exv10w5



 





Exhibit 10.5




			
	 	 	 
	(Bilateral Form)
	 	(ISDA Agreements Subject)










CREDIT SUPPORT ANNEX




to the Schedule to the




ISDA MASTER AGREEMENT




dated as
of July 18, 2007 

between




	 	 	 	 	 
	JPMORGAN CHASE BANK, N.A.
	 	and
	 	CENTEX CORPORATION
	 
	 	 	 	 
	(“Party A”)
	 	 	 	(“Party B”)





This Annex supplements, forms part of, and is subject to, the above-referenced Agreement,
is part of its Schedule and is a Credit Support Document under this Agreement with respect to each
party.



Accordingly, the parties agree as follows:—




Paragraph 1. Interpretation



(a) Definitions and Inconsistency. Capitalized terms not otherwise defined herein or elsewhere in
this Agreement have the meanings specified pursuant to Paragraph 12, and all references in this
Annex to Paragraphs are to Paragraphs of this Annex. In the event of any inconsistency between this
Annex and the other provisions of this Schedule, this Annex will prevail, and in the event of any
inconsistency between Paragraph 13 and the other provisions of this Annex, Paragraph 13 will
prevail.



(b) Secured
Party and Pledgor. All references in this Annex to the “Secured Party” will be to
either party when acting in that capacity and all corresponding
references to the “Pledgor” will be
to the other party when acting in that capacity; 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 the beneficiary thereof to provisions of law generally
relating to security interests and secured parties.




Paragraph 2. Security Interest



Each
party, as the Pledgor, hereby pledges to the other party, as 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.




Copyright© 1994 by International Swaps and Derivatives Association, Inc.





 









 








Paragraph 3. Credit Support Obligations



(a)
Delivery Amount. Subject to Paragraphs 4 and 5, upon a demand made by the Secured Party on
or promptly following a Valuation Date, if the Delivery Amount for that Valuation Date equals or
exceeds the Pledgor’s Minimum Transfer Amount, then the Pledgor will Transfer to the Secured Party
Eligible Credit Support having a Value as of the date of Transfer at least equal to the applicable
Delivery Amount (rounded pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the
“Delivery Amount” applicable to the Pledgor for any Valuation Date will equal the amount by which:





(i) the
Credit Support Amount 


exceeds




(ii) the Value as of that Valuation Date of all Posted Credit Support held by the Secured
Party.


(b) Return Amount. Subject to Paragraphs 4 and 5, upon a demand made by the Pledgor on or promptly
following a Valuation Date, if the Return Amount for that Valuation Date equals or exceeds the
Secured Party’s Minimum Transfer Amount, then the Secured Party will Transfer to the Pledgor Posted
Credit Support specified by the Pledgor in that demand having a Value as of the date of Transfer as
close as practicable to the applicable Return Amount (rounded pursuant to Paragraph 13). Unless
otherwise specified in Paragraph 13, the “Return Amount” applicable to the Secured Party for any
Valuation Date will equal the amount by which:





(i) the Value as of that Valuation Date of all Posted Credit Support held by the Secured
Party 


exceeds




(ii) the Credit Support Amount.


“Credit Support Amount” means, unless otherwise specified in Paragraph 13, 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) all Independent Amounts
applicable to the Secured Party, if any, minus (iv) the Pledgor’s Threshold; provided, however,
that the Credit Support Amount will be deemed to be zero whenever the calculation of Credit
Support Amount yields a number less than zero.




Paragraph 4. Conditions Precedent, Transfer Timing, Calculations and Substitutions



(a) Conditions Precedent. Each Transfer obligation of the Pledgor under Paragraphs 3 and 5 and
of the Secured Party under Paragraphs 3, 4(d)(ii), 5 and 6(d) is subject to the conditions
precedent that:





(i) no Event of Default, Potential Event of Default or Specified Condition has occurred and
is continuing with respect to the other party; and




(ii) no Early Termination Date for which any unsatisfied payment obligations exist has
occurred or been designated as the result of an Event of Default or Specified Condition with
respect to the other party.


(b) Transfer Timing. Subject to Paragraphs 4(a) and 5 and unless otherwise specified, if a demand
for the Transfer of Eligible Credit Support or Posted Credit Support is made by the Notification
Time, then the relevant Transfer will be made not later than the close of business on the next
Local Business Day; if a demand is made after the Notification Time. then the relevant Transfer
will be made not later than the close of business on the second Local Business Day thereafter.



(c) Calculations. All calculations of Value and Exposure for purposes of Paragraphs 3 and 6(d) will
be made by the Valuation Agent as of the Valuation Time. The Valuation Agent will notify each party
(or the other party, if the Valuation Agent is a party) of its calculations not later than the
Notification Time on the Local Business Day following the applicable Valuation Date (or in the case
of Paragraph 6(d), following the date of calculation).




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(d)
Substitutions.





(i) Unless otherwise specified in Paragraph 13, upon notice to the Secured Party
specifying the items of Posted Credit Support to be exchanged, the
Pledgor may, on any Local
Business Day, Transfer to the Secured Party substitute Eligible Credit Support (the
“Substitute Credit Support”); and




(ii) subject
to Paragraph 4(a), the Secured Party will Transfer to the Pledgor the items of
Posted Credit Support specified by the Pledgor in its notice not later than the Local
Business Day following the date on which the Secured Party receives the Substitute Credit
Support, unless otherwise specified in Paragraph 13 (the “Substitution Date”); provided
that the Secured Party will only be obligated to Transfer Posted Credit Support with a
Value as of the date of Transfer of that Posted Credit Support equal to the Value as of
that date of the Substitute Credit Support.



Paragraph 5. Dispute Resolution



If a party (a “Disputing Party”) disputes (I) the Valuation Agent’s calculation of a Delivery
Amount or a Return Amount or (II) the Value of any Transfer of Eligible Credit Support or Posted
Credit Support, then (1) the Disputing Party will notify the other party and the Valuation Agent
(if the Valuation Agent is not the other party) not later than the close of business on the Local
Business Day following (X) the date that the demand is made under Paragraph 3 in the case of (I)
above or (Y) the date of Transfer in the case of (II) above, (2) subject to Paragraph 4(a), the
appropriate party will Transfer the undisputed amount to the other party not later than the close
of business on the Local Business Day following (X) the date that the demand is made under
Paragraph 3 in the case of (I) above or (Y) the date of Transfer in the case of (II) above, (3)
the parties will consult with each other in an attempt to resolve the dispute and (4) if they fail
to resolve the dispute by the Resolution Time, then:





(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) utilizing any calculations of Exposure for the Transactions (or Swap Transactions)
that the parties have agreed are not in dispute;




(B) calculating the Exposure for the Transactions (or Swap Transactions) in dispute 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 a particular Transaction (or Swap
Transaction), then fewer than four quotations may be used for that Transaction (or Swap
Transaction); and if no quotations are available for a particular Transaction (or Swap
Transaction), then the Valuation Agent’s original calculations will be used for that
Transaction (or Swap Transaction); and




(C) utilizing the procedures specified in Paragraph 13 for calculating the Value, if
disputed, of Posted Credit Support.




(ii) In the case of a dispute involving the Value of any Transfer of Eligible Credit
Support or Posted Credit Support, the Valuation Agent will recalculate the Value as of the
date of Transfer pursuant to Paragraph 13.


Following a recalculation pursuant to this Paragraph, the Valuation Agent will notify each party
(or the other party, if the Valuation Agent is a party) not later than the Notification Time on
the Local Business Day following the Resolution Time. The appropriate party will, upon demand
following that notice by the Valuation Agent or a resolution pursuant to (3) above and subject to
Paragraphs 4(a) and 4(b), make the appropriate Transfer.




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Paragraph 6. Holding and Using Posted Collateral



(a) Care
of Posted Collateral. Without limiting the Secured Party’s rights under Paragraph
6(c), the Secured Party will exercise reasonable care to assure the safe custody of all Posted
Collateral to the extent required by applicable law, and in any event the Secured Party will be
deemed to have exercised reasonable care if it exercises at least the same degree of care as it
would exercise with respect to its own property. Except as specified in the preceding sentence, the
Secured Party will have no duty with respect to Posted Collateral, including, without limitation,
any duty to collect any Distributions, or enforce or preserve any rights pertaining thereto.



(b) Eligibility to Hold Posted Collateral; Custodians.





(i)
General. Subject to the satisfaction of any conditions specified in Paragraph 13
for holding Posted Collateral, the Secured Party will be entitled to hold Posted Collateral
or to appoint an agent (a “Custodian”) to hold Posted Collateral for the Secured Party.
Upon notice by the Secured Party to the Pledgor of the appointment of a Custodian, the
Pledgor’s obligations to make any Transfer will be discharged by making the Transfer to
that Custodian. The holding of Posted Collateral by a Custodian will be deemed to be the
holding of that Posted Collateral by the Secured Party for which the Custodian is acting.




(ii) Failure to Satisfy Conditions. If the Secured Party or its Custodian fails to satisfy
any conditions for holding Posted Collateral, then upon a demand made by the Pledgor, the
Secured Party will, not later than five Local Business Days after the demand, Transfer or
cause its Custodian to Transfer all Posted Collateral held by it to a Custodian that
satisfies those conditions or to the Secured Party if it satisfies those conditions.




(iii) Liability. The Secured Party will be liable for the acts or omissions of its
Custodian to the same extent that the Secured Party would be liable hereunder for its own
acts or omissions.


(c)
Use of Posted Collateral. Unless otherwise specified in Paragraph 13 and without limiting the
rights and obligations of the parties under Paragraphs 3, 4(d)(ii), 5, 6(d) and 8, if the Secured
Party is not a Defaulting Party or an Affected Party with respect to a Specified Condition and no
Early Termination Date has occurred or been designated as the result of an Event of Default or
Specified Condition with respect to the Secured Party, then the Secured Party will, notwithstanding
Section 9-207 of the New York Uniform Commercial Code, have the right to:





(i) sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or
otherwise use in its business any Posted Collateral it holds, free from any claim or right
of any nature whatsoever of the Pledgor, including any equity or right of redemption by the
Pledgor; and




(ii) register any Posted Collateral in the name of the Secured Party, its Custodian or a
nominee for either.


For purposes of the obligation to Transfer Eligible Credit Support or Posted Credit Support
pursuant to Paragraphs 3 and 5 and any rights or remedies authorized under this Agreement, the
Secured Party will be deemed to continue to hold all Posted Collateral and to receive
Distributions made thereon, regardless of whether the Secured Party has exercised any rights with
respect to any Posted Collateral pursuant to (i) or (ii) above.



(d)
Distributions and Interest Amount.





(i) Distributions. Subject to Paragraph 4(a), if the Secured Party receives or is
deemed to receive Distributions on a Local Business Day, it will Transfer to the Pledgor
not later than the following Local Business Day any Distributions it receives or is deemed
to receive to the extent that a Delivery Amount would not be created or increased by that
Transfer, as calculated by the Valuation Agent (and the date of calculation will be deemed
to be a Valuation Date for this purpose).



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(ii) Interest Amount. Unless otherwise specified in Paragraph 13 and subject to
Paragraph 4(a), in lieu of any interest, dividends or other amounts paid or deemed to have
been paid with respect to Posted Collateral in the form of Cash (all of which may be
retained by the Secured Party), the Secured Party will Transfer to the Pledgor at the times
specified in Paragraph 13 the Interest Amount to the extent that a Delivery Amount would not
be created or increased by that Transfer, as calculated by the Valuation Agent (and the date
of calculation will be deemed to be a Valuation Date for this purpose). The Interest Amount
or portion thereof not Transferred pursuant to this Paragraph will constitute Posted
Collateral in the form of Cash and will be subject to the security interest granted under
Paragraph 2.



Paragraph 7. Events of Default



For purposes of Section 5(a)(iii)(l) of this Agreement, an Event of Default will exist with respect
to a party if:





(i) that party 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 that party;




(ii) that party 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 that party; or




(iii) that party 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 that party.



Paragraph 8. Certain Rights and Remedies



(a) Secured Party’s Rights and Remedies. If at any time (1) an Event of Default or Specified
Condition with respect to the Pledgor has occurred and is continuing or (2) an Early Termination
Date has occurred or been designated as the result of an Event of Default or Specified Condition
with respect to the Pledgor, then, unless the Pledgor has paid in full all of its Obligations that
are then due, the Secured Party may exercise one or more of the following rights and remedies:





(i) all rights and remedies available to a secured party under applicable law with respect
to Posted Collateral held by the Secured Party;




(ii) any other rights and remedies available to the Secured Party under the terms of Other
Posted Support, if any;




(iii) the right to Set-off any amounts payable by the Pledgor with respect to any
Obligations against any Posted Collateral or the Cash equivalent of any Posted Collateral
held by the Secured Party (or any obligation of the Secured Party to Transfer that Posted
Collateral); and




(iv) the right to liquidate any Posted Collateral held by the Secured Party through one or
more public or private sales or other dispositions with such notice, if any, as may be
required under applicable law, free from any claim or right of any nature whatsoever of the
Pledgor, including any equity or right of redemption by the Pledgor (with the Secured Party
having the right to purchase any or all of the Posted Collateral to be sold) and to apply
the proceeds (or the Cash equivalent thereof) from the liquidation of the Posted Collateral
to any amounts payable by the Pledgor with respect to any Obligations in that order as the
Secured Party may elect.


Each party acknowledges and agrees that Posted Collateral in the form of securities may decline
speedily in value and is of a type customarily sold on a recognized market, and, accordingly, the
Pledgor is not entitled to prior notice of any sale of that Posted Collateral by the Secured
Party, except any notice that is required under applicable law and cannot be waived.




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(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 of Default or Specified Condition with respect to the Secured
Party, then (except in the case of an Early Termination Date relating to less than all Transactions
(or Swap Transactions) where the Secured Party has paid in full all of its obligations that are
then due under Section 6(e) of this Agreement):





(i) the Pledgor may exercise all rights and remedies available to a Pledgor under
applicable law with respect to Posted Collateral held by the Secured Party;




(ii) the Pledgor may exercise any other rights and remedies available to the Pledgor under
the terms of Other Posted Support, if any;




(iii) the Secured Party will be obligated immediately to Transfer all Posted Collateral and
the Interest Amount to the Pledgor; and




(iv) to the extent that Posted Collateral or the Interest Amount is not so Transferred
pursuant to (iii) above, the Pledgor may:




(A) Set-off any amounts payable by the Pledgor with respect to any Obligations against any
Posted Collateral or the Cash equivalent of any Posted Collateral held by the Secured
Party (or any obligation of the Secured Party to Transfer that Posted Collateral); and




(B) to the extent that the Pledgor does not Set-off under (iv)(A) above, withhold payment
of any remaining amounts payable by the Pledgor with respect to any Obligations, up to the
Value of any remaining Posted Collateral held by the Secured Party, until that Posted
Collateral is Transferred to the Pledgor.


(c) Deficiencies
and Excess Proceeds. The Secured Party will Transfer to the Pledgor any proceeds
and Posted Credit Support remaining after liquidation, Set-off and/or application under Paragraphs
8(a) and 8(b) after satisfaction in full of all amounts payable by the Pledgor with respect to any
Obligations; the Pledgor in all events will remain liable for any amounts remaining unpaid after
any liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b).



(d) Final
Returns. When no amounts are or thereafter may become payable by the Pledgor with respect
to any Obligations (except for any potential liability under Section 2(d) of this Agreement), the
Secured Party will Transfer to the Pledgor all Posted Credit Support and the Interest Amount, if
any.




Paragraph 9. Representations



Each party represents to the other party (which representations will be deemed to be repeated
as of each date on which it, as the Pledgor, Transfers Eligible Collateral) that:





(i) it has the power to grant a security interest in and lien on any Eligible Collateral it
Transfers as the Pledgor and has taken all necessary actions to authorize the granting of
that security interest and lien;




(ii) it is the sole owner of or otherwise has the right to Transfer all Eligible Collateral
it Transfers to the Secured Party hereunder, free and clear of any security interest, lien,
encumbrance or other restrictions other than the security interest and lien granted under
Paragraph 2;




(iii) upon the Transfer of any Eligible Collateral to the Secured Party under the terms of
this Annex, the Secured Party will have a valid and perfected first priority security
interest therein (assuming that any central clearing corporation or any third-party
financial intermediary or other entity not within the control of the Pledgor involved in
the Transfer of that Eligible Collateral gives the notices and takes the action required of
it under applicable law for perfection of that interest); and




(iv) the performance by it of its obligations under this Annex will not result in the
creation of any security interest, lien or other encumbrance on any Posted Collateral other
than the security interest and lien granted under Paragraph 2.



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Paragraph 10. Expenses



(a) General.
Except as otherwise provided in Paragraphs 10(b) and 10(c), each party will pay
its own costs and expenses in connection with performing its obligations under this Annex and
neither party will be liable for any costs and expenses incurred by the other party in connection
herewith.



(b) Posted Credit Support. The Pledgor will promptly pay when due all taxes, assessments or charges
of any nature that are imposed with respect to Posted Credit Support held by the Secured Party upon
becoming aware of the same, regardless of whether any portion of that Posted Credit Support is
subsequently disposed of under Paragraph 6(c), except for those taxes, assessments and charges that
result from the exercise of the Secured Party’s rights under Paragraph 6(c).



(c) Liquidation/Application of Posted Credit Support. All reasonable costs and expenses incurred by
or on behalf of the Secured Party or the Pledgor in connection with the liquidation and/or
application of any Posted Credit Support under Paragraph 8 will be payable, on demand and pursuant
to the Expenses Section of this Agreement, by the Defaulting Party or, if there is no Defaulting
Party, equally by the parties.




Paragraph 11. Miscellaneous



(a) Default Interest. A Secured Party that fails to make, when due, any Transfer of Posted
Collateral or the Interest Amount will be obligated to pay the Pledgor (to the extent permitted
under applicable law) an amount equal to interest at the Default Rate multiplied by the Value of
the items of property that were required to be Transferred, from (and including) the date that
Posted Collateral or Interest Amount was required to be Transferred to (but excluding) the date of
Transfer of that Posted Collateral or Interest Amount. This interest will be calculated on the
basis of daily compounding and the actual number of days elapsed.



(b) Further Assurances. Promptly following a demand made by a party, the other party will execute,
deliver, file and record any financing statement, specific assignment or other document and take
any other action that may be necessary or desirable and reasonably requested by that party to
create, preserve, perfect or validate any security interest or lien granted under Paragraph 2, to
enable that party to exercise or enforce its rights under this Annex with respect to Posted Credit
Support or an Interest Amount or to effect or document a release of a security interest on Posted
Collateral or an Interest Amount.



(c) Further Protection. The Pledgor will promptly give notice to the Secured Party of, and defend
against, any suit, action, proceeding or lien that involves Posted Credit Support Transferred by
the Pledgor or that could adversely affect the security interest and lien granted by it under
Paragraph 2, unless that suit, action, proceeding or lien results from the exercise of the Secured
Party’s rights under Paragraph 6(c).



(d) Good Faith and Commercially Reasonable Manner. Performance of all obligations under this Annex,
including, but not limited to, all calculations, valuations and determinations made by either
party, will be made in good faith and in a commercially reasonable manner.



(e) Demands and Notices. All demands and notices made by a party under this Annex will be made as
specified in the Notices Section of this Agreement, except as otherwise provided in Paragraph 13.



(f) Specifications of Certain Matters. Anything referred to in this Annex as being specified in
Paragraph 13 also may be specified in one or more Confirmations or other documents and this Annex
will be construed accordingly.




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Paragraph 12. Definitions



As used in this Annex:—



“Cash” means the lawful currency of the United States of
America.



“Credit Support Amount” has the meaning specified in
Paragraph 3.



“Custodian” has the meaning specified in
Paragraphs 6(b)(i) and 13.



“Delivery Amount” has the meaning
specified in Paragraph 3 (a).



“Disputing Party” has the
meaning specified in Paragraph 5.



“Distributions” means with respect to Posted Collateral other than Cash, all principal, interest
and other payments and distributions of cash or other property with respect thereto, regardless of
whether the Secured Party has disposed of that Posted Collateral under Paragraph 6(c).
Distributions will not include any item of property acquired by the Secured Party upon any
disposition or liquidation of Posted Collateral or, with respect to any Posted Collateral in the
form of Cash, any distributions on that collateral, unless otherwise specified herein.



“Eligible Collateral” means, with respect to a party, the items, if any, specified as such for
that party in Paragraph 13.



“Eligible Credit Support” means Eligible Collateral and Other Eligible Support.



“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 a party that
is the Secured Party by the other party (expressed as a positive number) or by a party that is the
Secured Party to the other party (expressed as a negative number) pursuant to Section
6(e)(ii)(2)(A) of this Agreement as if all Transactions (or Swap Transactions) were being
terminated as of the relevant Valuation Time; provided that Market Quotation will be determined by
the Valuation Agent using its estimates at mid-market of the amounts that would be paid for
Replacement Transactions (as that term is defined in the definition of “Market Quotation”).



“Independent Amount” means, with respect to a party, the amount specified as such for that party
in Paragraph 13; if no amount is specified, zero.



“Interest Amount” means, with respect to an Interest Period, the aggregate sum of the amounts of
interest calculated for each day in that Interest Period on the principal amount of Posted
Collateral in the form of Cash held by the Secured Party on that day, determined by the Secured
Party for each such day as follows:





(x) the amount of that Cash on that day;
multiplied by




(y) the Interest Rate in effect for
that day; divided by




(z) 360.


“Interest Period” means the period from (and including) the last Local Business Day on which an
Interest Amount was Transferred (or, if no Interest Amount has yet been Transferred, the Local
Business Day on which Posted Collateral in the form of Cash was Transferred to or received by the
Secured Party) to (but excluding) the Local Business Day on which the current Interest Amount is
to be Transferred.



“Interest Rate” means the rate specified in Paragraph 13.



“Local Business Day”, unless otherwise specified in Paragraph 13, has the meaning specified in the
Definitions Section of this Agreement, except that references to a payment in clause (b) thereof
will be deemed to include a Transfer under this Annex.




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“Minimum Transfer Amount” means, with respect to a party, the amount specified as such for that
party in Paragraph 13; if no amount is specified, zero.



“Notification Time” has the meaning specified in Paragraph 13.



“Obligations” means, with respect to a party, all present and future obligations of that party
under this Agreement and any additional obligations specified for that party in Paragraph 13.



“Other Eligible Support” means, with respect to a party, the items, if any, specified as such for
that party in Paragraph 13.



“Other Posted Support” means all Other Eligible Support Transferred to the Secured Party that
remains in effect for the benefit of that Secured Party.



“Pledgor” means either party, when that party (i) receives a demand for or is required to Transfer
Eligible Credit Support under Paragraph 3(a) or (ii) has Transferred Eligible Credit Support under
Paragraph 3(a).



“Posted Collateral” means all Eligible Collateral, other property, Distributions, and all proceeds
thereof that have been Transferred to or received by the Secured Party under this Annex and not
Transferred to the Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or 6(d)(i) or released by the
Secured Party under Paragraph 8. Any Interest Amount or portion thereof not Transferred pursuant to
Paragraph 6(d)(ii) will constitute Posted Collateral in the form of Cash.



“Posted Credit Support” means Posted Collateral and Other Posted Support.



“Recalculation Date” means the Valuation Date that gives rise to the dispute under Paragraph 5;
provided, however, that if a subsequent Valuation Date occurs under Paragraph 3 prior to the
resolution of the dispute, then the “Recalculation Date” means the most recent Valuation Date
under Paragraph 3.



“Resolution Time” has the meaning specified in Paragraph
13.



“Return Amount” has the meaning specified in
Paragraph 3(b).



“Secured Party” means either party, when that party (i) makes a demand for or is entitled to
receive Eligible Credit Support under Paragraph 3(a) or (ii) holds or is deemed to hold Posted
Credit Support.



“Specified Condition” means, with respect to a party, any event specified as such for that party in
Paragraph 13.



“Substitute Credit Support” has the meaning specified in Paragraph 4(d)(i).



“Substitution Date” has the meaning specified in Paragraph 4(d)(ii).



“Threshold” means, with respect to a party, the amount specified as such for that party in
Paragraph 13; if no amount is specified, zero.



“Transfer” means, with respect to any Eligible Credit Support, Posted Credit Support or Interest
Amount, and in accordance with the instructions of the Secured Party, Pledgor or Custodian, as
applicable:





(i) in the case of Cash, payment or delivery by wire transfer into one or more bank
accounts specified by the recipient;




(ii) in the case of certificated securities that cannot be paid or delivered by book-entry,
payment or delivery in appropriate physical form to the recipient or its account
accompanied by any duly executed instruments of transfer, assignments in blank, transfer
tax stamps and any other documents necessary to constitute a legally valid transfer to the
recipient;




(iii) in the case of securities that can be paid or delivered by book-entry, the giving of
written instructions to the relevant depository institution or other entity specified by
the recipient, together with a written copy thereof to the recipient, sufficient if
complied with to result in a legally effective transfer of the relevant interest to the
recipient; and




(iv) in the case of Other Eligible Support or Other Posted Support, as specified in
Paragraph 13.



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“Valuation Agent” has the meaning specified in Paragraph 13.



“Valuation Date” means each date specified in or otherwise determined pursuant to Paragraph 13.



“Valuation Percentage” means, for any item of Eligible Collateral, the percentage specified in
Paragraph 13.



“Valuation Time” has the meaning specified in Paragraph 13.



“Value” means for any Valuation Date or other date for which Value is calculated and subject to
Paragraph 5 in the case of a dispute, with respect to:





(i) Eligible Collateral or Posted Collateral that is:




(A) Cash, the amount thereof; and




(B) a security, the bid price obtained by the Valuation Agent multiplied by the applicable
Valuation Percentage, if any;




(ii) Posted Collateral that consists of items that are not specified as Eligible
Collateral, zero; and




(iii) Other Eligible Support and Other Posted Support, as
specified in Paragraph 13.




10









 





CREDIT SUPPORT ANNEX




between




JPMORGAN CHASE BANK, N.A.

(referred to herein as “Party A”)




and




CENTEX CORPORATION

(referred to herein as “Party B”)




Paragraph 13. Elections and Variables





	(a)	 	Security Interest for “Obligations.” The term “Obligations” as used in this Annex includes
no additional obligations with respect to Party A or Party B.
	 
	(b)	 	Credit Support Obligations.






	 	(i)	 	“Delivery Amount,” “Return Amount” and “Credit Support Amount” will have
the meanings specified in Paragraphs 3(a), 3(b) and 3, respectively.
	 
	 	(ii)	 	“Eligible Collateral” shall consist of those assets identified by the
ICAD codes listed below, as they are defined in the Collateral Asset Definitions.
Percentage shown is the Valuation Percentage applicable to the indicated combination
of ICAD and Remaining Maturity.





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Remaining Maturity
	 	 	 	 	 	 	More than one	 	More than five	 	 
	 	 	 	 	 	 	(1) year up to	 	(5) years up to	 	 
	 	 	One (1) year or	 	and including	 	and including ten	 	More than ten
	ICAD Code	 	under	 	five (5) years	 	(10) years	 	(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	%







	 	(iii)	 	There shall be no “Other Eligible Support” for Party B for purposes of
this Annex.
	 
	 	(iv)	 	Thresholds.






	 	(A)	 	“Independent Amount” means, with respect to Party A: Not
Applicable.
	 
	 	 	 	“Independent Amount” means, with respect to Party B: Not Applicable.
	 
	 	(B)	 	“Threshold”, means with respect to Party A: Not Applicable.
	 
	 	 	 	“Threshold”, means with respect to Party B: Initially, not applicable;
provided, however, if the long-term senior unsecured debt rating of Party B
is less than





 









 






	 	 	 	“BBB-” by S&P and less than “Baa3” by Moody’s, then the Threshold shall be
zero.
	 
	 	(C)	 	“Minimum Transfer Amount” means with respect to Party A:
$250,000.
	 
	 	 	 	“Minimum Transfer Amount” means with respect to Party B: $250,000.
	 
	 	(D)	 	Rounding. The Delivery Amount will be rounded up and the
Return Amount will be rounded down to the nearest integral multiple of $10,000,
respectively.






	(c)	 	Valuation and Timing.






	 	(i)	 	“Valuation Agent” shall be Party A; provided, however, that
notwithstanding anything to the contrary set forth in this Annex, the Valuation
Agent shall not be required to notify Party B of any of the Valuation Agent’s
calculations of Value, Exposure, Delivery Amount or Return Amount under this Annex
unless requested to do so (either verbally or in writing) by Party B in each
instance.
	 
	 	(ii)	 	“Valuation Date” means: each Local Business Day of each calendar week,
commencing on the first such date following the date hereof.
	 
	 	(iii)	 	“Valuation Time” means:






	 	[ ] 	 	 the close of business in the city of the Valuation Agent on
the Valuation Date or date of calculation, as applicable;
	 
	 	[X] 	 	 the close of business on the Local Business Day before the
Valuation Date or 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 1:00 p.m., New York time, on a Local Business
Day.






	(d)	 	Conditions Precedent and Secured Party’s Rights and Remedies. Each of the following
Termination Events will be a “Specified Condition” for the relevant party specified below
(that party being the Affected Party if the Termination Event occurs with respect to that
party):





	 	 	 	 	 
	 	 	Party A	 	Party B
	Illegality

	 	[X]
	 	[X]
	Credit Event Upon Merger

	 	[X]
	 	[X]
	Tax Event

	 	[X]
	 	[X]
	Tax Event Upon Merger

	 	[X]
	 	[X]







	(e)	 	Substitution.






	 	(i)	 	“Substitution Date” means the Local Business Day in New York on which the
Secured Party is able to confirm irrevocable receipt of the Substitute Credit
Support, provided that (x) such receipt is confirmed before 3:00 p.m. (New York
time) on such Local Business Day in New York and (y) the Secured Party has received,
before 1:00 p.m. (New York





2









 






	 	 	 	time) on the immediately preceding Local Business Day in New York, the notice of
substitution described in Paragraph 4(d)(i).
	 
	 	(ii)	 	Consent. The Pledgor is not required 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 Local Business
Day on which a notice is given that gives rise to a dispute under Paragraph 5 or
such earlier time as the parties agree that they are not able to resolve such
dispute.
	 
	 	(ii)	 	Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of
Posted Credit Support will be calculated as follows: for Cash, the U.S. dollar
value thereof, and for each item of Eligible Collateral (except for Cash), an amount
in U.S. dollars equal to the product of (i) either (A) the bid mid-market price for
such security quoted on such day by a principal market-maker for such security
selected in good faith by the Secured Party or (B) the most recent publicly
available bid mid-market price for such security as reported by a quotation service
or in a medium selected in good faith and in a commercially reasonable manner by
Secured Party, multiplied by (ii) the percentage figure listed in Paragraph
13(b)(ii) hereof with respect to such security.
	 
	 	(iii)	 	Alternative. The provisions of Paragraph 5 will apply, as modified by
Paragraph 13(o).






	(g)	 	Holding and Using Posted Collateral.






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






	 	(A)	 	Party A, as the Secured Party, is not a Defaulting Party.
	 
	 	(B)	 	Party A hereby covenants and agrees that it will cause all
Posted Collateral received from the other party to be entered in one or more
accounts (each, a “Collateral Account”) with a domestic office of a commercial
bank, trust company or financial institution organized under the laws of the
United States (or any state or a political subdivision thereof) having assets
of at least $10 Billion and a long term debt or deposit rating of at least (i)
Baa1 from Moody’s and (ii) BBB+ from S&P (a “Qualified Institution”), each of
which accounts may include property of other parties but will bear a title
indicating the Secured Party’s interest in said account and the Posted
Collateral in such account. In addition, provided that the Secured Party has a
long term debt or deposit rating of at least Baa1 from Moody’s and BBB+ from
S&P, the Secured Party may direct the Pledgor to transfer or deliver Eligible
Collateral directly into the Secured Party’s Collateral Account(s). If
otherwise qualified, the Secured Party may act as such Qualified Institution
and the Secured Party may move the Collateral Accounts from one Qualified
Institution to another upon reasonable prior written notice to the Pledgor.
The Secured Party shall cause statements concerning the Posted Collateral
transferred or delivered by the Pledgor to be sent to the Pledgor on request,
which may not be made more frequently than once in each calendar month.





3









 






	 	 	 	Initially the Custodian for Party A is: Not applicable.
	 
	 	(ii)	 	Use of Posted Collateral. The provisions of Paragraph 6(c) will apply to
Party A, subject to the condition precedent that each of the conditions set forth in
Paragraph 13(g)(i) is satisfied with respect to it.






	(h)	 	Distributions and Interest Amount.






	 	(i)	 	The “Interest Rate,” with respect to Eligible Collateral in the form of
Cash, for any day, will be the rate opposite the caption “Federal funds (effective)”
for such day as published by the Federal Reserve Publication H.15 (519) or any
successor publication as published by the Board of Governors of the Federal Reserve
System.
	 
	 	(ii)	 	The “Transfer of Interest Amount” will be made within 3 Local Business
Days after the last Local Business Day of each calendar month.
	 
	 	(iii)	 	Alternative Interest Amount. The provisions of Paragraph 6(d)(ii) will
apply.
	 
	 	(iv)	 	Paragraph 12 is hereby amended by replacing the definition of “Interest
Period” with the following:
	 
	 	 	 	““Interest Period” means the period from (and including) the first day of each
calendar month to (and including) the last day of each calendar month.”






	(i)	 	Additional Representations. None.
	 
	(j)	 	Other Eligible Support and Other Posted Support. Not Applicable.
	 
	(k)	 	Demands and Notices. All demands, specifications and notices made by a party to this Annex
will be made pursuant to the Notices Section of this Agreement.





	 	 	 
	Party A:

	 	JPMorgan Chase Bank, National Association
	 

	 	Collateral Middle Office Americas 3/OPS2
	 

	 	500 Stanton Christiana Road
	 

	 	Newark, Delaware 19713
	 

	 	Telephone No.: (302) 634-3154
	 

	 	Facsimile No.: (302) 634-3270
	 

	 	Email: collateral_services@jpmorgan.com.
	 
	 	 
	Party B:

	 	As set forth in the Schedule.







	(l)	 	Addresses for Transfers.




Party A: Cash: Collateral Cash instructions

ABA 021 000 021

JPM Chase

Acct: 060030062

Acct Name: Collateral Held

REF: Centex Corporation




4









 





	 	 	 
	Party B:

	 	Bank of America, Global Finance
	 

	 	Account #: 125-268-5906
	 

	 	ABA #: 026009593
	 

	 	Account Name: Centex Corp







	(m)	 	Other Provisions.






	 	(i)	 	This Credit Support Annex is a Security Agreement under the New York UCC.
	 
	 	(ii)	 	The definitions and provisions contained in the Collateral Asset
Definitions First Edition – 2003 (the “Collateral Asset Definitions”), as published
by the International Swaps and Derivatives Association, Inc., (“ISDA”) are
incorporated into this Annex. In the event of any inconsistency between any of the
following, the first listed shall prevail (i) this Annex, (ii) the Agreement and
(iii) the Collateral Asset Definitions.
	 
	 	(iii)	 	Paragraph 1(b) of this Annex is amended by deleting it and restating it
in full as follows:
	 
	 	 	 	“(b) Secured Party and Pledgor. All references in this Annex to the “Secured Party”
mean Party A, and all references in this Annex to the “Pledgor” mean Party B;
provided, however, that if Other Posted Support is held by Party A, all references
herein to the Secured Party with respect to that Other Posted Support will be to
Party A as the beneficiary thereof and will not subject that support or Party A as
the beneficiary thereof to provisions of law generally relating to security
interests and secured parties.”
	 
	 	(iv)	 	Paragraph 2 of this Annex is amended by deleting the first sentence
thereof and restating that sentence in full as follows:
	 
	 	 	 	“Party B, as the Pledgor, hereby pledges to Party A, as the Secured Party, as
security for the Pledgor’s 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.”
	 
	 	(v)	 	Sole Confirmation. Party A and Party B agree and acknowledge that the
only Transaction that will be governed by this Credit Support Annex is the one
Transaction evidenced by the Confirmation between Party A and Party B, dated as of
the date hereof (as amended, restated or supplemented from time to time).
	 
	 	(vi)	 	Only Party B makes the representations contained in Paragraph 9 of this
Annex.
	 
	 	(vii)	 	Paragraph 12 of this Annex is amended by deleting the definitions of
“Pledgor” and “Secured Party” and replacing them with the following:
	 
	 	 	 	“Secured Party” means Party A.
	 
	 	 	 	“Pledgor” means Party B.”






	(n)	 	“Exposure” means, for any Valuation Date or other date of determination, the amount, if any,
equal to the product of (x) the Sharing Percentage, as defined in the confirmation relating to
the Reference Transaction (as defined in the Confirmation), and (y) the quotient of (A)(i)the





5









 






	 	 	aggregate Outstanding Purchase Price of the Mortgage Loans owned by the Reference
Counterparty on such date minus (ii) the Current Market Value of such Mortgage Loans on such
date, divided by (B) 0.99. Capitalized terms used but not defined in this paragraph (n)
shall have the meanings ascribed to them in the Mortgage Loan Purchase and Servicing
Agreement (as defined in the Reference Transaction).
	 
	 	 	“Current Market Value” means, for any Mortgage Loan and any date of determination,
	 
	 	 	the current market value of such Mortgage Loan as determined by Party B; provided, that if
(i) such current market value of such Mortgage Loan as determined by Party B and the Average
Market Value (as defined below) are more than ten (10) basis points apart and (ii) Party A
gives Party B notice of a dispute regarding Party B’s determination of the Current Market
Value, the Current Market Value shall be the Average Market Value.
	 
	 	 	“Average Market Value” means, for any Mortgage Loan and any date of determination, the
current market value of such Mortgage Loan as determined by the Designated Swap Counterparty
by calculating the average of the current market value of such Mortgage Loan provided by
each Swap Counterparty.
	 
	(o)	 	Paragraph 5 is hereby deleted and replaced by the following language:
	 
	 	 	“Paragraph 5. Dispute Resolution
	 
	 	 	If a party (the “Disputing Party”) disputes (I) the Valuation Agent’s calculation of a
Delivery Amount or a Return Amount or (II) the Value of any Transfer of Eligible Credit
Support or Posted Credit Support, then (1) the Disputing Party will notify the other party
and the Designated Swap Counterparty not later than the close of business on the Local
Business Day following (X) the date that the demand is made under Paragraph 3 in the case of
(I) above or (Y) the date of Transfer in the case of (II) above, (2) subject to Paragraph
4(a), the appropriate party will Transfer the disputed amount and undisputed amount to the
other party not later than the close of business on the Local Business Day following (X) the
date that the demand is made under Paragraph 3 in the case of (I) above or (Y) the date of
Transfer in the case of (II) above, (3) the parties will consult with each other in an
attempt to resolve the dispute (each party will discuss loss curves, prepay curves, rate
curves and all other assumptions necessary to determine the calculated market value) and (4)
if they fail to resolve the dispute by the Resolution Time, then:






	 	 	 	(i) In the case of a dispute involving a Delivery Amount or Return Amount, unless
otherwise specified in Paragraph 13, the Designated Swap Counterparty will
recalculate the Exposure and the Value as of the Recalculation Date by:






	 	 	 	(A) utilizing any calculations of Exposure that the parties have agreed are
not in dispute;
	 
	 	 	 	(B) calculating the Exposure in dispute by seeking actual quotations from
each Swap Counterparty (including Party A’s quotation) and Party B for
purposes of calculating the Exposure, and taking the arithmetic average of
those obtained if there are three or fewer quotations; provided, that if
four or more quotations are available for a particular Transaction (or Swap
Transaction), then (I) calculating the arithmetic average of those obtained,
(II) removing the quotation that is farthest from the arithmetic average,
(III) repeating (I) and (II)





6









 






	 	 	 	above until only three quotations are left and (IV) taking the arithmetic
average of the three remaining quotations; and
	 
	 	 	 	(C)utilizing the procedure specified in Paragraph 13 for calculating the
Value, if disputed, of Posted Credit Support.






	 	 	 	“Designated Swap Counterparty” means Bank of America, N.A.
	 
	 	 	 	(ii)In the case of a dispute involving the Value of any Transfer of Eligible Credit
Support or Posted Credit Support, the Valuation Agent will recalculate the Value as
of the date of Transfer pursuant to Paragraph 13.






	 	 	Following a recalculation pursuant to this Paragraph, the Valuation Agent will notify each
party (or the other party, if the Valuation Agent is a party) not later than the
Notification Time on the Local Business Day following the Resolution Time. The appropriate
party will, following that notice by the Valuation Agent or a resolution pursuant to (3)
above, make the appropriate Transfer by the earlier of (x) the close of business on the
Local Business Day following the Resolution Time and (y) the time of resolution pursuant to
(3) above.”
	 
	(p)	 	This Credit Support Annex shall be in effect only during such time as the long-term senior
unsecured debt ratings are less than “BBB-” by S&P and less than “Baa3” by Moody’s. Subject
to Paragraphs 4 and 8, upon written notice from Party B that its long-term senior unsecured
debt ratings are equal to or greater than “BBB-” by S&P or equal to or greater than “Baa3” by
Moody’s, Party A shall return all Posted Collateral. For the avoidance of doubt, the
conditions precedent set forth in Paragraph 4(a) and the Specified Conditions set forth in
Paragraph 13(d) are applicable to the return of Posted Collateral pursuant to this paragraph.





[SIGNATURE PAGE FOLLOWS]




7









 





Accepted and agreed:




	 	 	 	 	 	 	 	 	 
	JPMORGAN CHASE BANK, N.A.	 	CENTEX CORPORATION
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Mark Lenczowski
	 	By:
	 	/s/ Lawrence Angelilli	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Name: Mark Lenczowski
	 	 	 	Name: Lawrence Angelilli	 	 
	 

	 	Title: Managing Director
	 	 	 	Title: Senior Vice President – Finance	 	 
	 

	 	Date: 07/18/07
	 	 	 	Date: 07/18/07	 	 







S-1