The Item 1115 Agreement
EXHIBIT
99.5
Item
1115
Agreement dated as of March 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 BANK OF AMERICA, N.A., 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:
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Section
1.
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Definitions
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Company
Information: As defined in Section 4(a)(i).
Company
Financial Information: As defined in Section 2(a)(ii).
Countrywide
Indemnified Party: As defined in Section 4(a).
Counterparty
Indemnified Party: As defined in Section 4(b).
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(b).
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. §§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.
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Section
2.
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Information
to be Provided by the Counterparty.
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(a)
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Prior
to printing the related Prospectus
Supplement,
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(i)
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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:
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(A)
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The
Counterparty’s legal name (and any
d/b/a);
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(B)
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the
organizational form of the
Counterparty;
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(C)
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a
description of the general character of the business of the
Counterparty;
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(ii)
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if
requested by the related Depositor for the purpose of compliance
with Item
1115(b) with respect to a Transaction 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:
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(A)
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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 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
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(B)
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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.
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(b)
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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,
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(i)
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if
the Counterparty provided Company Financial Information to the related
Depositor for the Prospectus Supplement, within 5 Business Days of
the
release of any updated financial data, the Counterparty shall (1)
provide
current Company Financial Information as required under Item 1115(b)
of
Regulation AB to the related Depositor in an XXXXX-compatible form
(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
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(ii)
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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.
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3
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Section
3.
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Representations
and Warranties and Covenants of the
Counterparty.
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(a)
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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)(i) or Section 2(b)(ii)(A), that, except
as
disclosed in writing the related Depositor prior to such
date:
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(i)
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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.
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(ii)
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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).
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(iii)
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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)
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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.
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(v)
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If
applicable, the financial statements included in the Company Financial
Information present fairly the consolidated financial position of
the
Counterparty (or the entity that consolidates the Counterparty) and
its
consolidated subsidiaries as at the dates indicated and the consolidated
results of their operations and cash flows for the periods specified;
except as otherwise stated in the Company Financial Information,
said
financial statements have been prepared in conformity with generally
accepted accounting principles (“GAAP”) applied on a consistent basis; and
the supporting schedules included in the Company Financial Information
present fairly in accordance with GAAP the information required to
be
stated therein. The selected financial data and summary
financial information included in the Company Financial Information
present fairly the information shown therein and have been compiled
on a
basis consistent with that of the audited financial statements of
the
Counterparty.
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(vi)
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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
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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.
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(b)
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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.
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(c)
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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, 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 XXXXX-compatible format no
later
than the 20th
calendar day
of the month in which any of the representations or warranties in
Section
3(a)(i) through (iii) ceased to be
correct.
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(d)
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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.
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Section
4.
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Indemnification;
Remedies
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(a)
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The
Counterparty shall indemnify CHL and the related Depositor, each
person
responsible for the preparation, execution or filing of any report
required to be filed with the Commission with respect to such SPV,
or for
execution of a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d)
under the Exchange Act; each person who controls any of such parties
(within the meaning of Section 15 of the Securities Act and Section
20 of
the Exchange Act); and the respective present and former directors,
officers, employees and agents of each of the foregoing (each, a
“Countrywide 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:
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(i)
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(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
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a
material fact required to be stated in the Company Information or
necessary in order to make the statements therein, in the light of
the
circumstances under which they were made, not misleading;
or
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(ii)
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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.
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(b)
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CHL
shall indemnify the Counterparty, each of its officers and directors
and
each person who controls the Counterparty (within the meaning of
Section
15 of the Securities Act and Section 20 of the Exchange Act) (each,
a
“Counterparty Indemnified Party”; and each of the Countrywide Indemnified
Party and the Counterparty Indemnified Party shall be referred to
as the
“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
any
untrue statement or alleged untrue statement of any material fact
contained in the Prospectus Supplement or any free writing prospectus
with
respect to the related Securities or the omission or alleged omission
to
state a material fact necessary in order to make the statements therein
not misleading; provided, however, that the indemnity set forth in
this
Section 4(b) shall not apply insofar as such losses, claims, expenses,
damages or liabilities (or actions in respect thereof) arise out
of or are
based upon (i) any untrue statement or alleged untrue statement of
any
material fact contained in the Company Information or the omission
or
alleged omission to state in the Company Information a material fact
necessary in order to make the statements therein not misleading
and/or
(ii) a breach of the representations set forth in Sections 3(a)
above.
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(c)
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Promptly
after the Indemnified Party receives notice of the commencement of
any
such action, the Indemnified Party will, if a claim in respect thereof
is
to be made pursuant to this Agreement, promptly notify the indemnifying
party in writing of the commencement thereof. In case any such
action is brought against the Indemnified Party, and it notifies
the
indemnifying party of the commencement thereof, the indemnifying
party
shall be entitled to appoint counsel of the indemnifying party’s choice at
the indemnifying party’s expense to represent the Indemnified Party in any
action for which indemnification is sought (in which case the indemnifying
party shall not thereafter be responsible for the fees and expenses
of any
separate counsel retained by the Indemnified Party except as set
forth
below); provided, however, that such counsel shall be reasonably
satisfactory to the Indemnified Party. Notwithstanding the
indemnifying party’s election to appoint counsel to represent the
Indemnified Party in an action, the Indemnified Party shall have
the right
to employ separate counsel (including local counsel), and the indemnifying
party shall bear the reasonable fees, costs and expenses of such
separate
counsel if (i) the use of counsel chosen by the indemnifying party
to
represent the Indemnified Party would present such counsel
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with
a conflict of interest, (ii) the actual or potential defendants in,
or
targets of, any such action include both the Indemnified Party and
the
indemnifying party, and the Indemnified Party shall have reasonably
concluded that there may be legal defenses available to it that are
different from or additional to those available to the indemnifying
party,
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified
Party
within a reasonable time after notice of the institution of such
action or
(iv) the indemnifying party shall authorize the Indemnified Party
to
employ separate counsel at the expense of the indemnifying party.
The
indemnifying party will not, without the prior written consent of
the
Indemnified Party, settle or compromise or consent to the entry of
any
judgment with respect to any pending or threatened claim, action,
suit or
proceeding in respect of which indemnification or contribution may
be
sought hereunder (whether or not the Indemnified Party is an actual
or
potential party to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising out of such claim, action,
suit or proceeding. In addition, for so long as the
indemnifying party is covering all costs and expenses of the Indemnified
Party as provided herein, no Indemnified Party will settle or compromise
or consent to the entry of any judgment with respect to any pending
or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder without the
consent of the indemnifying party, which consent shall not be unreasonably
withheld.
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(d)
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Nothing
in this agreement shall be construed to allow the Indemnified Party
to
recover punitive damages or consequential damages from the indemnifying
party.
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(e)
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(i)
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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
Agreement) under the Derivative Agreement. Following such
termination, a termination payment (if any) shall be payable by the
applicable party as determined by the application of Section 6(e)(ii)
of
the Master Agreement, with Market Quotation and Second Method being
the
applicable method for determining the termination payment (notwithstanding
anything in the Derivative Agreement to the
contrary).
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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), 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. 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 the applicable method for determining the termination payment
(notwithstanding anything in the Derivative Agreement to the
contrary).
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(iii)
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In
the event that the Counterparty or the SPV has found a
replacement entity in accordance with Section 4(e)(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.
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Section
5.
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Miscellaneous.
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(a)
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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
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information
of such permitted entity provided the Counterparty has received written
confirmation from CHL that such amendment or interpretive guidance
can be
relied upon.
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(b)
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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.
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(c)
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Assignment. None
of the parties may assign their rights under this Agreement without
the
prior written consent of the other parties. Subject to the foregoing,
this
Agreement shall be binding on and inure to the benefit of the parties
and
their respective successors and permitted
assigns.
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(d)
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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.
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(e)
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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.
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(f)
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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.
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(g)
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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.
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(h)
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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.
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(i)
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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.
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(j)
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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.
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CWMBS,
INC.
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By:
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/s/
Xxxxxxx X. Xxxxxxxxxxxx
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| Name: Xxxxxxx X. Xxxxxxxxxxxx | |||
| Title: Managing Director | |||
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CWALT,
INC.
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By:
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/s/
Xxxxxxx X. Xxxxxxxxxxxx
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| Name: Xxxxxxx X. Xxxxxxxxxxxx | |||
| Title: Managing Director | |||
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CWHEQ,
INC.
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By:
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/s/
Xxxxxxx X. Xxxxxxxxxxxx
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| Name: Xxxxxxx X. Xxxxxxxxxxxx | |||
| Title: Managing Director | |||
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COUNTRYWIDE
HOME LOANS, INC.
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By:
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/s/
Xxxxxxx X. Xxxxxxxxxxxx
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| Name: Xxxxxxx X. Xxxxxxxxxxxx | |||
| Title: Managing Director | |||
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BANK
OF AMERICA, N.A.
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By:
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/s/
Xxxxx X. Xxxxxx
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| Name: Xxxxx X. Xxxxxx | |||
| Title: Senior Vice President | |||
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