforceability against it of, this Agreement;
 
(vi)           Each of the documents delivered by it hereunder is, as of the
date stated in such document, true, accurate and complete in every material
respect or,
 

 
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in the case of financial statements, fairly presents the condition of the Person
indicated therein; and
 
(vii)           Its execution, delivery and performance of this Agreement 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.
 
(b)           The Seller makes the following additional representations and
warranties to the Buyer:
 
(i)           No event or condition that constitutes (or that with the giving of
notice or the lapse of time or both would constitute) a Termination Event with
respect to it has occurred and is continuing or will occur by reason of its
entering into or performing its obligations under this Agreement.
 
(ii)           Seller is and shall be the reporting party for the Transaction
pursuant to Section 4r(a)(3) of the Commodity Exchange Act, as amended (“CEA”),
and shall report the Transaction to a Swap Data Repository (as defined in
Section 1a(48) of the CEA, pursuant to any requirements of 17 CFR Part 44, 45
and 46 applicable to the Transaction.
 
(c)           In addition, if an Exhibit B on Tax Representations and Covenants
is made a part of this Agreement, each of the Buyer and the Seller makes the
representations and warranties set forth therein to the other and covenants as
set forth therein with the other with respect to certain matters relating to
Taxes.
 
(d)           Buyer represents that it is not a governmental,
quasi-governmental, municipal or similar public entity and is not otherwise
owned or controlled by any such entity.
 
Section 8.  Documents.  At or before the time of execution of this Agreement,
each party shall deliver to the other evidence of the truth and accuracy of its
representations in subsections (ii) and (iii) of Section 7(a) as well as
evidence of the authority, incumbency and specimen signature of each Person
authorized to execute and deliver this Agreement or any other document to be
delivered under this Agreement on its behalf.  In addition, the Seller shall
deliver to the Buyer at the times specified in Part 2 of Exhibit A, each of the
documents there specified.
 
Section 9.  Termination Events.  For purposes of this Agreement, “Termination
Event” means each of the events and circumstances listed below:
 
(a)           The Seller fails to pay any amount payable by it hereunder as and
when that amount becomes payable and does not remedy that failure on or before
the third Local Business Day after notice from the Buyer of the failure;
 
(b)           Any representation or warranty made by the Seller in this
Agreement, other than in Section 7(c), or made by any Credit Support Provider in
any Credit Support
 

 
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Document (or document related thereto) delivered hereunder proves to have been
incorrect, incomplete or misleading in any material respect at the time it was
made, or the Seller fails to deliver any document it is required to deliver as
provided in Part 2 of Exhibit A and does not remedy that failure on or before
the thirtieth day after notice from the Buyer of the failure or, in the case of
failure to deliver a Credit Support Document, does not remedy that failure
immediately;
 
(c)           The Seller or any Credit Support Provider becomes the subject of
any action or proceeding for relief under any bankruptcy or insolvency law or
any law affecting creditors’ rights that is similar to a bankruptcy or
insolvency law or law relating to the composition of debts or seeks or becomes
subject to the appointment of a receiver, custodian or similar official for it
or any of its property or fails or is unable to pay its debts generally as they
fall due;
 
(d)           The Seller or any Credit Support Provider fails to pay any amount
payable by it to the Buyer under any other agreement or under any instrument of
the Seller or any Credit Support Provider held by the Buyer and does not remedy
that failure during any applicable cure period;
 
(e)           (i) There occurs a default, an event of default or another similar
condition or event (however described) in respect of the Seller or any Credit
Support Provider for the Seller under one or more agreements or instruments
relating to Specified Indebtedness in an aggregate amount of not less than the
Threshold Amount and as a result such Specified Indebtedness has been or may be
declared due and payable before it would otherwise have been due and payable or
(ii) there occurs a default by the Seller or any such Credit Support Provider in
making one or more payments on the due date thereof in an aggregate amount of
not less than the Threshold Amount under any such agreements or instruments or
under any Specified Transaction (after giving effect to any applicable notice
requirement or grace period) or (iii) the combined amounts of Specified
Indebtedness covered by clauses (i) and (ii) at least equal the Threshold
Amount.
 
For this purpose, “Specified Indebtedness,” with respect to any Person, means
all obligations of that Person (whether present or future, contingent or
otherwise, as principal or surety or otherwise) in respect of borrowed money,
excluding deposits received in the ordinary course of its banking business;
“Specified Transaction” means any rate swap, currency swap, cross-currency swap,
commodity-price swap, equity, equity-index, debt-linked or debt-index-linked
swap, rate cap, floor or collar, forward rate agreement, forward or spot foreign
exchange transaction, interest rate, currency or commodity-price option, any
cash-settled option on a security or index or group of securities, any
combination of any of the foregoing and any similar transaction; and “Threshold
Amount” means an amount equal to the value of two percent (2%) of shareholder’s
equity of the Seller (or the equivalent in any other currency or currencies),
determined in accordance with generally accepted accounting principles in the
Seller’s jurisdiction of incorporation or organization, as at the end of the
Seller’s most recently completed fiscal year;
 
(f)           Any Credit Support Provider fails to comply with or perform any
agreement or obligation to be complied with or performed by it in accordance
with any
 

 
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Credit Support Document to which it is a party if the failure is not remedied
during any applicable cure period; or any Credit Support Document expires or
terminates or fails or ceases to be in full force and effect (in either case,
other than in accordance with its terms) prior to the satisfaction of all
obligations of the Seller under this Agreement; or any Credit Support Provider
or any Person purporting to act on its behalf disaffirms, disclaims, repudiates
or rejects, in whole or in part, or challenges the validity of, any Credit
Support Document to which it is a party;
 
(g)           The Seller or any Credit Support Provider consolidates or
amalgamates with, or merges with or into, or transfers all or substantially all
its assets to, another entity, and the creditworthiness of the resulting,
surviving or transferee entity is materially weaker than that of the Seller or
such Credit Support Provider (as the case may be) as determined by the Buyer or
Freddie Mac immediately prior to such action; or
 
(h)           If at any time the unsecured, unsubordinated long term obligations
of the Seller are rated below A+ by S&P (or such rating is suspended or
withdrawn) or below A1 by Moody’s (or such rating is suspended or withdrawn),
(any such event, a “Credit Event”), and within five Business Days of the
issuance of such a rating, either (a) Seller fails to post collateral to Buyer
sufficient to secure Seller’s obligation hereunder pursuant to a Credit Support
Annex attached hereto as Exhibit C and incorporated herein by reference, or
(b) either Buyer or Seller, each using its good faith efforts, fails to find a
party acceptable to the other party hereto and to Freddie Mac, which acceptance
shall not be unreasonably withheld, to which all of Seller’s interests and
obligations under this Agreement shall be assigned at no cost to Buyer, and
following which Seller shall be released from all obligations hereunder.
 
Section 10.   Early Termination.
 
(a)           At any time while a Termination Event is continuing, the Buyer
may, with the prior written consent of Freddie Mac, or Freddie Mac may, in its
absolute discretion, give notice of termination in accordance with this
Section.  If a party gives notice of supervening illegality, either party may
give notice of termination in accordance with this Section in the circumstances
described in Section 5.  If a party is required to pay any additional amount
pursuant to Section 6, it may give notice of termination in accordance with this
Section in the circumstances described in Section 6.
 
(b)           At any time while an event under Paragraph 7 of the Credit Support
Annex is continuing where the Buyer (or its Custodian) is the party failing to
take an action or comply with the provisions specified therein, the Seller may,
in its absolute discretion give notice of termination in accordance with this
Section.  For purposes of calculating the amount due under Sections 11 and 12
hereof in connection with a notice of termination under this Section 10(b), the
Market Quotation shall be determined pursuant to Section 12, substituting the
word “Seller” in each instance when the word “Buyer” is utilized in such section
and the quotation referred to in Section 12(b) shall be the amount in Dollars
that a Reference Market Maker would charge as a Fixed Amount on such date of
declaration of termination; provided, however, that if a Market Quotation cannot
be determined, the Seller shall reasonably determine in good faith an amount
 

 
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equal to its total losses and costs in connection with this Agreement including
any loss of bargain, costs of funding or, at the election of the Seller but
without duplication, loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading position.
 
(c)           Any notice of termination hereunder
 
(i)           shall state the grounds for termination;
 
(ii)           shall specify a date that is not before, nor more than 10 days
after, the date the notice of early termination is given on which the payments
required by Section 11 shall be made as provided therein (the “Early Termination
Date”); and
 
(iii)           shall declare the obligations of the Seller to make the payments
required by Section 2 that are scheduled to be made after the Early Termination
Date to be terminated as of that date, and those obligations shall so terminate
and be replaced by the parties’ obligations to make the payments specified in
Section 11.
 
Section 11.  Payments Upon Early Termination.
 
(a)           If notice of termination is given pursuant to Section 10, the
Seller shall pay the Buyer its Damages.
 
(b)           The Buyer’s Damages in the event of early termination shall be the
Market Quotation, if it can be determined.  If it cannot be determined, the
Buyer’s Damages shall be an amount in Dollars equal to the sum of the losses
(including loss of bargain) that it may incur as a result of the early
termination or as a result of the event that served as the ground for early
termination.
 
(c)           Payments to be made in accordance with this Section shall be made
on the Early Termination Date.  If the Buyer is entitled to be paid any amount
in respect of its Damages in accordance with this Section, it shall submit to
the Seller a statement in reasonable detail of those Damages.
 
Section 12.  Market Quotation.
 
(a)           For the purpose of determining the Market Quotation, the Buyer
shall select, with the consent of Freddie Mac, four leading participants in the
interest rate cap market (each a “Reference Market-maker”), in its sole
discretion and in good faith, with a view to minimizing the Market Quotation (to
the extent required by law); provided, however, that in doing so the Buyer shall
be entitled to select market participants that are of the highest credit
standing and that otherwise satisfy all the criteria that the Buyer applies
generally at the time in deciding whether to enter into an interest rate
protection transaction.
 

 
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(b)           The Buyer shall request from each of the Reference Market-makers
it has selected a quotation of the amount in Dollars which that Reference
Market-maker would charge on the Early Termination Date as a flat amount for
entering into an agreement, effective on the Early Termination Date, pursuant to
which it would be obligated to make all the payments scheduled to be made by the
Seller under Section 2 of this Agreement after the Early Termination Date.
 
(c)           The Market Quotation shall be the arithmetic mean (rounded up, if
necessary, to the nearest cent) of the amounts described in Section 12(b) that
are quoted to the Buyer by the Reference Market-makers it has selected or, if
only one Reference Market-maker will quote such a fee, the Market Quotation
Value shall be the amount quoted by that Reference Market-maker.
 
Section 13.  Costs and Expenses.
 
(a)           Each of the parties shall pay, or reimburse the other on demand
for, all stamp, registration, documentation or similar taxes or duties, and any
penalties or interest that may be due with respect thereto, that may be imposed
by any jurisdiction in respect of its execution or delivery of this
Agreement.  If any such tax or duty is imposed by any jurisdiction as the result
of the conduct or status of both parties, each party shall pay one half of the
amount of the tax or duty.
 
(b)           The Seller shall pay, or reimburse the Buyer on demand for, all
reasonable costs and expenses incurred by the Buyer in connection with
enforcement of its rights under this Agreement or as a consequence of a
Termination Event, including, without limitation, fees and expenses of legal
counsel.
 
(c)           Upon the Buyer’s failure to pay the Fixed Amount pursuant to
Section 2, if the value of this Agreement is greater than zero as determined in
the manner described in Section 2, the Buyer shall pay, or reimburse the Seller
on demand for, all reasonable costs and expenses incurred by the Seller in
connection with enforcement and protection of its rights under this Agreement
including, without limitation, fees and expenses of legal counsel.
 
Section 14.  Nonassignment. Neither party shall assign or otherwise transfer its
rights or obligations hereunder or any interest herein to any other Person or
any of its other branches or offices without the prior written consent of the
other party to this Agreement and Freddie Mac, unless the assignment or transfer
by the Seller is pursuant to Section 5 or Section 6 and provided that:
 
(a)           the Seller gives the Buyer 10 Business Days’ prior written notice
of the assignment or transfer;
 
(b)           the assignee or transferee meets the criteria set forth in
Section 5(a) or Section 6(b), as the case may be;
 

 
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(c)           the credit policies of the Buyer or Freddie Mac at the time would
permit the Buyer to purchase an interest rate cap from the assignee or
transferee without credit support;
 
(d)           a Termination Event does not occur as a result of such transfer;
 
(e)           on or prior to the effective date of the transfer, this Agreement
(including, without limitation, any Tax covenants (if any) in Exhibit B to this
Agreement) and all other related documents shall have been amended to reflect
the transfer in a manner reasonably satisfactory to Buyer; and
 
(f)           on or prior to the effective date of the transfer, Seller shall
have agreed in writing to indemnify and hold harmless Buyer in a manner
reasonably satisfactory to Buyer from and against any adverse tax consequences
and any related fees, expenses and other losses resulting from the transfer,
subject to the following conditions:  (i) notwithstanding Seller’s duty to
indemnify Buyer, Buyer shall at all times retain sole control and
decision-making authority with regard to any tax issues affecting Buyer or
related litigation arising from or in connection with said transfer; and
(ii) such indemnification shall be made as such expenses are incurred by Buyer
and at such time as Buyer is required to pay any such tax liability, provided
that Seller shall not be required to make such indemnification until five
Business Days after it has received written notice from Buyer of expenses or
liabilities for which Buyer seeks reimbursement.
 
Any purported transfer in violation of this Section shall be void.  The parties
are acting for purposes of this Agreement through their respective branches or
offices specified in Exhibit A.
 
The Seller shall not withhold its consent to an assignment or transfer proposed
by the Buyer, or by any subsequent assignee or transferee of the Buyer, if the
Seller would be entitled to make the payments it is required to make pursuant to
Section 2 to the proposed assignee or transferee lawfully and without
withholding for or on account of Taxes and the proposed assignee or transferee
assumes the obligations of the Buyer under the Tax covenants (if any) of the
Buyer in Exhibit B to this Agreement to the satisfaction of the
Seller.  Notwithstanding the provisions of this Section 14 to the contrary, the
Seller consents to the assignment of the Buyer’s interest herein ultimately to
Freddie Mac, its successors and Permitted Assigns.  “Permitted Assigns”, with
respect to Freddie Mac, means any national banking association organized under
the laws of the United States or Deutsche Bank Trust Company Americas, which in
either case serves as trustee (“Trustee”) of a Freddie Mac-sponsored
securitization trust and its successors and assigns.  No assignment by Freddie
Mac of its security interest in this Agreement shall be effective with respect
to the Seller until delivery by Freddie Mac to the Seller of a notification of
such assignment, which notification shall include the name and contact
information of the Trustee and of the servicer which shall be entitled to act on
behalf of the Trustee.  Buyer and Seller agree that, following receipt of such
notice, the Trustee or the designated servicer shall be entitled to exercise all
rights of Freddie Mac set forth herein.  Accordingly, all payments hereunder
shall be made in accordance with Section 3 hereof and to the account of Freddie
Mac as specified in Exhibit A hereto.  The Seller
 

 
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agrees that Freddie Mac may exercise the rights of the Buyer hereunder from time
to time, and Buyer agrees that the Seller may rely conclusively on the written
instructions of Freddie Mac to Seller made pursuant to this Agreement.
 
Section 15.  Waivers: Rights Not Exclusive.  No failure or delay by a party in
exercising any right hereunder shall operate as a waiver of, or impair, any such
right.  No single or partial exercise of any such right shall preclude any other
or further exercise thereof or the exercise of any other right.  No waiver of
any such right shall be effective unless given in writing.  No waiver of any
such right shall be deemed a waiver of any other right hereunder.  The right to
terminate provided for herein is in addition to, and not exclusive of, any other
rights, powers, privileges or remedies provided by law.
 
Section 16.   Interpretation.  The section headings in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision hereof.
 
Section 17.   Notices.  All notices in connection with this Agreement shall be
given by telex or cable or by notice in writing hand-delivered or sent by
facsimile transmission or by airmail, postage prepaid.  All such notices shall
be sent to the telex or telecopier number or address (as the case may be)
specified for the intended recipient in Exhibit A (or to such other number or
address as that recipient may have last specified by notice to the other
party).  All such notices shall be effective upon receipt, and confirmation by
answerback of any notice sent by telex as provided herein shall be sufficient
evidence of receipt thereof, and telephone confirmation of receipt of any
facsimile transmission in accordance with Exhibit A shall be sufficient evidence
of receipt thereof.
 
Section 18.   Amendments.  This Agreement may be amended only by an instrument
in writing executed by the parties hereto.
 
Section 19.   Survival.  The obligations of the parties under Section 6, Section
11 and Section 13 shall survive payment of the obligations of the parties under
Section 2 and Section 4 and the termination of their other obligations
hereunder.
 
Section 20.  Jurisdiction; Governing Law.
 
(a)           Any action or proceeding relating in any way to this Agreement may
be brought and enforced in the courts of the State of New York or of the
United States for the Southern District of New York, and each of the parties
irrevocably submits to the nonexclusive jurisdiction of each such court in
connection with any such action or proceeding.
 
(b)           This Agreement shall be governed by, and construed in accordance
with, the law of the State of New York without reference to its choice of law
doctrine.
 
Section 21.   Independence of this Agreement. It is the parties’ intention that
no other agreements or arrangements between them or any of their affiliates
affect the transaction provided for herein except as expressly provided
herein.  Therefore, except as expressly provided herein, the Seller’s obligation
to make payments to the Buyer hereunder shall not be subject to
 

 
12

--------------------------------------------------------------------------------

 

early termination or to any condition precedent, no such payment obligation
shall be netted against any payment due from the Buyer or any third party under
any other agreement or instrument, and neither the Seller nor any third party
shall have any right to set off any such payment due from the Seller to the
Buyer or withhold any such payment, in whole or in part, pending payment of any
amount payable by the Buyer or any third party to the Seller or any third
party.  In addition, the terms set forth in this provision may not be modified
except in a written amendment to this Agreement executed by both parties hereto
that (i) is expressly identified in capital letters as modifying this provision
(identified by its title) and (ii) deals only with such modification.
 
Section 22.   Waiver of Jury Trial. Each of the Buyer and the Seller,
respectively, hereby waives, to the fullest extent permitted by applicable law,
any right it may have to a trial by jury in respect of any suit, action or
proceeding relating to this Agreement or any Credit Support Document.  Each of
the Buyer and the Seller (i) certifies that no representative, agent or attorney
of the other party or any Credit Support Provider has represented, expressly or
otherwise, that such other party would not, in the event of such suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it
and the other party have been induced to enter into this Agreement and provide
for any Credit Support Document, as applicable, by, among other things, the
mutual waivers and certifications in this Section.
 
Section 23.   Setoff.  The obligation to pay amounts due hereunder shall be
absolute and unconditional and shall not be subject to diminution by set-off,
recoupment, counterclaim, abatement or otherwise.
 
Section 24.   Counterparts: Integration of Terms.  This Agreement may be
executed in counterparts, and the counterparts taken together shall be deemed to
constitute one and the same agreement.  This Agreement contains the entire
agreement between the parties relating to the subject matter hereof and
supersedes all oral statements and prior writings with respect thereto.
 
Section 25.   Contractual Currency.  The provision on Contractual Currency set
forth in Part 4 of Exhibit A will apply if the Seller or any Credit Support
Provider for the Seller is not organized in the U.S. or is acting through any
office outside the U.S.
 
Section 26.   Consent to Recording.  Each party (i) 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, (ii) waives any
further notice of such monitoring or recording, and (iii) agrees to notify (and,
if required by law, obtain the consent of) its officers and employees with
respect to such monitoring or recording.  Any such recording may be submitted in
evidence to any court or in any proceeding for the purpose of establishing any
matters pertinent to this Agreement.
 
 
 

 
13

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed
and delivered as of the day and year first written above.
 

 
BARCLAYS BANK PLC
 
 
By
/s/ Linda Alexander  
Name
Linda Alexander  
Title
Authorised Signatory

 
ATAX TEBS II, LLC, a Delaware limited liability company
 
 
By:
AMERICA FIRST MULTIFAMILY INVESTORS, L.P., a Delaware limited partnership
           
By:
AMERICA FIRST CAPITAL ASSOCIATES LIMITED PARNTERSHIP TWO, a Delaware limited
partnership, its general partner
               
By:
THE BURLINGTON GROUP, LLC, a Delaware limited liability company, its general
partner
               
By:
/s/ Mark Hiatt
       
Mark Hiatt
       
Chief Operating Officer

 

 
[Signature Page to ATAX TEBS II Rate Cap Agreement]
 

 
14

--------------------------------------------------------------------------------

 

SCHEDULE I
 
AMORTIZATIONSCHEDULE
 
 
From and Including
To but Excluding
Notional Amount
7/10/2014
7/15/2014
$31,565,000.00
7/15/2014
8/15/2014
$31,565,000.00
8/15/2014
9/15/2014
$31,563,000.00
9/15/2014
10/15/2014
$31,561,000.00
10/15/2014
11/15/2014
$31,559,000.00
11/15/2014
12/15/2014
$31,557,000.00
12/15/2014
1/15/2015
$31,555,000.00
1/15/2015
2/15/2015
$31,553,000.00
2/15/2015
3/15/2015
$31,546,550.34
3/15/2015
4/15/2015
$31,540,077.34
4/15/2015
5/15/2015
$31,525,105.67
5/15/2015
6/15/2015
$31,510,068.34
6/15/2015
7/15/2015
$31,494,964.67
7/15/2015
8/15/2015
$31,479,794.34
8/15/2015
9/15/2015
$31,464,557.34
9/15/2015
10/15/2015
$31,444,591.67
10/15/2015
11/15/2015
$31,424,535.67
11/15/2015
12/15/2015
$31,404,388.34
12/15/2015
1/15/2016
$31,372,482.00
1/15/2016
2/15/2016
$31,351,817.34
2/15/2016
3/15/2016
$31,325,657.34
3/15/2016
4/15/2016
$31,299,378.00
4/15/2016
5/15/2016
$31,271,253.34
5/15/2016
6/15/2016
$31,242,998.67
6/15/2016
7/15/2016
$31,214,613.67
7/15/2016
8/15/2016
$31,186,097.67
8/15/2016
9/15/2016
$31,157,449.67
9/15/2016
10/15/2016
$31,128,670.00
10/15/2016
11/15/2016
$31,099,757.00
11/15/2016
12/15/2016
$31,070,710.00
12/15/2016
1/15/2017
$31,028,195.00
1/15/2017
2/15/2017
$30,998,878.34
2/15/2017
3/15/2017
$30,969,426.67
3/15/2017
4/15/2017
$30,939,838.67
4/15/2017
5/15/2017
$30,910,114.00
5/15/2017
6/15/2017
$30,880,251.67
6/15/2017
7/15/2017
$30,850,250.34
7/15/2017
8/15/2017
$30,820,109.67
8/15/2017
9/15/2017
$30,789,829.34
9/15/2017
10/15/2017
$30,759,408.67
10/15/2017
11/15/2017
$30,728,846.34
11/15/2017
12/15/2017
$30,698,141.67

 
A-1

--------------------------------------------------------------------------------

 

From and Including
To but Excluding
Notional Amount
12/15/2017
1/15/2018
$30,652,294.34
1/15/2018
2/15/2018
$30,621,304.34
2/15/2018
3/15/2018
$30,590,170.00
3/15/2018
4/15/2018
$30,558,557.67
4/15/2018
5/15/2018
$30,526,800.00
5/15/2018
6/15/2018
$30,494,896.00
6/15/2018
7/15/2018
$30,462,845.00
7/15/2018
8/15/2018
$30,430,646.00
8/15/2018
9/15/2018
$30,398,298.34
9/15/2018
10/15/2018
$30,365,801.34
10/15/2018
11/15/2018
$30,333,155.00
11/15/2018
12/15/2018
$30,300,357.67
12/15/2018
1/15/2019
$30,252,408.67
1/15/2019
2/15/2019
$30,219,307.34
2/15/2019
3/15/2019
$30,186,052.67
3/15/2019
4/15/2019
$30,152,644.34
4/15/2019
5/15/2019
$30,119,081.67
5/15/2019
6/15/2019
$30,085,363.67
6/15/2019
7/15/2019
$30,051,489.67
7/15/2019
8/15/2019
$30,017,458.34

 

 
A-2

--------------------------------------------------------------------------------

 

EXHIBIT A
 
NOTICE ADDRESSES AND OTHER MATTERS
 
Part 1:                        Addresses for Notices and Accounts for Payments:
 
The Seller:
 

Address:
 
BARCLAYS BANK PLC
745 Seventh Avenue
New York, New York 10019
United States of America
Attention:  Head of Derivatives PTS, Americas
By electronic email:  IRDConfirmations@barclays.com
With copy to:  muni_deriv_middleoffice@barclays.com

Payments to Seller:
     
Bank:
Barclays Bank Plc, New York
 
ABA No.:
026-0025-74
 
A/C:
Barclays Bank Plc London
 
Favour:
Barclays Swaps & Options Group, New York A/C No.:  050-01922-8
     

The Buyer:

Address:
 
ATAX TEBS II, LLC
1004 Farnam Street, Suite 400
Omaha, Nebraska 68102
Attention: Chad L. Daffer
Phone: 402.930.3085
Fax: 402.930.3047
 
With a copy to:
Mark Hiatt
1004 Farnam Street, Suite 400
Omaha, Nebraska 68102
Phone: 402.930.3085
Fax: 402.930.3047
 
with a copy to:
 
Kutak Rock LLP
1650 Farnam Street
Omaha, Nebraska 68102
Attention:  Conal Hession
Facsimile:  (402) 231-8806
Telephone: (402) 346-1148
 

 
A-1

--------------------------------------------------------------------------------

 

copies to Freddie Mac:

Address:
 
Federal Home Loan Mortgage Corporation
8100 Jones Branch Drive
Mail Stop B2E
McLean, Virginia  22102
Attention:  Multifamily Loan Accounting/Operational Close
Telephone:  (703) 714-4177
Fax:  571-382-4798
E-Mail:  mfla@freddiemac.com
and
 
 
Federal Home Loan Mortgage Corporation
8100 Jones Branch Drive
Mail Stop B4G
McLean, Virginia  22102
Attention:  Multifamily Asset Management/Servicing
Telephone:  (703) 714-3194 (Steve Power)
E-Mail:  mf_spi_hedge@freddiemac.com
 
and
 
 
Federal Home Loan Mortgage Corporation
8200 Jones Branch Drive
Mail Stop 210
McLean, Virginia  22102
Attention:  Managing Associate General Counsel - Multifamily Real Estate (Legal
Division)
Telephone:  (703) 903-2538
E-Mail:  Joshua_schonfeld@freddiemac.com
 

Payments to Buyer (pursuant to Section 3, payments are to be made as will be
specified):
 
Bank Name: FRB New York
Bank ACCT Name: FHLMC Investor PI
ABA #:021039513
Bank ACCT #: 380530
Reference: MFTEBS
ATTN: MFRRO – Loan Accounting (703) 714-4177
 
Part 2:                        Documents to be delivered by the Seller to the
Buyer contemporaneously with this Rate Cap Agreement:
 

 
A-2

--------------------------------------------------------------------------------

 

(a)
Credit Support Document to be delivered by the Seller:  Credit Support Annex on
standard ISDA form with paragraph 13 in the form attached as Exhibit C hereto.

 
(b)
Items referenced in Section 8.

 
Document to be delivered by the Buyer to the Seller contemporaneously with this
Rate Cap Agreement:
 
(a)
Evidence of the authority, incumbency and specimen signature of the party
executing this Agreement.

 
Part 3:                        Credit Support Provider for the Seller:  NONE
 
Part 4:                        Each reference in this Agreement to Dollars (the
“Contractual Currency”) is of the essence.  The obligation of each party in
respect of any amount due under this Agreement in the Contractual Currency is,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
Contractual Currency that the intended payee may, in accordance with normal
banking procedures, purchase with the sum paid in that other currency (after any
premium and costs of exchange) on the Business Day in New York City immediately
following the day on which that payee receives the payment.  If the amount in
the Contractual Currency that may be so purchased for any reason falls short of
the amount originally due, the party owing that amount shall pay such additional
amount, in the Contractual Currency, as is necessary to compensate for the
shortfall.  Any obligation of that party not discharged by that payment shall,
to the fullest extent permitted by applicable law, be due as a separate and
independent obligation and, until discharged as provided herein, shall continue
in full force and effect.
 

 
A-3

--------------------------------------------------------------------------------

 

EXHIBIT B
 
TAX REPRESENTATIONS AND COVENANTS
 
A.           Tax Representations and Covenants
 
Representations of each of the Seller and the Buyer
 
It is not required by any applicable law, as modified by the practice of any
relevant governmental authority, to make any deduction or withholding for or on
account of any Tax from any payment (other than interest under Section 4 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 representation made by
the other party below in this Exhibit and (ii) the satisfaction of the covenant
of that other party contained below in this Exhibit and the accuracy and
effectiveness of any document provided by that other party pursuant to any such
covenant.
 
B.           Payee Tax Representations
 
Of the Seller:
 
 
(i)
With respect to payments made to Seller which are not effectively connected to
the United States, Seller is a non-U.S. branch of a foreign person for United
States federal income tax purposes.

 
 
(ii)
With respect to payments made to Seller which are effectively connected to the
United States, each payment received or to be received by Seller in connection
with this Agreement will be effectively connected with its conduct of a trade or
business in the United States.

 
Of the Buyer:
 
Buyer is a United States person for purposes of the United States Internal
Revenue Code of 1986, as amended, and is not acting as an agent or intermediary
for a foreign Person.
 
C.           Covenants
 
Of Each Party:
 
It will give notice of any failure of a representation set forth in this Exhibit
B and made by it under Section 7(c) of this Agreement to be accurate and true
promptly upon learning of such failure.
 
If a party is required at any time to execute any form or document in order for
payments to it hereunder to qualify for exemption from withholding for or on
account of Taxes or to qualify for such withholding at a reduced rate, that
party shall, as soon as practicable after request from the other party, execute
the required form or document and deliver it to that other party.
 

 
B-1

--------------------------------------------------------------------------------

 

Of the Seller:
 
None
 
Of the Buyer:
 
None
 

 
B-2

--------------------------------------------------------------------------------

 

EXHIBIT C
 

 
FORM OF PARAGRAPH 13 OF CREDIT SUPPORT ANNEX
 
Paragraph 13.  Elections and Variables
 
(a)
Security Interest for “Obligations.”  The term “Obligations” as used in the
Annex includes the following additional obligations:  Not Applicable.

 
(b)
Credit Support Obligations.

 
 
(i)
Delivery Amount, Return Amount and Credit Support Amount.

 
 
(A)
“Delivery Amount” has the meaning specified in Paragraph 3(a), unless otherwise
specified here:  None Specified

 
 
(B)
“Return Amount” has the meaning specified in Paragraph 3(b), unless otherwise
specified here:  None Specified

 
 
(C)
“Credit Support Amount” means, for any Valuation Date (i) the Secured Party’s
Exposure for that Valuation Date plus (ii) the aggregate of all Independent
Amounts applicable to the Pledgor, if any, minus (iii) the Pledgor’s Threshold;
provided, however, that (x) in the case where the sum of the Independent Amounts
applicable to the Pledgor exceeds zero, the Credit Support Amount will not be
less than the sum of all Independent Amounts applicable to the Pledgor and (y)
in all other cases, the Credit Support Amount will be deemed to be zero whenever
the calculation of Credit Support Amount yields an amount less than zero.

 
 
(ii)
Eligible Collateral.  Debt obligations of the Federal Home Loan Mortgage
Corporation shall not qualify as “Eligible Collateral.”  The following items
will qualify as “Eligible Collateral”:

 

 
Remaining Maturity
ICAD Code
One (1) year or under
More than one (1) year up to and including five (5) years
More than five (5) years up to and including ten (10) years
More than ten (10) years
         
US-CASH
100%
N/A
N/A
N/A
US-TBILL
99%
N/A
N/A
N/A
US-TNOTE
99%
98%
95%
N/A
US-TBOND
99%
98%
95%
95%
         

 

 
C-1

--------------------------------------------------------------------------------

 

 
(iii)
Other Eligible Support.  There shall be no “Other Eligible Support” for either
Party A or Party B.

 
 
(iv)
Thresholds.

 
 
(A)
“Independent Amount” for Pledgor means zero.

 
 
(B)
“Threshold” for the Pledgor means the amounts determined on the basis of the
lower of the Long Term Debt Ratings set forth in the following table, provided,
however, that if (i) the Pledgor has no Long Term Debt Rating, or (ii) an Event
of Default has occurred and is continuing with respect to the Pledgor, the
Threshold shall be USD$0.

 
Long Term Debt Rating
(the lower of S&P/Moody’s)
Threshold
   
A+/A1 or above
Infinity
A/A2
$1,000,000
At or below A-/A3
$0

____________________________________
As used herein:
 
“Long Term Debt Rating” means with respect to the Pledgor, the public or private
rating assigned by S&P or Moody’s, to the extent the Pledgor is rated by such
organization, to the long term, unsecured and unsubordinated indebtedness of
such party, or, if applicable, the Credit Support Provider.  If a party has been
assigned a private rating by S&P or Moody’s, such party is responsible to advise
the Secured Party of such private rating and of any changes to such private
rating to the other party and to provide any relevant credit reports to the
other party.
 
“S&P” means Standard & Poor’s Ratings Group.
 
“Moody’s” means Moody’s Investors Service.
 
 
(C)
“Minimum Transfer Amount” means, with respect to Pledgor and the Secured Party,
USD$10,000; provided, that if an Event of Default has occurred and is continuing
with respect to Pledgor, the Minimum Transfer Amount with respect to Pledgor
shall be zero.

 
 
(D)
Rounding.  The Delivery Amount and the Return Amount will be rounded up or down
respectively to the nearest integral multiple of USD$1,000.

 
(c)
Valuation and Timing.

 
 
(i)
“Valuation Agent” means, for purposes of Paragraphs 3 and 5, the party making
the demand under Paragraph 3, and, for purposes of Paragraph 6(d), the Secured
Party receiving or deemed to receive the Distributions or the Interest Amount,
as applicable.  In addition, the Valuation Agent will be the Secured Party for

 

 
C-2

--------------------------------------------------------------------------------

 

purposes of calculating Value in connection with substitutions pursuant to
Paragraph 4(d).
 
 
(ii)
“Valuation Date” means each Local Business Day.

 
 
(iii)
“Valuation Time” means the closing of business in the city of the Valuation
Agent on the Local Business Day preceding the Valuation Date or the date of
calculation, as applicable, provided that the calculations of Value and Exposure
will be made as of approximately the same time on the same date.

 
 
(iv)
“Notification Time” means by 10:00 a.m., New York time, on a Local Business Day.

 
(d)
Conditions Precedent and Secured Party’s Rights and Remedies.  Each of the
following will be a “Specified Condition”:  None.

 
(e)
Substitution.

 
 
(i)
“Substitution Date” has the meaning specified in Paragraph 4(d)(ii) unless
otherwise specified here:  None

 
 
(ii)
Consent.  The Pledgor does not need to obtain the Secured Party’s consent for
any substitution pursuant to Paragraph 4(d).

 
(f)
Dispute Resolution.

 
 
(i)
“Resolution Time” means 1:00 p.m., New York Time, on the fifth Local Business
Day following the date on which notice of a dispute is given under Paragraph 5.

 
 
(ii)
Value.  For the purpose of Paragraph 5(i)(C) and 5(ii), the Value of Eligible
Collateral other than Cash will be calculated as follows:

 
the sum of (i) (x) the arithmetic mean of the closing bid prices quoted on the
relevant date of three nationally recognized principal market makers (which may
include an affiliate of Party A) for such security chosen by the Valuation Agent
or (y) if no quotations are available from such principal market makers on the
relevant date, the arithmetic mean of the closing bid prices on the next
preceding date, multiplied by the appropriate Valuation Percentage set forth in
subsection (b) of this Paragraph 13, plus (ii) the accrued interest on such
security (except to the extent Transferred to a party pursuant to any applicable
provision of this Agreement or included in the applicable price referred to in
(i) of this clause) as of such date.
 
 
(iii)
Alternative.  Not Applicable.

 

 
C-3

--------------------------------------------------------------------------------

 

(g)
Holding and Using Posted Collateral.

 
 
 (i)       Eligibility to Hold Posted Collateral; Custodians.  Secured Party
will be entitled to     hold Posted Collateral only through its Custodian
pursuant to Paragraph 6(b), provided that the following conditions applicable to
it are satisfied:

 
 
(1)     The Custodian:  The Custodian is a bank or trust company designated by
the Secured Party and having total assets of at least USD$10,000,000,000.

 
 
(ii)        Use of Posted Collateral.  The provision of Paragraph 6(c) will not
apply.

 
(h)
Distributions and Interest Amount.

 
 
(i)
Interest Rate.  The Interest Rate will be the rate per annum equal to the
overnight Federal Funds Rate for each day cash is held by the Secured Party as
reported in Federal Reserve Publication H.15-519.

 
 
(ii)
Transfer of Interest Amount.  The Transfer of the Interest Amount will be made
on the last Local Business Day of each calendar month and on any Local Business
Day that Posted Collateral in the form of Cash is Transferred to the Pledgor
pursuant to Paragraph 3(b).

 
 
(iii)
Alternative to Interest Amount.  Not Applicable.

 
(i)
Additional Representation(s).  Not Applicable.

 
(j)
“Other Eligible Support and Other Posted Support.”

 
 
(i)
“Value” with respect to Other Eligible Support and Other Posted Support
means:  Not Applicable.

 
 
(ii)
“Transfer” with respect to Other Eligible Support and Other Posted Support
means:  Not Applicable.

 
(k)
Demands and Notices.  All demands, specifications and notices made by one party
to this Annex will be made pursuant to the Notices Section of this Agreement,
unless otherwise specified here:

 
Party A:                                None Specified
 
Party B:                                [TO BE PROVIDED]
 
(l)
Address for Transfers.  [TO BE PROVIDED]

 
(m)
Other Provisions.

 
 
(i)
Agreement as to Single Secured Party and Pledgor.  Party A and Party B agree
that, notwithstanding anything to the contrary in the recital to this Annex,
Paragraph 1(b) or Paragraph 2 or the definitions in Paragraph 12, (a) the term

 

 
C-4

--------------------------------------------------------------------------------

 

“Secured Party” as used in this Annex means only Party B, (b) the term “Pledgor”
as used in this Annex means only Party A, (c) only Party A makes the pledge and
grant in Paragraph 2, the acknowledgement in the final sentence of Paragraph
8(a) and the representations in Paragraph 9 and (d) only Party A will be
required to make Transfers of Eligible Credit Support hereunder.
 
 
(ii)
FIRREA.  Party A, if an FDIC-insured depository institution, represents that (i)
this Annex has been executed and delivered by a duly appointed or elected and
authorized officer of Party A of the level of vice president or higher and (ii)
Party A has taken all necessary action to authorize the execution, delivery and
performance of this Annex.

 
 
(iii)
Posted Collateral.  The definition of Posted Collateral shall also include any
and all accounts in which Cash Collateral is held.

 
 
(iv)
Additions to Paragraph 3.  The following subparagraph (c) is hereby added to
Paragraph 3 of this Annex:

 
 
(c)
No Offset.  On any Valuation Date, if (i) each party is required to make a
Transfer under Paragraph 3(a) and (ii) each party is required to make a Transfer
under Paragraph 3(b), then the amounts of those obligations will not offset each
other.

 
 
(v)
Fees of Custodian.  Notwithstanding any other provision contained in this Annex,
Pledgor shall pay all fees and charges of the Custodian related to the holding
and maintenance of the Posted Collateral.

 
 
(vi)
Exposure.  The definition of the term “Exposure” contained in Paragraph 12 of
this Annex is deleted in its entirety and the following language is substituted
therefor:  “Exposure” means for any Valuation Date or other date for which
Exposure is calculated and, subject to Paragraph 5 in the case of a dispute, the
amount, if any that would be payable to Party B pursuant to Section 11 of this
Agreement as if this Agreement were being terminated as of the relevant
Valuation Time; provided, however, that Market Quotation will be determined by
the Valuation Agent using its estimates at mid-market of the amounts that would
be paid pursuant to Section 11.

 
 
(vii)
Master Agreement.  For purposes of this Annex, the term "Agreement" shall not
refer to a Master Agreement and Schedule as indicated above in the introductory
paragraph, but shall mean the Rate Cap Agreement between Party A and Party B
dated as of the date hereof.

 
 
(viii)
Form of Annex.  The parties hereto agree that the text of the body of this Annex
(paragraphs 1 through 12) shall be deemed to be the printed form of the 1994
ISDA Credit Support Annex (Bilateral Form — ISDA Agreements subject to New York
Law only version) as published and copyrighted by the International Swaps and
Derivatives Association, Inc., incorporated herein by reference, subject to the
following revisions:

 

 
C-5

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(a)           Modification to Introductory Paragraph:  The following paragraph
is substituted for the introductory paragraph of the Annex:
 
“This Annex supplements, forms part of, and is subject to, the above-referenced
Rate Cap Agreement (the “Agreement”), and is a Credit Support Document under the
Agreement with respect to each party.
 
(b)           Modifications to Paragraph 1:
 
(1)                          The word “Schedule” shall be replaced with
“Agreement” in subparagraph (a) of the Annex.
 
(2)                          The following subparagraph (b) is substituted for
subparagraph (b) of the Annex:
 
“(b)           Secured Party and Pledgor.  All references in this Annex to the
“Secured Party” will be to the Buyer (“Party B”) and all corresponding
references to the “Pledgor” will be to the Seller (“Party A”); provided,
however, that if Other Posted Support is held by a party to this Annex, all
references herein to that party as the Secured Party with respect to that Other
Posted Support will be to that party as the beneficiary thereof and will not
subject that support or that party as beneficiary thereof to provisions of law
generally relating to security interests and secured parties.”
 
(c)           Modification to Paragraph 2:  The following Paragraph 2 is
substituted for Paragraph 2 of this Annex:
 
“Paragraph 2.  Security Interest.  The Pledgor hereby pledges to the Secured
Party, as security for its Obligations, and grants to the Secured Party a first
priority continuing security interest in, lien on and right of Set-off against
all Posted Collateral Transferred to or received by the Secured Party
hereunder.  Upon the Transfer by the Secured Party to the Pledgor of Posted
Collateral, the security interest and lien granted hereunder on that Posted
Collateral will be released immediately and, to the extent possible, without any
further action by either party.”
 
(d)           Modification to Paragraph 4:  The following clause is added after
the word “thereafter” and before the period in the last line of Paragraph 4(b):
 
“provided, however, that if a demand is made by the Notification Time and such
demand is the first demand made by the Secured Party under Paragraph 3(a) after
a Credit Event under Section 9(h) of the Agreement, then the relevant transfer
will be made not later than the close of business on the fifth (5th) Local
Business Day thereafter.”
 
(e)           Modification to Paragraph 5:  The following subparagraph (i) is
substituted for subparagraph (i) of Paragraph 5 of this Annex:
 

 
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(i)           In the case of a dispute involving a Delivery Amount or Return
Amount, unless otherwise specified in Paragraph 13, the Valuation Agent will
recalculate the Exposure and the Value as of the Recalculation Date by:
 
(A)            calculating the Exposure for the Rate Cap Agreement by seeking
four actual quotations at mid-market from Reference Market-makers for purposes
of calculating Market Quotation, and taking the arithmetic average of those
obtained; provided that if four quotations are not available for the Rate Cap
Agreement, then fewer than four quotations may be used for the Rate Cap
Agreement; and if no quotations are available for the Rate Cap Agreement, then
the Valuation Agent's original calculations will be used for the Rate Cap
Transaction; and
 
(B)           utilizing the procedures specified in Paragraph 13 for calculating
the Value, if disputed, of Posted Credit Support.”
 
(f)           Modification to Paragraph 7:  The following Paragraph 7 is
substituted for Paragraph 7 of this Annex:
 
“Paragraph 7. Notice of termination.  For purposes of Section 10 of this
Agreement, a party (X) may give a notice of termination with respect to the
other party (Y) in accordance with Section 10 in the following circumstances:
 
(i)           Y fails (or fails to cause its Custodian) to make, when due, any
Transfer of Eligible Collateral, Posted Collateral or the Interest Amount, as
applicable, required to be made by it and that failure continues for two Local
Business Days after notice of that failure is given to Y;
 
(ii)           Y fails to comply with any restriction or prohibition specified
in this Annex with respect to any of the rights specified in Paragraph 6(c) and
that failure continues for five Local Business Days after notice of that failure
is given to Y; or
 
(iii)           Y fails to comply with or perform any agreement or obligation
other than those specified in Paragraphs 7(i) and 7(ii) and that failure
continues for 30 days after notice of that failure is given to Y.
 
For purposes of Section 10, (a) if Y is the Seller, the occurrence of an event
described above shall constitute a “Termination Event” and (b) if Y is the
Buyer, the occurrence of an event described above shall give rise to the
Seller’s right to terminate pursuant to Section 10(b).”
 
(g)           Modifications to Paragraph 8:
 

 
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(1)           The following subparagraph (b) is substituted for the introductory
clause of subparagraph (b) of Paragraph 8 of the Annex:
 
“(b)           Pledgor’s Rights and Remedies.  If at any time an Early
Termination Date has occurred or been designated as the result of an event
described in Paragraph 7 with respect to the Secured Party, then:”
 
(2)           The words “Section 2(d)” shall be replaced with “Section 8” in
subparagraph (d) of Paragraph 8 of this Annex.
 
(h)           Modifications to Paragraph 9:  The following first clause of
Paragraph 9 is substituted for the first clause of this Annex:
 
“Paragraph 9.  Representations.  The Pledgor represents to the Secured Party
(which representations will be deemed to be repeated as of each date on which it
Transfers Eligible Collateral) that:”
 
(i)           Modification to Paragraph 11:  The words “one or more
Confirmations or” are deleted in Paragraph 11(f) of this Annex.
 
(j)           Certain Defined Terms.  The following terms have the meanings
indicated below:
 
“Defaulting Party” means (a) the Seller if a Termination Event has occurred and
is continuing with respect to the Seller and (b) the Buyer if an event has
occurred and is continuing under Paragraph 7 hereof with respect to which the
Buyer is Y.
 
“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.
 
“Event of Default”  means a Termination Event as specified in Section 9 of the
Agreement.
 
“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.
 

C-8
 
 
 
 

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