The Item 1115 Agreement
EXHIBIT
99.4
Item
1115
Agreement dated as of January 26, 2006 (this “Agreement”), between COUNTRYWIDE
HOME LOANS, INC., a New York corporation (“CHL”), CWABS, INC., a Delaware
corporation (“CWABS”), CWMBS, Inc., a Delaware corporation (“CWMBS”), CWALT,
Inc., a Delaware corporation (“CWALT”), CWHEQ, Inc., a Delaware corporation
(“CWHEQ”) and SWISS RE FINANCIAL PRODUCTS CORPORATION, as counterparty (the
“Counterparty”).
RECITALS
WHEREAS,
CWABS, CWMBS, CWALT and CWHEQ each have filed Registration Statements on Form
S-3 (each, a “Registration Statement”) with the Securities and Exchange
Commission (the “Commission”) for purposes of offering mortgage backed or
asset-backed notes and/or certificates (the “Securities”) through special
purpose vehicles (each, an “SPV”).
WHEREAS,
from time to time, on the closing date (the “Closing Date”) of a transaction
pursuant to which Securities are offered (each, a “Transaction”), the
Counterparty and CHL or an underwriter or dealer with respect to the
Transaction, enter into certain derivative agreements (each, a “Derivative
Agreement”), including interest rate or currency swaps, for purposes of
providing certain yield enhancements that are assigned to the SPV or the related
trustee on behalf of the SPV or a swap or corridor contract administrator (each,
an “Administrator”).
NOW,
THEREFORE, in consideration of the mutual agreements set forth herein and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereby agree as follows:
Section
1. Definitions
Company
Information: As defined in Section 4(a)(i).
Company
Financial Information: As defined in Section 2(a)(ii).
Depositor:
Means CWABS, CWMBS, CWALT or CWHEQ with respect to the related Registration
Statement for which the entity of the registrant.
GAAP:
As
defined in Section 3(a)(v).
XXXXX:
The Commission’s Electronic Data Gathering, Analysis and Retrieval
system.
Exchange
Act: The Securities Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder.
Exchange
Act Reports: All Distribution Reports on Form 10-D, Current Reports on Form
8-K
and Annual Reports on Form 10-K that are to be filed with respect to the related
SPV pursuant to the Exchange Act.
Master
Agreement: The ISDA Master Agreement between the Counterparty and CHL, or if
no
such Master Agreement exists, the ISDA Master Agreement assumed to apply to
the
Derivative Agreement pursuant to its terms.
Prospectus
Supplement: The prospectus supplement prepared in connection with the public
offering and sale of the related Securities.
Regulation
AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R.
§§229.1100-229.1123, as such may be amended from time to time, and subject to
such clarification and interpretation as have been provided by the Commission
in
the adopting release (Asset-Backed Securities, Securities Act Release No.
33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the
Commission, or as may be provided by the Commission or its staff from time
to
time.
Securities
Act: The Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
Section
2. Information
to be Provided by the Counterparty.
| (a) |
Prior
to printing the related Prospectus Supplement,
|
| (i) |
the
Counterparty shall provide to the related Depositor such information
regarding the Counterparty, as a derivative instrument counterparty,
as is
reasonably requested by the related Depositor for the purpose of
compliance with Item 1115(a)(1) of Regulation AB. Such information
shall
include, at a minimum:
|
| (A) |
The
Counterparty’s legal name (and any d/b/a);
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| (B) |
the
organizational form of the Counterparty;
|
| (C) |
a
description of the general character of the business of the
Counterparty;
|
| (D) |
a
description of any material legal or governmental proceedings
pending (or
known to be contemplated) against the Counterparty which
may have a
material impact on the Counterparty’s ability to perform under the related
Derivative Agreement;
|
| (E) |
a
description of any affiliation or relationship between
the Counterparty
and any of the following
parties:
|
| (1) |
CHL
(or any other sponsor identified to the Counterparty by
CHL);
|
| (2) |
the
related Depositor (as identified to the Counterparty by
CHL);
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2
| (3) |
the
SPV;
|
| (4) |
Countrywide
Home Loans Servicing LP (or any other servicer or master
servicer
identified to the Counterparty by
CHL);
|
| (5) |
The
Bank of New York (or any other trustee identified to the
Counterparty by
CHL);
|
| (6) |
any
originator identified to the Counterparty by
CHL;
|
| (7) |
any
enhancement or support provider identified to the
Counterparty by CHL;
and
|
| (8) |
any
other material transaction party identified to
the Counterparty by
CHL.
|
| (ii) |
if
requested by the related Depositor for the
purpose of compliance with Item
1115(b) with respect to a Transaction, the
Counterparty
shall:
|
| (A) |
provide
the financial data required by Item 1115(b)(1)
or (b)(2) of Regulation AB
(as specified by the related Depositor to
the Counterparty) with respect
to the Counterparty (or any entity that consolidates
the Counterparty) and
any affiliated entities providing derivative
instruments to the SPV (the
“Company Financial Information”), in a form appropriate for use in the
Prospectus Supplement and in an XXXXX-compatible
form; and
|
| (B) |
if
applicable, cause its accountants to
issue their consent to the filing of
such financial statements in the Registration
Statement.
|
| (b) |
Following
the Closing Date with respect to
a
Transaction,
|
| (i) |
(I)
no later than the 25th calendar day
of each month, the Counterparty shall
(i) notify the related Depositor
in writing of (A) any material litigation
or governmental proceedings pending
against the Counterparty which may
have a material impact on the Counterparty’s ability to perform under the
related Derivative Agreement or (B)
any affiliations or relationships
that
develop following the Closing Date
between the Counterparty and any
of the
parties specified in Section 2(a)(i)(E)
(and any other parties identified
in writing by the related Depositor)
and (ii) provide to the related
Depositor a description of such proceedings,
affiliations or relationships
as described in Section 2(b)(i)(I)(i);
and
|
| (ii) |
if
the Counterparty provided Company
Financial Information to the related
Depositor for the Prospectus Supplement,
within 5 Business Days of the
release of any updated financial
data, the Counterparty shall (1)
provide
current Company Financial Information
as required under Item 1115(b)
of
Regulation AB to the related Depositor
in an XXXXX-compatible form, and
(2) if applicable, cause its accountants
to issue their consent to filing
or incorporation by reference of
such financial statements in the
Exchange
Act Reports of the SPV;
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| (iii) |
if
the related Depositor requests
Company Financial Information from
the
Counterparty, for the purpose of
compliance with Item 1115(b) of
Regulation AB following the Closing
Date, the Counterparty shall upon
five
Business Days written notice either
(A), (1) provide current Company
Financial Information as required
under Item 1115(b) of Regulation
AB to
the related Depositor in an XXXXX-compatible
form, (2) if applicable,
cause its accountants to issue
their consent to filing or incorporation
by
reference of such financial statements
in the Exchange Act Reports of
the
SPV and (3) within 5 Business Days
of the release of any updated financial
data, provide current Company Financial
Information as required under Item
1115(b) of Regulation AB to the
related Depositor in an XXXXX-compatible
form and if applicable, cause its
accountants to issue their consent
to
filing or incorporation by reference
of such financial statements in
the
Exchange Act Reports of the SPV
or (B) assign the Derivative Agreement
as
provided below.
|
| (c) |
Prior
to printing of any Prospectus Supplement, CHL and Depositor
will inform
the Counterparty of the scope and extent of the information
that they need
to receive from the Counterparty for use in the related Prospectus
Supplement for the purpose of compliance with Item 1115 of
Regulation AB
(the “Scope of Information”). CHL and the Depositor acknowledge that the
Counterparty need not undertake any review of the related
Prospectus
Supplement (other than with respect to the Company Information
and/or the
Company Financial Information) in connection with its provision
of the
Company Information and/or the Company Financial Information.
|
Section
3. Representations
and Warranties and Covenants of the Counterparty.
| (a) |
The
Counterparty represents and warrants to the related Depositor,
as of the
date on which information is first provided to the related
Depositor under
Section 2(a)(ii), Section 2(b)(ii) or Section 2(b)(iii)(A),
that, except
as disclosed in writing the related Depositor prior to such
date:
|
| (i) |
The
accountants who certify the financial statements and supporting
schedules
included in the Company Financial Information (if applicable)
are
independent registered public accountants as required by
the Securities
Act.
|
| (ii) |
If
applicable, the financial statements included in the Company
Financial
Information present fairly the consolidated financial position
of the
Counterparty (or the entity that consolidates the Counterparty)
and its
consolidated subsidiaries as at the dates indicated and the
consolidated
results of their operations and cash flows for the periods
specified;
except as otherwise stated in the Company Financial Information,
said
financial statements have been prepared in conformity with
generally
accepted accounting principles (“GAAP”) applied on a consistent basis; and
the supporting schedules included in the Company Financial
Information
present fairly in accordance with GAAP the information required
to be
stated therein. The selected financial data and summary financial
information included in the Company Financial Information present
fairly
the information shown therein and have been compiled on a basis
consistent
with that of the audited financial statements of the Counterparty.
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| (iii) |
The
Company Financial Information and other Company Information
included or
incorporated by reference in the Registration Statement
(including through
filing on an Exchange Act Report), at the time they were
or hereafter are
filed with the Commission, complied in all material respects
with the
requirements of Item 1115(b) of Regulation AB (in the case
of the Company
Financial Information) and, did not and will not contain
an untrue
statement of a material fact or omit to state a material
fact required to
be stated therein or necessary in order to make the statements
therein, in
the light of the circumstances under which they were made,
not
misleading.
|
| (b) |
The
Counterparty agrees that the terms of this Agreement
shall be incorporated
by reference into any Derivative Agreement so that each
SPV who is a
beneficiary of a Derivative Agreement shall be an express
third party
beneficiary of this Agreement.
|
Section
4. Indemnification;
Remedies
| (a) |
The
Counterparty shall indemnify CHL and the related Depositor,
each person
responsible for the preparation, execution or filing of
any report
required to be filed with the Commission with respect to
such SPV, or for
execution of a certification pursuant to Rule 13a-14(d)
or Rule 15d-14(d)
under the Exchange Act; each person who controls any of
such parties
(within
the meaning of Section 15 of the Securities Act and Section
20 of the
Exchange Act);
and the respective present and former directors, officers,
employees and
agents of each of the foregoing, and shall hold each of
them harmless from
and against any losses, damages, penalties, fines, forfeitures,
legal fees
and expenses and related costs, judgments, and any other
costs, fees and
expenses that any of them may sustain arising out of or
based
upon:
|
| (i) |
(A)
any untrue statement of a material fact contained or
alleged to be
contained in any
information, report, certification, accountants’ consent or other
material
provided in written or electronic form under
Section 2 by
or on behalf of the Counterparty
(collectively, the “Company Information”),
or (B) the omission or alleged omission to state in the Company
Information a material fact required to be stated in
the Company
Information or necessary in order to make the statements
therein, in the
light of the circumstances under which they were made,
not misleading;
or
|
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| (ii) |
any
breach by the Counterparty of a representation
or warranty set forth in
Section 3(a) and made as of a date prior to
the Closing Date, to the
extent that such breach is not cured by the
Closing Date, or any breach by
the Counterparty of a representation or warranty
pursuant to Section 3 to
the extent made as of a date subsequent to
the Closing
Date.
|
| (b) |
(i) Any
failure by the Counterparty to
deliver any information, report, certification,
accountants’ consent or
other material when and as required under
Section 2 or any breach by the
Counterparty of a representation or warranty
set forth in Section 3 and
made as of a date prior to the Closing
Date, to the extent that such
breach is not cured by the Closing Date
(or in the case of information
needed for purposes of printing the Prospectus
Supplement, the date of
printing of the Prospectus Supplement),
or any breach by the Counterparty
of a representation or warranty pursuant
to Section 3 to the extent made
as of a date subsequent to such closing
date, shall, except as provided in
clause (ii) of this paragraph, immediately
and automatically, without
notice or grace period, constitute an Additional
Termination Event (as
defined in the Master Agreement) with the
Counterparty as the sole
Affected Party (as defined in the Master
Agreement) under the Derivative
Agreement. Following such termination,
a termination payment (if any)
shall be payable by the applicable party
as determined by the application
of Section 6(e)(ii) of the Master Agreement,
with Market Quotation and
Second Method being the applicable method
for determining the termination
payment (notwithstanding anything in the
Derivative Agreement to the
contrary).
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|
(ii) If
the Counterparty has failed to deliver any information, report,
certification or accountants’ consent when and as required under Section
2, which continues unremedied for the lesser of ten calendar days
after
the date on which such information, report, certification or accountants’
consent was required to be delivered or such period in which the
applicable Exchange Act Report for which such information is required
can
be timely filed (without taking into account any extensions permitted
to
be filed), and the Counterparty has not, at its own cost, within
the
period in which the applicable Exchange Act Report for which such
information is required can be timely filed caused another entity
(which
meets any applicable ratings threshold in the Derivative Agreement)
to
replace the Counterparty as party to the Derivative Agreement that
(i) has
signed an agreement with CHL and the Depositors substantially in
the form
of this Agreement, (ii) has agreed to deliver any information, report,
certification or accountants’ consent when and as required under Section 2
hereof and (iii) is approved by the Depositor (which approval shall
not be
unreasonably withheld) and any rating agency, if applicable, on terms
substantially similar to the Derivative Agreement, then an Additional
Termination Event (as defined in the Master Agreement) shall have
occurred
with the Counterparty as the sole Affected Party. Following such
termination, a termination payment (if any) shall be payable by the
applicable party as determined by the application of Section 6(e)(ii)
of
the Master Agreement, with Market Quotation and Second Method being
the
applicable method for determining the termination payment (notwithstanding
anything in the Derivative Agreement to the
contrary).
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(iii) In
the event that the Counterparty or the SPV has found a replacement
entity
in accordance with Section 2(b)(ii), the Counterparty shall promptly
reimburse the SPV for all reasonable incidental expenses incurred
by the
SPV, as such are incurred, in connection with the termination of
the
Counterparty as counterparty and the entry into a new Derivative
Instrument. The provisions of this paragraph shall not limit whatever
rights the SPV may have under other provisions of this Agreement
or
otherwise, whether in equity or at law, such as an action for damages,
specific performance or injunctive
relief.
|
| (c) |
CHL
and the related Depositor shall indemnify the Counterparty,
each person
who controls the Counterparty (within the meaning of Section
15 of the
Securities Act and Section 20 of the Exchange Act); and
the respective
present and former directors, officers, employees and agents
of each of
the foregoing, and shall hold each of them harmless from
and against any
losses, damages, penalties, fines, forfeitures, legal fees
and expenses
and related costs, judgments, and any other costs, fees
and expenses that
any of them may sustain arising out of or based upon (A)
any untrue
statement of a material fact contained or alleged to be
contained in the
related Prospectus Supplement (other than the Company Information),
or (B)
the omission or alleged omission to state in related Prospectus
Supplement
(other than the Company Information) a material fact required
to be stated
in the Prospectus Supplement or necessary in order to make
the statements
therein, in the light of the circumstances under which
they were made, not
misleading.
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Section
5. Miscellaneous.
| (a) |
Construction.
Throughout this Agreement, as the context requires, (a)
the singular tense
and number includes the plural, and the plural tense and
number includes
the singular; (b) the past tense includes the present,
and the present
tense includes the past; and (c) references to parties,
sections,
schedules, and exhibits mean the parties, sections, schedules,
and
exhibits of and to this Agreement. The section headings
in this Agreement
are inserted only as a matter of convenience, and in no
way define, limit,
extend, or interpret the scope of this Agreement or of
any particular
section.
|
| (b) |
Assignment.
None of the parties may assign their rights under this
Agreement without
the prior written consent of the other parties. Subject
to the foregoing,
this Agreement shall be binding on and inure to the benefit
of the parties
and their respective successors and permitted
assigns.
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7
| (c) |
No
Third-Party Benefits Except as Specified. None of the
provisions of this
Agreement are intended to benefit, or to be enforceable
by, any
third-party beneficiaries except the related SPV and
any trustee of an SPV
or any Administrator.
|
| (d) |
Governing
Law. This Agreement shall be governed by and construed
in accordance with
the internal laws of the State of New York without
regard to the conflict
of laws principles
thereof.
|
| (e) |
Amendment
and Waiver. This Agreement may not be modified or amended
except by an
instrument in writing signed by the parties hereto. No
waiver of any
provision of this Agreement or of any rights or obligations
of any party
under this Agreement shall be effective unless in writing
and signed by
the party or parties waiving compliance, and shall be
effective only in
the specific instance and for the specific purpose stated
in that
writing.
|
| (f) |
Counterparts.
This Agreement may be executed in one or more counterparts,
each of which
shall be deemed an original, but all of which together
shall constitute
one and the same
instrument.
|
| (g) |
Additional
Documents. Each party hereto agrees to execute any and
all further
documents and writings and to perform such other actions
which may be or
become necessary or expedient to effectuate and carry
out this
Agreement.
|
| (h) |
Severability.
Any provision hereof which is prohibited or unenforceable
shall be
ineffective only to the extent of such prohibition
or unenforceability
without invalidating the remaining provisions
hereof.
|
| (i) |
Integration.
This Agreement contains the entire understanding
of the parties with
respect to the subject matter hereof. There are
no restrictions,
agreements, promises, representations, warranties,
covenants or
undertakings with respect to the subject matter
hereof other than those
expressly set forth or referred to herein. This
Agreement supersedes all
prior agreements and understandings between the
parties with respect to
its subject
matter.
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8
IN
WITNESS WHEREOF, the parties hereto have caused their names to be signed hereto
by their respective officers thereunto duly authorized as of the day and year
first above written.
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CWABS,
INC.
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| By: | /s/ Xxxxx Xxxxxx | |
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Name: Xxxxx Xxxxxx |
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Title:
Vice
President
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CWMBS,
INC.
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| By: | /s/ Xxxxx Xxxxxx | |
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Name: Xxxxx Xxxxxx |
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Title:
Vice President
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CWALT,
INC.
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| By: | /s/ Xxxxx Xxxxxx | |
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Name: Xxxxx Xxxxxx |
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Title:
Vice
President
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CWHEQ,
INC.
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| By: | /s/ Xxxxx Xxxxxx | |
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Name: Xxxxx Xxxxxx |
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Title:
Vice
President
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COUNTRYWIDE
HOME LOANS, INC.
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| By: | /s/ Xxxxx Xxxxxx | |
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Name: Xxxxx Xxxxxx |
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Title:
Vice
President
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9
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SWISS
RE FINANCIAL PRODUCTS CORPORATION
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| By: |
/s/ Xxxxxx
X.
Xxxx
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Name: Xxxxxx X. Xxxx |
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Title:
President
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