Exhibit 99.4
(Multicurrency-Cross Border)
SCHEDULE
to the
Master Agreement
dated as of March 28, 2006
between
XXXXXX BROTHERS SPECIAL FINANCING INC. ("Party A"),
a corporation organized under the laws of
the State of Delaware
and
THE BANK OF NEW YORK, not in its individual or corporate capacity but solely
as Swap Contract Administrator for CWABS, Inc. Asset-Backed Certificates
Series 2006-5, pursuant to a Swap Contract Administration Agreement ("Party B")
All terms used herein and not otherwise defined are given their meaning in
the Pooling and Servicing Agreement dated as of March 1, 2006 among CWABS,
Inc. as depositor, Park Monaco Inc., as a Seller, Park Sienna LLC, as a
Seller, Countrywide Home Loans, Inc. as a seller, Countrywide Home Loans
Servicing LP, as master servicer and The Bank of New York, as trustee (the
"Pooling and Servicing Agreement") and in the Swap Contract Administration
Agreement dated as of March 28, 2006, among the Bank of New York, as Swap
Contract Administrator (in such capacity, the "Swap Contract Administrator")
and as Trustee under the Pooling and Servicing Agreement referred to below
(in such capacity, the "Trustee"), and Countrywide Home Loans, Inc.(the "Swap
Contract Administration Agreement")
Part 1: Termination Provisions
In this Agreement:
(a) "Specified Entity" means in relation to Party A for the purpose of:
Section 5(a)(v), Not applicable.
---------------
Section 5(a)(vi), Not applicable.
----------------
Section 5(a)(vii), Not applicable.
-----------------
Section 5(b)(iv), Not applicable.
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and in relation to Party B for the purpose of:
Section 5(a)(v), Not applicable.
---------------
Section 5(a)(vi), Not applicable.
----------------
Section 5(a)(vii), Not applicable.
-----------------
Section 5(b)(iv), Not applicable.
----------------
(b) "Specified Transaction" will have the meaning specified in Section 14 of
this Agreement.
(c) Events of Default.
(i) The "Breach of Agreement" provisions of Section 5(a)(ii) will not
apply to Party A and will not apply to Party B.
(ii) The "Credit Support Default" provisions of Section 5(a)(iii) will
apply to Party A and will not apply to Party B.
(iii) The "Misrepresentation" provisions of Section 5(a)(iv) will not
apply to Party A and will not apply to Party B.
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(iv) The "Default under Specified Transaction" provisions of Section
5(a)(v) will not apply to Party A and will not apply to Party B.
(v) "Cross Default" provisions of Section 5(a)(vii) will not apply to
Party A and will not apply to Party B.
(vi) Clause (2) of the "Bankruptcy" provisions of Section 5(a)(vii) will
not apply to Party B with respect to its inability to pay its
subordinated debt.
(d) Termination Events.
(i) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will
not apply to Party A and will not apply to Party B.
(e) The "Automatic Early Termination" provision of Section 6(a) will not
apply to Party A and will not apply to Party B.
(f) Payments on Early Termination. For the purpose of Section 6(e) of this
Agreement, Market Quotation and the Second Method will apply.
(g) "Termination Currency" means USD.
(h) Additional Termination Events will apply. Each of the following shall
constitute an Additional Termination Event:
(A) Approved Ratings Threshold. Upon the occurrence of a
Collateralization Event (as defined below) Party A has not, within 30
days after such ratings downgrade (unless, within 30 days after such
downgrade, each such Swap Rating Agency has reconfirmed the rating of
the Swap Certificates which was in effect immediately prior to such
downgrade without regard to any financial guarantee insurance policy, if
applicable, unless the rating of the Swap Certificates were changed due
to a circumstance other than the downgrading of Party A's (or its Credit
Support Provider's rating), complied with one of the four solutions
listed below, then an Additional Termination Event shall have occurred
with respect to Party A and Party A shall be the sole Affected Party
with respect to such Additional Termination Event.
In the event that (A) either (i) the unsecured, long-term senior debt
obligations of Party A (or its Credit Support Provider) are rated below
"A1" by Xxxxx'x or are rated "A1" by Xxxxx'x and such rating is on watch
for possible downgrade (but only for so long as it is on watch for
possible downgrade) or (ii) the unsecured, short-term debt obligations
of Party A (or its Credit Support Provider) are rated below "P-1" by
Xxxxx'x or are rated "P-1" by Xxxxx'x and such rating is on watch for
possible downgrade (but only for so long as it is on watch for possible
downgrade), (B) no short-term rating is available from Xxxxx'x and the
unsecured, long-term senior debt obligations of Party A (or its Credit
Support Provider) are rated below "Aa3" by Xxxxx'x or are rated "Aa3" by
Xxxxx'x and such rating is on watch for possible downgrade (but only for
so long as it is on watch for possible downgrade), or (C) either (i) the
unsecured, short-term debt obligations of Party A (or its Credit Support
Provider) are rated below "A-1" by S&P or (ii) if Party A (or its Credit
Support Provider) does not have a short-term rating from S&P, the
unsecured, long-term senior debt obligations of Party A (or its Credit
Support Provider) are rated below "A+" by S&P (such event a
"Collateralization Event"), then, Party A, at its own cost and subject
to Rating Agency Condition (other than with respect to sub-clause (iii)
below, shall within 30 days either (i) cause another entity to replace
Party A as party to this Agreement that satisfies the Swap Counterparty
Ratings Requirement and that is approved by the Trustee (which approval
shall not be unreasonably withheld) on terms substantially similar to
this Agreement; (ii) obtain a guaranty of, or a contingent agreement of
another person that satisfies the Swap Counterparty Ratings
Requirement), to honor Party A's obligations under this Agreement,
provided that such other person is approved by the Trustee such
approval not to be unreasonably withheld; (iii) post collateral in
accordance with the Credit Support Annex attached hereto; or (iv)
establish any other arrangement satisfactory to the applicable Swap
Rating Agency which will be sufficient to restore the immediately prior
ratings of the Swap Certificates without regard to any financial
guarantee policy, if applicable, that satisfies
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the Swap Counterparty Ratings Requirements. If Party A posts collateral
in any circumstance described in this paragraph, and if required at the
time by S&P or necessary to satisfy the Rating Agency Condition,
concurrently with such delivery of Eligible Collateral, Party A shall
cause its outside counsel to deliver to Party B an opinion in form and
substance acceptable to S&P, as to the enforceability, perfection and
priority of Party B's security interest in such Eligible Collateral in
all relevant jurisdictions (i.e., that, notwithstanding Party A's
insolvency, the collateral will be available to meet swap obligations
free from any preference claim or moratorium). All collateral posted by
Party A shall be returned to Party A immediately upon Party A securing a
substitute counterparty that satisfies the Swap Counterparty Ratings
Requirements.
"Swap Counterparty Ratings Requirement" shall mean (a) either (i) the
unsecured, short-term debt obligations of the substitute counterparty
(or its Credit Support Provider) are rated at least "A-1" by S&P or (ii)
if the substitute counterparty does not have a short-term rating from
S&P, the unsecured, long-term senior debt obligations of the substitute
counterparty (or its Credit Support Provider) are rated at least "A+" by
S&P, and (b) either (i) the unsecured, long-term senior debt obligations
of such substitute counterparty (or its Credit Support Provider) are
rated at least "A1" by Xxxxx'x (and if rated "A1" by Xxxxx'x, such
rating is not on watch for possible downgrade) and the unsecured,
short-term debt obligations of such substitute counterparty (or its
Credit Support Provider) are rated at least "P-1" by Xxxxx'x (and if
rated "P-1" by Xxxxx'x, such rating is not on watch for possible
downgrade and remaining on watch for possible downgrade), or (ii) if
such substitute counterparty (or its Credit Support Provider) does not
have a short-term debt rating from Xxxxx'x, the unsecured, long-term
senior debt obligations of such substitute counterparty (or its Credit
Support Provider) are rated at least "Aa3" by Xxxxx'x (and if rated
"Aa3" by Xxxxx'x, such rating is not on watch for possible downgrade).
(B) Ratings Event. Upon the occurrence of a Ratings Event (as defined
below) Party A has not, within 10 days after such rating withdrawal or
downgrade (unless, within 10 days after such withdrawal or downgrade,
each such Swap Rating Agency has reconfirmed the rating of the Swap
Certificates which was in effect immediately prior to such withdrawal or
downgrade without regards to any financial guarantee insurance policy,
if applicable unless the rating of the Swap Certificates were changed
due to a circumstance other than the withdrawal or downgrading of Party
A's (or its Credit Support Provider's) rating), complied with one of the
solutions listed below, then an Additional Termination Event shall have
occurred with respect to Party A and Party A shall be the sole Affected
Party with respect to such Additional Termination Event.
It shall be a ratings event ("Ratings Event") if at any time after the
date hereof Party A shall fail to satisfy the Swap Counterparty Ratings
Threshold. Swap Counterparty Ratings Threshold shall mean that both (A)
the unsecured, long-term senior debt obligations of Party A (or its
Credit Support Provider) are rated at least "BBB-" by S&P, and (B)
either (i) the unsecured, long-term senior debt obligations of Party A
(or its Credit Support Provider) are rated at least "A2" by Xxxxx'x
(including if such rating is on watch for possible downgrade) and the
unsecured, short-term debt obligations of Party A (or its Credit Support
Provider) are rated at least "P-1" by Xxxxx'x (including if such rating
is on watch for possible downgrade) or (ii) if Party A (or its Credit
Support Provider) does not have a short-term rating from Xxxxx'x, the
unsecured, long-term senior debt obligations of Party A (or its Credit
Support Provider) are rated at least "A1" by Xxxxx'x (including if such
rating is on watch for possible downgrade).
Following a Ratings Event, Party A shall take the following actions at
its own expense and subject to the Rating Agency Condition (other than
with respect to sub-clause (A) hereafter), (A) immediately post
collateral in accordance with the Credit Support Annex attached hereto
(until such time as it has secured a substitute counterparty or a
guarantor that satisfies the Swap Counterparty Ratings Requirement, and
(B) not later than 10 days after the occurrence of such a downgrade or
withdrawal by S&P or Xxxxx'x, either (I) assign all of its rights and
obligations under the Transactions to a counterparty that satisfies the
Swap Counterparty Ratings Requirement or whose guarantor satisfies the
Swap Counterparty Ratings Requirement pursuant to documentation
substantially similar to the documentation then in place and subject to
prior notification to the Swap Rating Agencies, or (II) provide a guaranty
from a guarantor that satisfies the Swap Counterparty Ratings
Requirement pursuant to documentation substantially similar to the
documentation then in place and subject to prior notification to the Swap
Rating Agencies.
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The occurrence of the Additional "Termination Event described in Part
1(h)(A) and (B) shall have no effect on Party A's obligation to
undertake the steps set forth hereunder in the event Party B does not
exercise its right to terminate hereunder. Notwithstanding the
foregoing, in the event that S&P has other published criteria with
respect to the downgrade of a counterparty in effect at the time of such
a downgrade of Party A, Party A shall be entitled to elect to take such
other measures specified in such published criteria subject to the
satisfaction of the Rating Agency Condition.
(C) Supplemental Pooling and Servicing Agreement without Party A's Prior
Written Consent. Party B enters into an amendment and or supplement to
the Pooling and Servicing Agreement or other modification to the Pooling
and Servicing Agreement that could reasonably be expected to have a
material adverse effect on Party A without the prior written consent of
Party A (such consent not to be unreasonably withheld). For the purpose
of the foregoing Additional Termination Event, Party B shall be the sole
Affected Party.
(D) Return of Collateral. Party B or its Custodian fails to transfer any
Return Amount pursuant to the terms of the Credit Support Annex
following any applicable notice, cure and grace periods provided for
thereunder. For the purpose of the foregoing Additional Termination Event,
Party B shall be the sole Affected Party.
Part 2: Tax Representations
(a) Payer Tax Representations. For the purpose of Section 3(e) of this
Agreement, Party A and Party B will each make the following
representation: It is not required by any applicable law, as modified by
the practice of any relevant governmental revenue authority, of any
Relevant Jurisdiction to make any deduction or withholding for or on
account of any Tax from any payment (other than interest under Sections
2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it to the other
party under this Agreement. In making this representation, it may rely
on (i) the accuracy of any representation made by the other party
pursuant to Section 3(f) of this Agreement, (ii) the satisfaction(s) of
the agreement of the other party contained in Section 4(a)(i) or
4(a)(iii) of this Agreement and the accuracy and effectiveness of any
document provided by the other party pursuant to Section 4(a)(i) or
4(a)(iii) of this Agreement; and (iii) the satisfaction of the agreement
of the other party contained in Section 4(d) of this Agreement, provided
that it shall not be a breach of this representation where reliance is
placed on clause (ii) and the other party does not deliver a form or
document under Section 4(a)(iii) of this Agreement by reason of material
prejudice to its legal or commercial position.
(b) Payee Tax Representations.
For the purpose of Section 3(f) of this Agreement, Party A represents
that it is a corporation duly organized and validly existing under the
laws of the State of Delaware and Party B represents that it is a
"United States person" as such term is defined in Section 7701(a)(30) of
the Internal Revenue Code of 1986, as amended.
(c) Tax Representations in Confirmations.
For purposes of Sections 2(d)(i)(4) and 3(f), any payee tax
representation specified in a Confirmation under this Agreement shall be
deemed to be specified in this Schedule.
(d) Deduction or Withholding for Tax.
The provisions of Section 2(d)(i)(4) and 2(d)(ii) will not apply to
Party B and Party B shall not be required to pay any additional amounts
referred to therein.
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Part 3: Agreement to Deliver Documents
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are:
Party required to Form/Document/ Date by which
deliver document Certificate to be Delivered
---------------- ----------- ---------------
Party A and Forms and/or documents Upon reasonable demand by the
Party B described in Section 4(a)(iii) other party.
of the Agreement.
(b) Other documents to be delivered are:
Party required to Form/Document/ Date by which Covered by
deliver document Certificate to be delivered Section 3(d)
---------------- ----------- --------------- ------------
Party A and For each party, an incumbency Upon execution of Yes
Party B certificate with respect to this Agreement.
each signatory to this
Agreement and the Credit
Support Documents.
Party A A copy of the annual report Upon request. Yes
of its Credit Support
Provider containing audited
consolidated financial
statements for such fiscal
year certified by independent
public accountants and
prepared in accordance with
generally accepted accounting
principles consistently
applied.
Party A For its most recent fiscal Upon request. Yes
quarter, a copy of the
unaudited financial
statements of its Credit
Support Provider, prepared in
accordance with generally
accepted accounting
principles consistently
applied.
Party A and Any documents required or Upon execution of Yes
Party B reasonably requested by the this Agreement.
receiving party to evidence
authority of the delivering
party or its Credit Support
Provider, if any, to execute
and deliver this Agreement,
any Confirmation, and any
Credit Support Documents to
which it is a party, and to
evidence the authority of the
delivering party to its
Credit Support Provider to
perform its obligations under
this Agreement, such
Confirmation and/or Credit
Support Document, as the case
may be.
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Party required to Form/Document/ Date by which Covered by
deliver document Certificate to be delivered Section 3(d)
---------------- ----------- --------------- ------------
Party A A guarantee of Xxxxxx Upon execution of No
Brothers Holdings Inc. this Agreement.
("Holdings") substantially in
the form of Exhibit A to this
Schedule.
Party B Opinions of counsel to Party Upon execution of No
B of this substantially in this Agreement.
the form of Exhibit B to this
Schedule.
Party A An opinion of counsel to Upon execution of No
Party A Upon execution of this Agreement.
this and Party A's Credit
Support Provider
substantially in the form of
Exhibit C to this Schedule.
Party B Monthly Report At such time as Yes
each Monthly
Report is
delivered to the
Trustee.
Party B Copy of any notice delivered Upon availability. Yes
under the Pooling and
Servicing Agreement that
impacts this Agreement.
Party B Executed copy of the Credit Upon execution of Yes
Support Document specified in this Agreement.
Part 4 to this Schedule.
Party B Executed copy of the Swap Upon execution of Yes
Contract Administration this Agreement.
Agreement.
Part 4: Miscellaneous
(a) Addresses for Notices. For the purpose of
Section 12(a) of this Agreement:
Address for notices or communications to Party A:-
Address: Xxxxxx Brothers Special Financing Inc.
c/x Xxxxxx Brothers Inc.
Corporate Advisory Division
Transaction Management Group
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Documentation Manager
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
For all purposes.
Address for notices or communications to Party B:-
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Address: The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Administration MBS Administration, CWABS,
Series 2006-5
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
For all purposes.
(b) Process Agent. For the purpose of Section
13(c) of this Agreement:-
Party A appoints as its Process Agent: Not applicable.
Party B appoints as its Process Agent: Not applicable.
(c) Offices. The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party. For the purpose of Section 10(c) of this Agreement:-
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Party A; provided, however,
that if an Event of Default has occurred and is continuing with respect
to Party A, then the parties will mutually appoint a financial
institution acceptable to both parties which would qualify as a
Reference Market-maker to act as Calculation Agent until the earlier of
(i) a designation under Section 6(c)(ii), or (ii) the discontinuance of
such Event of Default with respect to Party A.
(f) Credit Support Document. Details of any Credit Support Document, each of
which is incorporated by reference in, constitutes part of, and is in
connection with, this Agreement and each Confirmation as if set forth in
full in this Agreement or such Confirmation:-
In the case of Party A: (1) A guarantee of Party A's obligations
hereunder substantially in the form annexed hereto as Exhibit A to this
Schedule. (2) The Credit Support Annex which supplements, forms part of,
and is subject to this Agreement.
In the case of Party B: From and including the date of its exclusion,
the Pooling and Servicing Agreement.
(g) Credit Support Provider.
Credit Support Provider means in relation to Party A: Xxxxxx Brothers
Holdings Inc.
Credit Support Provider means in relation to Party B: None.
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without reference to
choice of law doctrine other than Sections 5-1401 and 5-1402 of the New
York General Obligations Law).
(i) Jurisdiction. Section 13(b) is hereby amended by: (i) deleting in the
second line of subparagraph (i) thereof the word "non-"; and (ii)
deleting the final paragraph thereof.
(j) Netting of Payments. Subparagraph (ii) of Section 2(c) of this Agreement
will apply.
(k) "Affiliate" will have the meaning specified in Section 14 of this
Agreement, except that Party B shall be deemed to have no Affiliates;
and provided, however, that with respect to Party A, such definition
shall be understood to exclude Xxxxxx Brothers Derivative Products Inc.
and Xxxxxx Brothers Financial Products Inc.
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Part 5: Other Provisions
(a) Accuracy of Specified Information. Section 3(d) is hereby amended by
inserting in the third line thereof after the words "in every material
respect" and before the period the phrase "or, in the case of audited or
unaudited financial statements, a fair presentation, in all material
respects, of the financial condition of the relevant person."
(b) No Violation or Conflict Representation. Section 3(a)(iii) is hereby
amended by inserting in the second line thereof after the words
"constitutional documents" and before the words ", any order or
judgment" the phrase "(including, but not limited to, the Pooling and
Servicing Agreement as amended, and any and all resolutions, investment
policies, guidelines, procedures or restrictions)."; provided, such
amendment shall be applicable only with respect to the Representations
of Party B.
(c) Representations. Section 3 is hereby amended by adding the following
subsections after subsection (f) thereof:
(g) No Agency. It is entering into this Agreement, any Credit Support
Document to which it is a party, and each Transaction, and any
other documentation relating to this Agreement or any Transaction,
as principal (and not as agent or in any other capacity, fiduciary
or otherwise).
(h) Eligible Contract Participant. It is an "eligible contract
participant" within the meaning of Section 1a(12) of the Commodity
Exchange Act, as amended.
(i) Non-Reliance. It is acting for its own account, and it has made
its own independent decisions to enter into each Transaction and
as to whether that Transaction is appropriate or proper for it
based upon its own judgment and upon advice from such advisers as
it has deemed necessary. It is not relying on any communication
(written or oral) of the other party as investment advice or as a
recommendation to enter into that Transaction; it being
understood that information and explanations related to the terms
and conditions of a Transaction shall not be considered
investment advice or a recommendation to enter into that
Transaction. No communication (written or oral) received from
the other party shall be deemed to be an assurance or guarantee
as to the expected results of that Transaction.
(j) Assessment and Understanding. It is capable of assessing the
merits of and understanding (on its own behalf or through
independent professional advice), and understands and accepts, the
terms, conditions and risks of that Transaction. It is also
capable of assuming, and assumes, the risks of that Transaction.
(k) Status of Parties. The other party is not acting as a fiduciary
for or an adviser to it in respect of that Transaction.
(d) Additional Representations and Warranties of Party B. Party B
represents to Party A in accordance with Section 3 of the Agreement
(which representations will be deemed to be repeated by Party B at all
times until the termination of this Agreement) that all representations
and warranties in the Swap Contract Administration Agreement are
incorporated hereby as if made under this Agreement and all references
to the Swap Contract Administration Agreement are references to this
Agreement.
(e) Third-Party Beneficiary. Party B agrees with Party A that Party A shall
be an express third-party beneficiary of the Pooling and Servicing
Agreement and the Swap Contract Administration Agreement.
(f) No Set-off. Notwithstanding any provision of this Agreement or any
other existing or future agreements, each of Party A and Party B
irrevocably waives as to itself any and all contractual rights it may
have to set-off, net, recoup or otherwise withhold or suspend or
condition its payment or performance of any obligation to the other
party under this Agreement against any obligation of one party hereto
to the other party hereto arising outside of this Agreement (which
Agreement includes, without limitation, the Master Agreement to
26
which this Schedule is attached, this Schedule, the Confirmations and
any Credit Support Document). The provisions for Set-Off set forth in
Section 6(e) shall not apply.
(g) Transfer and Assignment. Notwithstanding anything to the contrary in
Section 7 and Section 6(b)(ii) of the Agreement, Party A may assign its
rights and obligations under the Agreement, in whole or in part, to any
Affiliate of Holdings effective upon delivery to Party B of the
guarantee by Holdings, in favor of Party B, of the obligations of such
Affiliate, such guarantee to be substantially the same as the guarantee
then in effect of the obligations of the transferor. Party A will
provide prior written notice to each Swap Rating Agency of any such
assignment. Any transfer pursuant to the foregoing or Section 7 of this
Agreement shall meet the following requirements:
1. No Event of Default nor Termination Event would occur immediately as
a result of such transfer;
2. Party A delivers to Party B both (a) an executed acceptance and
assumption by the Assignee of this Agreement and all Transactions (the
"Transferred Obligations") and (b) an executed guarantee from Party A's
Credit Support Provider on behalf of the Assignee, with respect to the
Transferred Obligations, substantially and in all material respects in
the form of the guaranty provided hereunder;
3. As a result of the Transfer, on the next scheduled payment date Party
B is not required to make payments (tax or otherwise) that are more than
or receive payments (tax or otherwise) that are less than the payments
that Party B would be required to make or receive under the Transactions
or the Agreement had the transfer not occurred.
On the Effective Date, (1) Party A shall be released from all
obligations and liabilities arising under the Transferred Obligations;
(2) the Assignee shall assume all obligations and liabilities under the
Transferred Obligations; and (3) the Transferred Obligations shall cease
to be Transaction(s) under this Agreement and shall be deemed to be
Transaction(s) under the master agreement between Assignee and Party B.
In addition, any transfer pursuant to Section 7 of this Agreement other
than the foregoing shall be subject to Rating Agency Condition and Party
A and Party B will provide prior written notice to each Swap Rating
Agency of any transfer under Section 6(b)(ii).
(h) Notices. For the purposes of subsections (iii) and (v) of Section 12(a),
the date of receipt shall be presumed to be the date sent if sent on a
Local Business Day or, if not sent on a Local Business Day, the date of
receipt shall be presumed to be the first Local Business Day following
the date sent.
(i) Service of Process. The third sentence of Section 13(c) shall be amended
by adding the following language at the end thereof: "if permitted in
the jurisdiction where the proceedings are initiated and in the
jurisdiction where service is to be made."
(j) Amendments. Section 9(b) is hereby amended by adding at the end thereof
the sentence: "In addition, any amendment or modification of this
Agreement shall be subject to the Rating Agency Condition."
(k) Amendments to Operative Documents. Party B agrees that it will obtain
Party A's written consent (which consent shall not be unreasonably
withheld) at least ten (10) Business Days prior to amending or
supplementing the Pooling and Servicing Agreement (or any other
transaction document), if such amendment and/or supplement would: (a)
materially adversely affect any of Party A's rights or obligations
hereunder; or (b) modify the obligations of, or impact the ability of,
Party B to fully perform any of Party B's obligations hereunder.
(l) No Bankruptcy Petition. Party A agrees that it will not, until a
period of one year and one day (or if longer, the applicable preference
period), after the payment in full of all of the Swap Certificates,
acquiesce, petition, invoke or otherwise cause Party B to invoke the
process of any governmental authority for the purpose of commencing or
sustaining a case (whether voluntary or involuntary) against Party B
under any bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of Party B or any substantial part of its
property or ordering the winding-up or liquidation of the affairs of
Party B; provided, that this provision shall not restrict or
27
prohibit Party A from joining any other person, including, without
limitation, the Trustee, in any bankruptcy, reorganization, arrangement,
insolvency, moratorium or liquidation proceedings already commenced or
other analogous proceedings already commenced under applicable law.
(m) Additional Definition. Section 14 is hereby amended by adding the
following definitions in their appropriate alphabetical order:
"Moody's" means Xxxxx'x Investor Services, Inc.
"Rating Agency Condition" means, with respect to any particular proposed
act or omission to act hereunder, that the party acting or failing to
act has consulted with each Rating Agency then providing a rating of any
Swap Certificates and has received from each Swap Rating Agency a written
confirmation that the proposed action or inaction would not cause such
Swap Rating Agency to downgrade or withdraw its then-current rating of any
Swap Certificates determined without regards to any financial guarantee
insurance policy, if applicable.
"S&P" means Standard & Poor's Ratings Services, a division of
XxXxxx-Xxxx, Inc.
"Swap Rating Agencies " means Moody's and S&P.
"USD" means United States Dollars.
All terms used herein and not otherwise defined are given their meaning
in the Pooling and Servicing Agreement.
(n) Waiver of Trial By Jury. Insofar as is permitted by law, each party
irrevocably waives any and all rights to trial by jury in any legal
proceeding in connection with this agreement or any transaction, and
acknowledges that this waiver is a material inducement to the other
party's entering into this agreement and each transaction hereunder.
(o) Severability. If any term, provision, covenant or condition of this
Agreement, or the application thereof to any party or circumstance,
shall be held to be invalid or unenforceable (in whole or in part) for
any reason, the remaining terms, provisions, covenants and conditions
hereof shall continue in full force and effect as if this Agreement had
been executed with the invalid or unenforceable portion eliminated, so
long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the
subject matter of this Agreement and the deletion of such portion of
this Agreement will not substantially impair the respective benefits or
expectations of the parties to this Agreement; provided, however, that
this severability provision shall not be applicable if any provision of
Section 2, 5, 6 or 13 (or any definition or provision in Section 14 to
the extent it relates to, or is used in or connection with any such
Section) shall be held to be invalid or unenforceable.
(p) Limited Liability. Party A and Party B agree to the following: (a)
The Bank of New York ("BNY") is entering into this Agreement not in its
individual or corporate capacity, but solely in its capacity as Swap
Contract Administrator under the Swap Contract Administration
Agreement; (b) in no case shall BNY (or any person acting as successor
Swap Contract Administrator under the Swap Contract Administration
Agreement) be personally liable for or on account of any of the
statements, representations, warranties, covenants or obligations
stated to be those of Party B under the terms of this Agreement, all
such liability, if any, being expressly waived by Party A and any
person claiming by, through or under Party A; and (c) recourse against
Party B shall be limited to the assets available under the Swap
Contract Administration Agreement or the Pooling and Servicing
Agreement.
(q) Regulation AB Compliance. Party A and Party B agree that the terms of
the Item 1115 Agreement dated as of February 24, 2006 (the "Regulation
AB Agreement"), between Countrywide Home Loans, Inc., CWABS, Inc.,
CWMBS, Inc., CWALT, Inc., CWHEQ, Inc. and Xxxxxx Brothers Special
Financing Inc.
28
shall be incorporated by reference into this Agreement so that Party B
shall be an express third party beneficiary of the Regulation AB
Agreement. A copy of the Regulation AB Agreement is attached hereto as
Exhibit D.
The parties executing this Schedule have executed the Master Agreement and
have agreed as to the contents of this Schedule.
XXXXXX BROTHERS THE BANK OF NEW YORK, not in its
SPECIAL FINANCING INC. individual or corporate capacity but
solely as Swap Contract Administrator
for CWABS, Inc. Asset-Backed
Certificates Series 2006-5, pursuant
to a Swap Contract Administration
Agreement
Party A Party B
/s/ Xxxx Xxxxxxx /s/ Xxxxx Xxxxxx
------------------------------- -------------------------------
Name: Xxxx Xxxxxxx Name: Xxxxx Xxxxxx
Title: Vice President Title: Assistant Treasurer
Date: Date:
29
XXXXXX BROTHERS
EXHIBIT A to Schedule
---------------------
GUARANTEE OF XXXXXX BROTHERS HOLDINGS INC.
------------------------------------------
XXXXXX BROTHERS SPECIAL FINANCING INC. ("Party A") and THE BANK OF NEW YORK,
not in its individual or corporate capacity but solely as Swap Contract
Administrator for CWABS, Inc. Asset-Backed Certificates Series 2006-5,
pursuant to a Swap Contract Administration Agreement, ("Party B") have entered
into a Master Agreement dated as of March 28, 2006, (the "Master Agreement"),
pursuant to which Party A and Party B have entered and/or anticipate entering
into one or more transactions (each a "Transaction"), the Confirmation of each
of which supplements, forms part of, and will be read and construed as one
with, the Master Agreement (collectively referred to as the "Agreement"). This
Guarantee is a Credit Support Document as contemplated in the Agreement. For
value received, and in consideration of the financial accommodation accorded
to Party A by Party B under the Agreement, XXXXXX BROTHERS HOLDINGS INC., a
corporation organized and existing under the laws of the State of Delaware
("Guarantor"), hereby agrees to the following:
(a) Guarantor hereby unconditionally guarantees to Party B the due and
punctual payment of all amounts payable by Party A under each Transaction when
and as Party A's obligations thereunder shall become due and payable in
accordance with the terms of the Agreement. In case of the failure of Party A
to pay punctually any such amounts, Guarantor hereby agrees, upon written
demand by Party B, to pay or cause to be paid any such amounts punctually when
and as the same shall become due and payable.
(b) Guarantor hereby agrees that its obligations under this Guarantee
constitute a guarantee of payment when due and not of collection.
(c) Guarantor hereby agrees that its obligations under this Guarantee
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Agreement against Party A (other than as a result of the
unenforceability thereof against Party B), the absence of any action to
enforce Party A's obligations under the Agreement, any waiver or consent by
Party B with respect to any provisions thereof, the entry by Party A and Party
B into additional Transactions under the Agreement or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of
a guarantor (excluding the defense of payment or statute of limitations,
neither of which is waived) provided, however, that Guarantor shall be
entitled to exercise any right that Party A could have exercised under the
Agreement to cure any default in respect of its obligations under the
Agreement or to setoff, counterclaim or withhold payment in respect of any
Event of Default or Potential Event of Default in respect of Party B or any
Affiliate, but only to the extent such right is provided to Party A under the
Agreement. The Guarantor acknowledges that Party A and Party B may from time
to time enter into one or more Transactions pursuant to the Agreement and
agrees that the obligations of the Guarantor under this Guarantee will upon
the execution of any such Transaction by Party A and Party B extend to all
such Transactions without the taking of further action by the Guarantor.
(d) This Guarantee shall remain in full force and effect until such time
as Party B shall receive written notice of termination. Termination of this
Guarantee shall not affect Guarantor's liability hereunder as to obligations
incurred or arising out of Transactions entered into prior to the termination
hereof.
(e) Guarantor further agrees that this Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time, payment, or
any part thereof, of any obligation or interest thereon is rescinded or must
otherwise be restored by Party B upon an Event of Default as set forth in
Section 5(a)(vii) of the Master Agreement affecting Party A or Guarantor.
(f) Guarantor hereby waives (i) promptness, diligence, presentment,
demand of payment, protest, order and, except as set forth in paragraph (a)
hereof, notice of any kind in connection with the Agreement and this
Guarantee, or (ii) any requirement that Party B exhaust any right to take any
action against Party A or any other person prior to or contemporaneously with
proceeding to exercise any right against Guarantor under this Guarantee.
1
XXXXXX BROTHERS HOLDINGS INC.
000 XXXXXXX XXXXXX, XXX XXXX, XXX XXXX 00000
XXXXXX BROTHERS
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York, without reference to choice of law doctrine.
All capitalized terms not defined in this Guarantee, but defined in the
Agreement, shall have the meanings assigned thereto in the Agreement.
IN WITNESS WHEREOF, Guarantor has caused this Guarantee to be executed
in its corporate name by its duly authorized officer as of the date of the
Agreement.
XXXXXX BROTHERS HOLDINGS INC.
By:__________________________________
Name:
Title:
Date:
2
XXXXXX BROTHERS HOLDINGS INC.
000 XXXXXXX XXXXXX, XXX XXXX, XXX XXXX 00000
EXHIBIT B to Schedule
---------------------
[Form of Opinion of Counsel for Party B]
[Date]
Xxxxxx Brothers Special Financing Inc.
c/x Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
XXX
Re: CWABS, Inc.
Asset-Backed Certificates, Series 2006-5
----------------------------------------
Ladies and Gentlemen:
We have acted as special counsel for CWABS, Inc., a Delaware corporation
(the "Depositor"), in connection with the issuance of the CWABS, Inc.
Asset-Backed Certificates of the above-referenced Series (the "Certificates").
The Certificates represent the entire beneficial ownership interest in a trust
fund (the "Trust Fund") created pursuant to a Pooling and Servicing Agreement,
dated as of March 1, 2006 (the "Pooling and Servicing Agreement") among the
Depositor, as depositor, Countrywide Home Loans Inc. ("CHL"), as a seller,
Park Monaco Inc., as a seller, Park Sienna LLC, as a seller, Countrywide Home
Loans Servicing LP, as master servicer, The Bank of New York ("BNY"), as
trustee, and The Bank of New York Trust Company, N.A., as co-trustee. The
assets of the Trust Fund will consist primarily of a pool of conventional,
credit-blemished mortgage loans secured by first liens on one- to four-family
residential properties.
In connection with the issuance of the Certificates, we have also acted
as special counsel to the Depositor in connection with the execution and
delivery of the following documents relating to the Certificates: (i) the Swap
Contract Administration Agreement, dated as of March 28, 2006 (the "Swap
Contract Administration Agreement"), between BNY, in its capacity as swap
contract administrator (in such capacity, the "Swap Contract Administrator")
and in its capacity as Trustee under the Pooling and Servicing Agreement, and
CHL, (ii) a confirmation with a reference number of [] and a trade date of
March [], 2006 (the "Confirmation") between CHL and Xxxxxx Brothers Special
Financing Inc. (the "Swap Counterparty"), (iii) the ISDA Master Agreement,
Schedule and Credit Support Annex dated as of March 28, 2006 (collectively,
the "Master Agreement"), between the Swap Counterparty and the Swap Contract
Administrator and (iv) the Swap Contract Assignment Agreement, dated as of
March 28, 2006 (the "Swap Contract Assignment Agreement"), between CHL, the
Swap Counterparty and the Swap Contract Administrator. The Master Agreement
and the transaction evidenced by the Confirmation, taken together with the
applicable provisions of the Swap Contract Assignment Agreement, are referred
to herein collectively as the "Swap Agreement".
Capitalized terms not otherwise defined herein have the meanings ascribed
to such terms in the Pooling and Servicing Agreement.
In arriving at the opinion expressed below, we have examined and relied
on originals or copies of the Pooling and Servicing Agreement, the Swap
Contract Administration Agreement, the Swap Contract Assignment Agreement, the
Master Agreement and the Confirmation (collectively, the "Agreements"). In
addition, we have made such investigations of law as we have deemed
appropriate as a basis for the opinion expressed below.
1
Based upon the foregoing, and having regard to legal considerations which
we deem relevant, subject to the assumptions, qualifications and limitations
set forth herein, we are of the opinion that the Swap Agreement constitutes
the valid and binding obligation of the Swap Contract Administrator,
enforceable against the Swap Contract Administrator in accordance with its
terms.
The opinion set forth above is subject to certain qualifications,
assumptions and exceptions as set out below.
In rendering the foregoing opinion, we have assumed, without any
independent investigation or verification, the following: (a) the authenticity
of original documents, the legal capacity of all individuals and the
genuineness of all signatures; (b) the conformity to the originals of all
documents submitted to us as certified, conformed or photostatic copies; (c)
the truth, accuracy and completeness of the information, representations and
warranties made in conference or contained in the records, documents,
instruments and certificates we have reviewed; (d) the due organization of the
parties to the Agreements and the power and authority of the parties to the
Agreements to enter into and perform all of their obligations thereunder; (e)
the due authorization, execution and delivery of the Agreements on behalf of
the respective parties thereto; (f) except as expressly covered in the opinion
set forth above, the legal, valid, and binding effect of the Agreements and
the enforceability thereof (in accordance with their terms) against the
respective parties thereto; (g) that the parties have complied and will comply
with all material provisions of the Agreements; (h) the absence of any
evidence extrinsic to the provisions of the written agreements between the
parties that the parties intended a meaning contrary to that expressed by
those provisions; (i) the absence of any agreement or understanding among the
parties other than those contained in the Agreements (or referred to therein
or incidental thereto); (j) that the terms and provisions of the Agreements do
not, and the execution, delivery and performance of the Agreements by any
party thereto does not and will not, violate the organizational documents of
such party or any law, rule, regulation, order or decree of any court,
administrative agency or other governmental authority or agency applicable to
such party, or result in the breach of or a default under any contract or
undertaking to which it is a party or by which it or its property is bound;
and (k) that there is nothing in the laws or public policy of any relevant
jurisdiction (other than the State of New York or the United States of
America) that would affect the opinion set forth above.
Our opinion is qualified as to:
(i) limitations imposed by any applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, fraudulent transfer or
other similar law of general application affecting the enforcement of
creditors' or secured creditors' rights generally;
(ii) general principles of equity including, without limitation, concepts
of materiality and fair dealing, the possible unavailability of specific
performance or injunctive relief, and other similar doctrines affecting the
enforceability of agreements generally (regardless of whether considered in a
proceeding in equity or at law);
(iii) rights to indemnification or contribution which may be limited by
applicable law or equitable principles or otherwise unenforceable as against
public policy,
(iv) the effect of any other limitations imposed by public policy,
although (except as noted in sub-paragraph (iii) above and sub-paragraphs (v)
through (viii) below) we are not aware of any limitation that would be
relevant to such enforcement;
(v) the effect of any requirement conditioning enforcement on the party
seeking enforcement having acted in a commercially reasonable manner and in
good faith in performing its obligations and exercising its rights and
remedies thereunder;
(vi) the discretion of a court to invalidate or decline to enforce any
right, remedy or provision of the Swap Agreement, determined by it, in any
such case, to be a penalty;
(vii) the unenforceability of any provision requiring the payment of
attorney's fees, except to the extent that a court determines such fees to be
reasonable; and
2
(viii) the effect of any requirement that a claim (or a foreign currency
judgment in respect of such claim) be converted into United States dollars at
a rate of exchange prevailing on a date determined pursuant to applicable law.
Without in any way limiting the effect of sub-paragraph (viii) above, we
note that a judgment for money in an action in a federal or state court in the
United States ordinarily would be enforced in the United States only in United
States dollars. The date used to determine the rate of conversion of a foreign
currency into United States dollars will depend upon various factors,
including which court renders the judgment. By way of example, under Section
27 of the New York Judiciary Law, a state court in the State of New York
rendering a judgment on an obligation required to be paid in a foreign
currency will be required to render such judgment in such foreign currency,
and such judgment would be converted into United States dollars at the
exchange rate prevailing on the date of entry of the judgment.
Certain of the remedial provisions of the Swap Agreement may be limited
or rendered ineffective or unenforceable in whole or in part, but the
inclusion of such provisions does not make the remedies provided by such
Agreement inadequate for the practical realization of the respective rights
and benefits purported to be provided thereby (except for the economic
consequences of procedural or other delay, as to which we express no opinion).
We express no opinion:
(a) as to any provision in the Swap Agreement to the extent that such
provision refers to, or incorporates by reference, the provisions of any
agreement other than the Swap Agreement;
(b) regarding any severability provision;
(c) with respect to the creation, perfection or priority of any security
interest or as to the effect thereof or the rights and remedies or obligations
of any party to the Swap Agreement in respect thereof;
(d) as to the effect of: (i) the compliance or non-compliance of Xxxxxx
Brothers Special Financing Inc. with any United States state or federal laws
or regulations or any other laws or regulations applicable to Xxxxxx Brothers
Special Financing Inc., including limitations or restrictions that apply to
financial institutions; or (ii) the failure of Xxxxxx Brothers Special
Financing Inc. to be duly authorized to conduct business in any jurisdiction;
(e) with respect to any federal or state securities, "blue sky" or other
similar laws;
(f) as to the enforceability of any rights to specific performance
provided for in the Swap Agreement; or
(g) as to whether a federal court of the United States of America or a
state court outside the State of New York would give effect to the choice of
New York law provided for in the Swap Agreement.
Our opinion herein, as it pertains to the enforceability of provisions
contained in the Swap Agreement pursuant to which the parties thereto agree to
submit to the jurisdiction of the United States federal courts referred to
herein, is subject to the power of such courts to transfer actions pursuant to
28 U.S.C. ss. 1404(a) or to dismiss such actions or proceedings on the ground
that such a federal court is an inconvenient forum for such an action or
proceeding and we note that such issues may be raised by the court sua sponte.
In addition, we express no opinion as to the subject matter jurisdiction of
any United States federal court to adjudicate any action relating to the
Agreements where jurisdiction based on diversity of citizenship under 27
U.S.C. ss. 1332 does not exist.
As noted above, the conclusions set forth herein are subject to the
accuracy of the factual assumptions described above and the absence of
additional facts that would materially affect the validity of the assumptions
set forth herein. Our conclusions as to any legal matters in this letter speak
only as of the date hereof. We assume no obligation to revise or supplement
this letter should such factual matters change or should such laws or
regulations be changed by legislative or regulatory action, judicial decision
or otherwise, and we hereby express no opinion as to the effect any such
changes may have on the foregoing opinion. We do not express any opinion,
either implicitly or otherwise, on any issue not expressly addressed in the
third paragraph of this letter.
3
To the extent our opinion herein pertains to the enforceability of Part
4(h) of the Schedule to the Master Agreement pursuant to which the Trust and
the Swap Counterparty have agreed that the laws of the State of New York shall
govern the Agreement, we have relied on Section 5-1401 of the New York General
Obligations Law, which states in pertinent part: "The parties to any contract,
agreement or undertaking, contingent or otherwise, in consideration of, or
relating to any obligation arising out of a transaction covering in the
aggregate not less than two hundred fifty thousand dollars . . . may agree
that the law of this state shall govern their rights and duties in whole or in
part, whether or not such contract, agreement or undertaking bears a
reasonable relation to this state."
We express no opinion as to matters of law other than the law of the
State of New York and the federal law of the United States of America. In
rendering the foregoing opinion we have assumed that enforcement of the Swap
Agreement in accordance with New York law would not violate any provision of
any law of any jurisdiction (other than the State of New York) or any public
policy of any jurisdiction that bears a reasonable relation to the Agreements
or the transaction in which the Swap Agreement is being executed and delivered
by the parties thereto.
The opinion expressed herein is solely for your benefit in connection
with the transactions contemplated by the Agreements and may not be relied on
in any manner or for any purpose by any other individual, partnership,
corporation or other governmental or non-governmental entity (each a
"Person"), nor may any copies thereof be published, communicated, filed with
or otherwise made available in whole or in part to any other Person without
our specific prior written consent. By accepting this letter, each Person to
whom this letter is addressed (other than the Depositor) recognizes and
acknowledges that (i) no attorney-client relationship exists or has existed
between the lawyers in our firm representing the Depositor and such Person in
connection with the execution of the Agreements or by virtue of this letter,
(ii) in order to permit reliance by such Person on this letter, the lawyers in
our firm representing the Depositor conducted no activities in addition to
those undertaken or conducted for the purpose of rendering this letter to the
Depositor as one of the addressees hereof and (iii) this letter may not be
appropriate or sufficient for such Person's purposes.
Very truly yours,
4
EXHIBIT C to Schedule
---------------------
[Form of Opinion of Counsel for
Xxxxxx Brothers Special Financing Inc. and
Xxxxxx Brothers Holdings Inc.]
March 28, 2006
THE BANK OF NEW YORK,
not in its individual or corporate capacity
but solely as Swap Contract Administrator for
CWABS, Inc. Asset-Backed Certificates Series 2006-5,
pursuant to a Swap Contract Administration Agreement
x/x Xxx Xxxx xx Xxx Xxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Administration MBS Administration,
---------
CWABS, Series 2006-5
Ladies and Gentlemen:
I have acted as counsel to Xxxxxx Brothers Special Financing Inc., a
Delaware corporation ("Party A") and Xxxxxx Brothers Holdings Inc., a Delaware
corporation ("Guarantor"), and am familiar with matters pertaining to the
execution and delivery of the Master Agreement (the "Master Agreement") dated
as of March 28, 2006 between Party A and THE BANK OF NEW YORK, not in its
individual or corporate capacity but solely as Swap Contract Administrator for
CWABS, Inc. Asset-Backed Certificates Series 2006-5, pursuant to a Swap
Contract Administration Agreement and the guarantee of Guarantor (the
"Guarantee") delivered in connection with the Master Agreement.
In connection with this opinion, I have examined, or have had examined on
my behalf, an executed copy of the Master Agreement and the Guarantee,
certificates and statements of public officials and officers of Party A and
Guarantor and such other agreements, instruments, documents and records as I
have deemed necessary or appropriate for the purposes of this opinion.
Except as expressly set forth herein, no independent investigation
(including, without limitation, conducting any review, search or investigation
of any public files, records or dockets) has been undertaken to determine the
existence or absence of the facts that are material to my opinions, and no
inference as to my knowledge concerning such facts should be made.
When used herein the phrase "to my knowledge" means to my actual
knowledge without independent investigation.
References in this letter to "Applicable Laws" are to those laws, rules
and regulations of the State of New York which, in my experience, are normally
applicable to transactions of the type contemplated by the Master Agreement
and the Guarantee. References in this letter to "Governmental Authorities" are
to executive, legislative, judicial, administrative or regulatory bodies of
the State of New York. References in this letter to "Governmental Approval"
are to any consent, approval, license, authorization or validation of, or
filing, recording or registration with, any Governmental Authority pursuant to
Applicable Laws.
Based on the foregoing but subject to the assumptions, exceptions,
qualifications and limitations hereinafter expressed, I am of the opinion
that:
1
(i) Each of Party A and Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware.
(ii) The execution, delivery and performance of the Master Agreement in
the case of Party A, and the Guarantee, in the case of Guarantor,
are within its corporate power, have been duly authorized by all
corporate action and do not conflict with any provision of its
certificate of incorporation or by-laws.
(iii) The Master Agreement, in the case of Party A, and the Guarantee, in
the case of Guarantor, have been duly executed and delivered and
each constitutes a legal, valid and binding obligation, enforceable
against it in accordance with its respective terms.
(iv) To the best of my knowledge, no Governmental Approval is required in
connection with the execution, delivery and performance of the
Master Agreement in the case of Party A, or the Guarantee, in the
case of Guarantor, except those that have been obtained and, to my
knowledge, are in effect.
The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations:
A. My opinion in paragraph 3 above is subject to: (i) bankruptcy,
insolvency, reorganization, receivership, moratorium or similar laws affecting
creditors' rights generally (including, without limitation, the effect of
statutory or other laws regarding fraudulent or other similar transfers or
conveyances); (ii) general principles of equity, regardless of whether
enforceability is considered in a proceeding in equity or at law; (iii) laws
and considerations of public policy that may limit the enforceability of
provisions (a) regarding indemnification and contribution rights and
obligations, (b) regarding the waiver or limitation of rights to trial by
jury, oral amendments to written agreements or rights of setoff, (c) relating
to submission to jurisdiction, venue or service of process, and (d) purporting
to prohibit or restrict, or require the consent of the "account debtor" (as
defined in Section 9-102 of the Uniform Commercial Code as in effect in the
State of New York (the "NYUCC")) for, the creation, perfection or enforcement
of a security interest in "accounts" or "general intangibles" (in each case,
as defined in Section 9-102 of the NYUCC).
B. I am a member of the Bar of the State of New York and render no
opinion on the laws of any jurisdiction other than the laws of the State of
New York and the General Corporation Law of the State of Delaware. Except as
described, I have not examined, or had examined on my behalf, and I do not
express any opinion with respect to, Delaware law.
C. My opinions are limited to the present laws and to the facts as they
presently exist, and no opinion is to be inferred or implied beyond the
matters expressly so stated. I assume no obligation to revise or supplement
this opinion should the present laws of the jurisdictions referred to in
paragraph B above be changed by legislative action, judicial decision or
otherwise.
D. This letter is rendered solely to you solely for your benefit in
connection with the Master Agreement and the Guarantee and the transactions
related thereto and may not be relied upon by any other person, entity or
agency or by you in any other context or for any other purpose. This letter
may not be circulated, used or quoted in whole or in part, nor may copies
thereof be furnished or delivered to any other person, without the prior
written consent of Xxxxxx Brothers Holdings Inc., except that you may furnish
copies hereof (i) to your independent auditors and attorneys, (ii) to any
United States, state or local authority having jurisdiction over you or over
Party A or Guarantor, (iii) pursuant to the order of any legal process of any
court of competent jurisdiction or any governmental agency, and (iv) in
connection with any legal action arising out of the Master Agreement or the
Guarantee.
2
E. I have assumed with your permission (i) the genuineness of all
signatures by each party other than Party A or Guarantor, (ii) the
authenticity of documents submitted to me as originals and the conformity to
authentic original documents of all documents submitted to me as copies, (iii)
the accuracy of the matters set forth in the documents, agreements and
instruments I reviewed, (iv) that each party other than Party A and Guarantor
is duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (v) the due execution and delivery, pursuant to
due authorization, of the Master Agreement by each party other than Party A,
and (vi) that the Master Agreement is the legal, valid, binding and
enforceable obligation of each party other than Party A, enforceable against
each such party in accordance with its terms.
F. My opinion in paragraph 3 is subject to the qualification that certain
provisions contained in the Agreement and the Guarantee may not be
enforceable, but such unenforceability will not render the Agreement or the
Guarantee invalid as a whole or substantially interfere with the practical
realization of the principal benefits provided thereby.
The foregoing opinions are given on the express understanding that the
undersigned is an officer of Xxxxxx Brothers Inc. and shall in no event incur
any personal liability in connection with said opinions.
Very truly yours,
3
EXHIBIT D to Schedule
---------------------
[REGULATION AB AGREEMENT]
-------------------------
1
Item 1115 Agreement dated as of February 24, 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 XXXXXX BROTHERS SPECIAL FINANCING INC., 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 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).
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. 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.
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);
(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 affiliation or
relationship (as set forth in Item 1119)
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);
(3) the SPV;
(4) Countrywide Home Loans Servicing LP (or
any other servicer or master servicer
identified to the Counterparty by CHL);
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(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 prior to the
related Depositor taking the steps necessary to
suspend its obligation to file Exchange Act
Reports, with respect to the SPV, under Sections 13
and 15(d) of the Exchange Act, in accordance with
the requirements of Regulation AB, 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 (if not
incorporated by reference) and 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 and until the related Depositor takes
the steps necessary to suspend its obligation to file Exchange
Act Reports, with respect to the SPV, under Sections 13 and 15(d)
of the Exchange Act, with respect to a Transaction,
(i) no later than the 25th calendar day of each month, the
Counterparty shall (1) notify the related Depositor in
writing of any affiliations or relationships that develop
following the Closing Date between the Counterparty and any
of the parties specified in Section 2(a)(i)(D) (and any
other parties identified in writing by the related
Depositor) and (2) provide to the related Depositor a
description of such proceedings, affiliations or
relationships as described in Section 2(b)(i)(1);
(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)
3
provide current Company Financial Information as required
under Item 1115(b) of Regulation AB to the related Depositor
in an XXXXX-compatible form (if not incorporated by
reference) and 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 to issue their consent to filing or
incorporation by reference of such financial statements in
the Exchange Act Reports of the SPV; and
(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 (if not incorporated by reference)
and hereby authorizes the related Depositor to incorporate
by reference the financial data required by Item 1115(b)(2)
of Regulation AB, (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.
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 or the entity that consolidates 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 or the entity that consolidates 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, or entity that
consolidates the Counterparty, include (or properly
incorporate by reference) 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, 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.
(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 the Counterparty has provided Company Financial Information
that is incorporated by reference into the Registration Statement
of the related Depositor, the Counterparty, so long as the
related Depositor is required to file Exchange Act Reports with
respect to the SPV, will file promptly all documents required to
be filed with the Commission pursuant to Section 13 or 14 of the
Exchange Act. If permitted by the Exchange Act, the related
Depositor will take the steps necessary to suspend its obligation
to file Exchange Act Reports, with respect to the SPV, under
Sections 13 and 15(d) of the Exchange Act.
(c) If at any time, the Counterparty ceases to meet the requirements
of Item 1101(c)(1) of Regulation AB with respect to the
incorporation by reference of the financial information of third
parties, the Counterparty shall provide notice to the related
Depositor, and if any Company Financial Information is required
to be included in the Registration Statement, or the Exchange Act
Reports of the SPV, will provide to the related Depositor such
Company Financial Information in
5
XXXXX-compatible format no later than the 25th calendar day of the
month following the date on which the Counterparty ceased to meet
the requirements.
(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 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 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, 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) 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, accountants' consent or other material
when and in any case only 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), 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
6
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).
(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), or if
the Counterparty has provided Company Information, 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, 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).
(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 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.
7
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.
(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 reasonably 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
8
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 Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
CWMBS, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
CWALT, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
CWHEQ, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Senior Vice President
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XXXXXX BROTHERS SPECIAL FINANCING INC.
By: /s/ Xxxxxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxxxxx X. Xxxxxx
Title: Vice President
11
