EXHIBIT 99.5
The Item 1115 Agreement.
Exhibit 99.5
Item 1115 Agreement dated as of December 27, 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 UBS AG, 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, on the closing date (the "Closing Date") of each
transaction referenced in Exhibit A hereto (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 caps and 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).
Counterparty Guarantor: Any entity guaranteeing the obligations of
the SPV or any affiliate providing derivative instruments to the SPV.
Counterparty Guarantor Condition: Any Counterparty Guarantor or S-X
Counterparty Guarantor shall, upon providing any guarantee have executed and
delivered the joinder agreement referred to in Section 5(d).
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.
Indemnified Party: As defined in Section 4(a).
Master Agreement: The ISDA Master Agreement between the Counterparty
and SPV, 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. ss.ss.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.
Significance percentage: The "significance percentage", as the term
is defined and used in Regulation AB.
S-X Counterparty Guarantor: Any Counterparty Guarantor with respect
to which each of the requirements set forth in Rule 3-10(b) or 3-10(c) of
Regulation S-X, as applicable shall be satisfied, including with respect to the
such Counterparty Guarantor and the Counterparty and the financial statements of
the Counterparty Guarantor (as though the Counterparty was the issuer of
registered securities).
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 (or any Counterparty
Guarantor), 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:
(A) The Counterparty's legal name (and any d/b/a);
(B) the organizational form of the Counterparty;
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(C) a description of the general character of the business
of the Counterparty;
(ii) if requested by the related Depositor (after the aggregate
"significance percentage", determined absent manifest error,
of all derivative instruments provided by Counterparty and any
of its affiliates to the SPV is 8.00% or more in respect of
Item 1115(b)(1), or 18.00% or more in respect of Item
1115(b)(2)) for the purpose of compliance with Item 1115(b)
with respect to a Transaction, the Counterparty shall:
(A) provide the relevant financial data required by Item
1115(b)(1) or (b)(2) of Regulation AB, as applicable (as
specified by the related Depositor to the Counterparty)
either, in the Counterparty's discretion (I) with
respect to the Counterparty (which may comprise all
branches of the Counterparty as a consolidated entity),
any affiliated entities providing derivative instruments
to the SPV and any Counterparty Guarantor (other than an
S-X Counterparty Guarantor) (provided the Counterparty
Guarantor Condition has been satisfied) or (II) with
respect to an S-X Counterparty Guarantor (provided the
Counterparty Guarantor Condition has been satisfied)
(the "Company Financial Information"), in a form
appropriate for use in the Prospectus Supplement and in
an XXXXX-compatible form (if not incorporated by
reference) and, unless otherwise instructed in writing
by the Counterparty, hereby authorizes the related
Depositor to incorporate by reference the financial data
required by Item 1115(b)(2) of Regulation AB; and
(B) if applicable, cause its accountants to issue their
consent to the filing or the incorporation by reference
of such financial statements in the Registration
Statement.
(b) Following the Closing Date with respect to a Transaction,
(i) 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 (including Company Financial Information of any
Counterparty Guarantor) as required under Item 1115(b) of
Regulation AB to the related Depositor in an XXXXX-compatible
form (if not incorporated by reference) and, unless otherwise
instructed in writing by the Counterparty, hereby authorizes
the related Depositor to incorporate by reference the
financial data required by Item 1115(b)(2) of Regulation AB,
and (2) if applicable, cause its accountants (and, if
applicable, the accountants of any Counterparty Guarantor) to
issue their consent to filing or incorporation by reference of
such financial statements in the Exchange Act Reports of the
SPV; and
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(ii) if the related Depositor requests Company Financial
Information from the Counterparty (after the aggregate
"significance percentage", determined absent manifest error,
of all derivative instruments provided by Counterparty and any
of its affiliates to the SPV is 8.00% or more in respect of
Item 1115(b)(1), or 18.00% or more in respect of Item
1115(b)(2)), 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) comply
with Regulation AB by, (1) providing current Company Financial
Information (including Company Financial Information of any
Counterparty Guarantor) as required under Item 1115(b) of
Regulation AB to the related Depositor in an XXXXX-compatible
form (if not incorporated by reference), with the
understanding that, unless otherwise instructed in writing by
the Counterparty, the Counterparty hereby authorizes the
related Depositor to incorporate by reference the financial
data required by Item 1115(b)(2) of Regulation AB, (2) if
applicable, causing its accountants (and, if applicable, the
accountants of any Counterparty Guarantor) 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
(including Company Financial Information of any Counterparty
Guarantor) as required under Item 1115(b) of Regulation AB (in
such a manner as complies with Regulation AB) to the related
Depositor in an XXXXX-compatible form and if applicable, cause
its accountants (and, if applicable, the accountants of any
Counterparty Guarantor) 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.
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 Counterparty is required to file reports with the
Commission pursuant to section 13(a) or 15(d) of the Exchange
Act.
(ii) The Counterparty has filed all reports and other materials
required to be filed by such requirements during the preceding
12 months (or such shorter period that such party was required
to file such reports and materials).
(iii) The reports filed by the Counterparty, include (or incorporate
by reference in conformity with Regulation AB) the financial
statements of the Counterparty.
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(iv) 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.
(v) If applicable, with respect to the Counterparty, the financial
statements included in the Company Financial Information
present fairly the consolidated financial position of 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 reconciled (in a manner consistent with
Regulation S-X) 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.
(vi) 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) If at any time the representations and warranties set forth in
3(a)(i) through (iii) are no longer true and correct, the
Counterparty shall provide notice to the related Depositor within a
reasonable time prior to any Company Financial Information being
required to be included in the Registration Statement, or the
Exchange Act Reports of the SPV.
(c) If the Counterparty has elected to provide the Company Financial
Information with respect to an S-X Counterparty Guarantor, the
requirements set forth in Rule 3-10(b) or 3-10(c) of Regulation S-X,
as applicable, shall be satisfied, including with respect to such
Counterparty Guarantor and the Counterparty, and the financial
statements of the Counterparty Guarantor (as though the Counterparty
was the issuer of registered securities).
(d) 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
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a Derivative Agreement shall be an express third party beneficiary
of this Agreement; provided, however, that the representations made
in Section 3 of this Agreement shall not be deemed to be
representations under Section 3 of the Master Agreement.
Section 4. Indemnification; Remedies
(a) The Counterparty shall indemnify CHL and the related Depositor, each
person responsible for execution of a certification pursuant to Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act; each broker
dealer acting as underwriter, 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 (each, an "Indemnified Party"), 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,
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;
(ii) if any representation or warranty set forth in Section 3(a) is
made as of a date prior to the Closing Date, any breach by the
Counterparty of such representation or warranty, to the extent
that such breach is not cured by the Closing Date, or if any
representation or warranty pursuant to Section 3 is required
to be made as of a date subsequent to the Closing Date, any
breach by the Counterparty of such representation or warranty,
to the extent that such breach is not cured by the date
required hereunder;
provided, however that the foregoing shall not apply to any losses,
damages, penalties, fines, forfeitures, legal fees and expenses and
related costs, judgments, and any other costs, fees and expenses
caused by the negligence or any willful action of an Indemnified
Party, including without limitation any failure to make any filings
as and when required under Regulation AB.
(b) (i) If the Counterparty is required to provide Company Information
under the terms of Item 1115 of Regulation AB as of the
Closing Date and the Counterparty or any Counterparty
Guarantor fails to take such actions as are necessary to
comply with the requirements of Item 1115 of Regulation AB as
and when required, to the extent that such breach is not cured
by the Closing Date (or in the case of information needed for
purposes of printing
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the Prospectus Supplement, the date of printing of the
Prospectus Supplement), or any breach by the Counterparty or
any Counterparty Guarantor of a representation or warranty
pursuant to Section 3 to the extent made as of a date prior to
the Closing Date, then such failure shall, except as provided
in clause (ii) or (iii) of this Section 4, 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. In the event that an Early Termination Date is
designated in connection with such Additional Termination
Event, a termination payment (if any) shall be payable as of
the Early Termination Date 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).
(ii) If the Counterparty or any Counterparty Guarantor has received
written notice from the Depositor that the Counterparty or any
Counterparty Guarantor is required to provide Company
Financial Information under the terms of Item 1115 of
Regulation AB as of a specified date and the Counterparty or
any Counterparty Guarantor fails to take such actions as are
necessary to comply with the requirements of Item 1115 of
Regulation AB as and when required, and if such failure
continues unremedied for the lesser of ten calendar days after
the date on which such information, report, 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, in each case to or from, as applicable,
an entity 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) meets the rating conditions applicable to a
derivative counterparty for the relevant asset-backed
securities of each applicable rating agency, if applicable,
then (unless the Counterparty has taken the actions in clause
(iii) of this Section), an Additional Termination Event (as
defined in the Master Agreement) shall have occurred with the
Counterparty as the sole Affected Party. In the event that an
Early Termination Date is designated in connection with such
Additional Termination Event, a termination payment (if any)
shall be payable by the applicable party as of the Early
Termination Date as determined by the application of Section
6(e)(ii) of the Master Agreement, with Market Quotation and
Second Method being
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the applicable method for determining the termination payment
(notwithstanding anything in the Derivative Agreement to the
contrary).
(iii) At any time that the Counterparty has failed to meet its
obligations under Item 1115 and has failed to transfer any
applicable Transaction pursuant to clause (ii) of this
Section, then on or prior to any Early Termination Date, the
Counterparty may elect to designate a date as an Early
Termination Date (an "Elective Termination Date"), and the
termination payment referenced in clause (i) or (ii) above, as
applicable, shall be calculated and paid as provided in such
applicable clause.
(iv) In the event that the Counterparty or the SPV has found a
replacement entity in accordance with Section 4(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 Agreement. 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.
Section 5. Miscellaneous.
(a) Company Financial Information. Notwithstanding anything to the
contrary contained herein, if Regulation AB is amended, or the
Commission has issued interpretive guidance uniformly applicable to
registrants of Asset-Backed Securities allowing the presentation of
the financial information required by Item 1115 of Regulation AB
with respect to an affiliate of the Counterparty rather than the
Counterparty and any affiliated entities providing derivatives to
the SPV, "Company Financial Information" shall be deemed to refer to
the financial information of such permitted entity provided the
Counterparty has received written confirmation from CHL that no
amendment to this Agreement is necessary. The parties shall
reasonably cooperate with respect to any amendments to this
Agreement to reflect such amendment or interpretation.
(b) 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.
(c) 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
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Agreement shall be binding on and inure to the benefit of the
parties and their respective successors and permitted assigns.
(d) Counterparty Guarantor. The Counterparty shall cause any
Counterparty Guarantor to execute a joinder agreement in the form
attached hereto as Exhibit B acknowledging its rights and
obligations under this Agreement and setting forth certain
additional obligations with respect to such Counterparty Guarantor.
(e) 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 and any Counterparty Guarantor.
(f) 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.
(g) 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.
(h) 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.
(i) 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 reasonably necessary or expedient to
effectuate and carry out this Agreement.
(j) 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.
(k) 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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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.
CWABS, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title:
CWMBS, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title:
CWALT, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title:
CWHEQ, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title:
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title: First Vice President
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UBS AG
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Director and Counsel, Region
Americas Legal, Fixed Income
Section
UBS AG
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Director
Region Americas Legal
Fixed Income Section
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EXHIBIT A
---------
Transaction(s) covered by this Agreement
1. CWALT, Inc. Alternative Loan Trust 2006-43CB
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EXHIBIT B
---------
Form of Joinder
The undersigned Counterparty Guarantor as defined in that certain 1115 Agreement
COUNTRYWIDE HOME LOANS, INC., a New York corporation, CWABS, INC., a Delaware
corporation, CWMBS, Inc., a Delaware corporation, CWALT, Inc., a Delaware
corporation, CWHEQ, Inc., a Delaware corporation and [o], as counterparty (the
"Counterparty"), dated as of [ ], 2006 (the "1115 Agreement"), has reviewed the
1115 Agreement and acknowledges and agrees to the terms and conditions of such
1115 Agreement with respect to its rights and obligations as a Counterparty
Guarantor thereunder.
The undersigned Counterparty Guarantor further acknowledges and agrees that as
of the date hereof, (1) the representations and warranties set forth in Section
3 of the 1115 Agreement are true and correct as of the date hereof with respect
to the Counterparty Guarantor and (2) that the terms of Section 3(b) and Section
4 of the 1115 Agreement shall apply to such Counterparty Guarantor as if it were
named in such section in each instance where the "Counterparty" is named.
[ ]
By:
Name:
Title:
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