EXHIBIT 99.5
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The Item 1115 Agreement
Master Item 1115 Agreement dated as of November 28, 2006 (this
"Agreement"), among 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 Credit Suisse International,
as counterparty (the "Counterparty").
RECITALS
WHEREAS, CWABS, CWMBS, CWALT and CWHEQ each have filed
Registration Statements on Form S-3 (each, a "Registration Statement") with
the Securities and Exchange Commission (the "Commission") for purposes of
offering mortgage backed or asset-backed notes and/or certificates (the
"Securities") through special purpose vehicles (each, an "SPV").
WHEREAS, on the closing date (the "Closing Date") of each
Transaction referenced in any supplement to this Agreement, any such
supplement substantially in the form attached hereto as Exhibit A hereto, 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
Business Days: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to be closed.
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 and
that is the most recent disclosure available to investors at the time of
pricing.
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.
Transaction: A securities offering involving CWABS, CWMBS,
CWALT or CWHEQ in which the Counterparty provides a Derivative Agreement that
acknowledges and incorporates the terms of this Agreement in accordance with
Section 5(b) hereof.
Section 2. Information to be Provided by or Actions of the Counterparty.
The Counterparty hereby covenants to perform the following with
respect to each Transaction:
(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:
(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;
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(ii) if requested by the related Depositor (after the aggregate
"significance percentage", determined absent manifest
error, of all derivative instruments provided by
Counterparty and any of its affiliates to the SPV is 8.00%
or more in respect of Item 1115(b)(1), or 18.00% or more
in respect of Item 1115(b)(2)) for the purpose of
compliance with Item 1115(b) with respect to a
Transaction, the Counterparty shall:
(A) provide the financial data required by and which
complies in all material respects with Item
1115(b)(1) or (b)(2) of Regulation AB (as applicable)
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 Microsoft Word or Microsoft Excel form; and
(B) if applicable, cause its accountants to issue their
consent to the filing or 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) if the Counterparty provided Company Financial Information
to the related Depositor for the Prospectus Supplement,
within ten Business Days of the release of any updated
financial data, the Counterparty shall (1) provide current
Company Financial Information as required by and which
complies in all material respects with Item 1115(b) of
Regulation AB to the related Depositor in Microsoft Word
or Microsoft Excel form, and (2) if applicable, cause its
accountants to issue their consent to filing or
incorporation by reference of such financial statements in
the Exchange Act Reports of the SPV; and
(ii) if the related Depositor requests Company Financial
Information from the Counterparty (after the aggregate
"significance percentage", determined absent manifest
error, of all derivative instruments provided by
Counterparty and any of its affiliates to the SPV is 8.00%
or more in respect of Item 1115(b)(1), or 18.00% or more
in respect of Item 1115(b)(2)), for the purpose of
compliance with Item 1115(b) of Regulation AB following
the Closing Date, the Counterparty shall upon ten Business
Days written notice either (A), (1) provide current
Company Financial Information as required by and which
complies in all material respects with Item 1115(b) of
Regulation AB to the related Depositor in Microsoft Word
or Microsoft Excel form, (2) if applicable, cause its
accountants to issue their consent to filing or
incorporation by reference of such financial statements in
the Exchange Act Reports of the SPV and (3)
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within ten Business Days of the release of any updated
financial data, provide current Company Financial
Information as required by and which complies in all
material respects with Item 1115(b) of Regulation AB
to the related Depositor in Microsoft Word or
Microsoft Excel 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 or obtain a
unconditional guarantee of a parent company as
provided in Section 2(c) below.
(c) If the Counterparty has failed to deliver any information,
report, or accountants' consent when and as required under
Section 2(a) or (b), which continues unremedied for the lesser
of five Business Days after the date on which such information,
report, or accountants' consent was required to be delivered
and such period (as specified in a prior written notice by the
applicable Depositor or SPV to the Counterparty) 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), then the Counterparty shall,
at its own cost, within the period in which the applicable
Exchange Act Report for which such information is required can
be timely filed, either cause another entity to replace the
Counterparty as party to the Derivative Agreement or obtain a
full and unconditional guaranty of a parent company to honor
the Counterparty's obligations under the Derivative Agreement;
provided that, with respect to the guaranty of a parent
company, if the financial information is not separately
presented for the derivative counterparty then each of the
requirements set forth in Rule 3-10(b) or 3-10(c) of Regulation
S-X, as applicable, shall be satisfied, including with respect
to the parent, the Counterparty and the financial statements of
the parent (as though the Counterparty were the issuer of
registered securities), in each case to or from, as applicable,
an entity that (i) has signed an agreement with CHL and the
Depositors substantially in the form of this Agreement and (ii)
has agreed to deliver any information, report, certification or
accountants' consent when and as required under this Section 2
hereof, on terms substantially similar to the Derivative
Agreement. Counterparty agrees that the related Derivative
Agreement shall provide that failure to take the actions
provided in this Section 2(c) shall be an Additional
Termination Event (as defined in the Master Agreement) as
provided in the related Master Agreement for each Transaction.
(d) In the event that the Counterparty or the SPV has found a
replacement entity in accordance with Section 2(c), 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 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)(i) or Section 2(b)(ii)(A), that, except as
disclosed in writing to the related Depositor prior to such
date:
(i) If applicable, the accountants who certify the financial
statements and supporting schedules included in the
Company Financial Information (if applicable) are
independent registered public accountants as required by
the Securities Act.
(ii) If applicable, the financial statements included in the
Company Financial Information present fairly the
consolidated financial position of the Counterparty (or
the entity that consolidates the Counterparty) and its
consolidated subsidiaries as at the dates indicated and
the consolidated results of their operations and cash
flows for the periods specified; except as otherwise
stated in the Company Financial Information, said
financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied
on a consistent basis; and the supporting schedules
included in the Company Financial Information present
fairly in accordance with GAAP the information required to
be stated therein. The selected financial data and summary
financial information included in the Company Financial
Information present fairly the information shown therein
and have been compiled on a basis consistent with that of
the audited financial statements of the Counterparty.
(iii) If applicable, 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 applicable, the Counterparty represents and warrants to the
related Depositor, as of the date on which it has obtained a
full and unconditional guaranty of a parent company to honor
Counterparties obligations under the Derivative Agreement as a
remedy to failing to deliver any information, report, or
accountants' consent when and as required under Section 2(a) or
(b), that the requirements of Rule 3-10(b) or 3-10(c) of
Regulation S-X, as applicable, have been satisfied with respect
to the omission of the financial information of the
Counterparty (assuming the Counterparty is treated as the
Issuer of the registered security under Rule 3-10).
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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 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:
(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(a) or (b) by or on
behalf of the Counterparty (collectively, the "Company
Information"), or (B) the omission or alleged omission to
state in the Company Information a material fact required
to be stated in the Company Information or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
or
(ii) any failure by the Counterparty to comply with Section 2;
provided, however, that notwithstanding anything to the
contrary herein such indemnification shall not cover any
failure by the Counterparty to provide Company Financial
Information while the aggregate "significance percentage",
of all derivative instruments provided by Counterparty and
any of its affiliates to the SPV is below 10.00% in
respect of Item 1115(b)(1), or below 20.00% in respect of
Item 1115(b)(2).
In the case of any failure of performance described in
clause (a)(ii) of this Section, the Counterparty shall
promptly reimburse the related Depositor and each Person
responsible for execution of a certification pursuant to
Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with
respect to the SPV, for all costs reasonably incurred by
each such party in order to obtain the information, report,
certification, accountants' consent or other material not
delivered as required by the Counterparty.
(b) The Depositor 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
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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.
(c) 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 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
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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.
(d) Nothing in this agreement shall be construed to allow the
Indemnified Party to recover punitive damages or consequential
damages from the indemnifying party.
(e) 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(a) or (b) 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 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).
Section 5. Miscellaneous.
(a) Company Financial Information. Notwithstanding anything to the
contrary contained herein, if Regulation AB is amended, or the
Commission has issued interpretive guidance uniformly
applicable to registrants of Asset-Backed Securities allowing
the presentation of the financial information required by Item
1115 of Regulation AB with respect to an affiliate of the
Counterparty (a "Permitted Entity") rather than the
Counterparty and any affiliated entities providing derivatives
to the SPV, "Company Financial Information" shall be deemed to
refer to the financial information of such Permitted Entity
provided the Counterparty has received written confirmation
from CHL that no amendment to this Agreement is necessary. The
parties shall reasonably cooperate with respect to any
amendments to this Agreement to reflect such amendment or
interpretation.
(b) Incorporation by Reference. The Counterparty agrees that upon
its consent 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. For avoidance of
doubt, any Transaction where the Counterparty does not consent
to the incorporation by reference of this Agreement shall not
be governed by this Agreement.
(c) Construction. Throughout this Agreement, as the context
requires, (a) the singular tense and number includes the
plural, and the plural tense and number
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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.
(d) 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.
(e) No Third-Party Benefits Except as Specified. None of the
provisions of this Agreement are intended to benefit, or to be
enforceable by, any third-party beneficiaries except the
related SPV and any trustee of an SPV or any Administrator.
(f) Governing Law. This Agreement and, to the fullest extent
permitted by applicable law, all matters arising out of or
related in any way to this Agreement shall be governed by and
construed in accordance with the internal laws of the State of
New York without regard to the conflict of laws principles
thereof.
(g) 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, and
acknowledges that this waiver is a material inducement to the
other party's entering into this Agreement hereunder.
(h) Jurisdiction. With respect to any suit, action or proceeding
relating to this Agreement, each party irrevocably submits to
the jurisdiction of courts in the State of New York and the
United States District Court located in the Borough of
Manhattan in New York City.
(i) 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.
(j) 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.
(k) 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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(l) 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.
(m) Integration. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof. There
are no restrictions, agreements, promises, representations,
warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth or
referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect
to its subject matter.
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IN WITNESS WHEREOF, the parties hereto have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
CWABS, INC.
By:
------------------------------------------
Name:
Title:
CWMBS, INC.
By:
-----------------------------------------
Name:
Title:
CWALT, INC.
By:
-----------------------------------------
Name:
Title:
CWHEQ, INC.
By:
-----------------------------------------
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.
By:
------------------------------------------
Name:
Title:
11
CREDIT SUISSE INTERNATIONAL
By:
-------------------------------------------
Name:
Title:
By:
------------------------------------------
Name:
Title:
12
EXHIBIT A
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[FORM OF SUPPLEMENT TO MASTER ITEM 1115 AGREEMENT]
This supplement dated as of ____________, 20__ (this
"Supplement") to the Master Item 1115 Agreement dated as of November 28, 2006
(the "Master 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 Credit Suisse
International, as counterparty (the "Counterparty") supplements and forms part
of the Master Agreement. Capitalized terms used but not defined herein shall
have the meanings set forth in the Master Agreement.
The undersigned hereby acknowledge and agree that each of
the following entities shall be Transactions under the Master Agreement and
that all of the terms of the Master Agreement shall apply to each:
1. [Transaction]
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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:
-----------------------------------------
Name:
Title:
CWMBS, INC.
By:
------------------------------------------
Name:
Title:
CWALT, INC.
By:
-----------------------------------------
Name:
Title:
CWHEQ, INC.
By:
------------------------------------------
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.
By:
------------------------------------------
Name:
Title:
14
CREDIT SUISSE INTERNATIONAL
By:
------------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
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