EXHIBIT 99.5
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An Item 1115 Agreement
Item 1115 Agreement dated as of January 26, 2006 (this "Agreement"),
between COUNTRYWIDE HOME LOANS, INC., a New York corporation ("CHL"), CWABS,
INC., a Delaware corporation ("CWABS"), CWMBS, Inc., a Delaware corporation
("CWMBS"), CWALT, Inc., a Delaware corporation ("CWALT"), CWHEQ, Inc., a
Delaware corporation ("CWHEQ") and SWISS RE FINANCIAL PRODUCTS CORPORATION, as
counterparty (the "Counterparty").
RECITALS
WHEREAS, CWABS, CWMBS, CWALT and CWHEQ each have filed
Registration Statements on Form S-3 (each, a "Registration Statement") with
the Securities and Exchange Commission (the "Commission") for purposes of
offering mortgage backed or asset-backed notes and/or certificates (the
"Securities") through special purpose vehicles (each, an "SPV").
WHEREAS, from time to time, on the closing date (the "Closing
Date") of a transaction pursuant to which Securities are offered (each, a
"Transaction"), the Counterparty and CHL or an underwriter or dealer with
respect to the Transaction, enter into certain derivative agreements (each, a
"Derivative Agreement"), including interest rate or currency swaps, for
purposes of providing certain yield enhancements that are assigned to the SPV
or the related trustee on behalf of the SPV or a swap or corridor contract
administrator (each, an "Administrator").
NOW, THEREFORE, in consideration of the mutual agreements set
forth herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereby agree as follows:
Section 1. Definitions
Company Information: As defined in Section 4(a)(i).
Company Financial Information: As defined in Section
2(a)(ii).
Depositor: Means CWABS, CWMBS, CWALT or CWHEQ with respect
to the related Registration Statement for which the entity of the registrant.
GAAP: As defined in Section 3(a)(v).
XXXXX: The Commission's Electronic Data Gathering, Analysis
and Retrieval system.
Exchange Act: The Securities Exchange Act of 1934, as
amended and the rules and regulations promulgated thereunder.
Exchange Act Reports: All Distribution Reports on Form 10-D,
Current Reports on Form 8-K and Annual Reports on Form 10-K that are to be
filed with respect to the related SPV pursuant to the Exchange Act.
Master Agreement: The ISDA Master Agreement between the
Counterparty and CHL, or if no such Master Agreement exists, the ISDA Master
Agreement assumed to apply to the Derivative Agreement pursuant to its terms.
Prospectus Supplement: The prospectus supplement prepared in
connection with the public offering and sale of the related Securities.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. 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 material legal or
governmental proceedings pending (or known to be
contemplated) against the Counterparty which may
have a material impact on the Counterparty's
ability to perform under the related Derivative
Agreement;
(E) a description of any affiliation or relationship
between the Counterparty and any of the
following parties:
(1) CHL (or any other sponsor identified to the
Counterparty by CHL);
(2) the related Depositor (as identified to the
Counterparty by CHL);
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(3) the SPV;
(4) Countrywide Home Loans Servicing LP (or any
other servicer or master servicer identified
to the Counterparty by CHL);
(5) The Bank of New York (or any other trustee
identified to the Counterparty by CHL);
(6) any originator identified to the
Counterparty by CHL;
(7) any enhancement or support provider
identified to the Counterparty by CHL; and
(8) any other material transaction party
identified to the Counterparty by CHL.
(ii) if requested by the related Depositor for the purpose
of compliance with Item 1115(b) with respect to a
Transaction, the Counterparty shall:
(A) provide the financial data required by Item
1115(b)(1) or (b)(2) of Regulation AB (as
specified by the related Depositor to the
Counterparty) with respect to the Counterparty
(or any entity that consolidates the
Counterparty) and any affiliated entities
providing derivative instruments to the SPV (the
"Company Financial Information"), in a form
appropriate for use in the Prospectus Supplement
and in an XXXXX-compatible form; and
(B) if applicable, cause its accountants to issue
their consent to the filing of such financial
statements in the Registration Statement.
(b) Following the Closing Date with respect to a Transaction,
(i) (I) no later than the 25th calendar day of each month,
the Counterparty shall (i) notify the related
Depositor in writing of (A) any material litigation or
governmental proceedings pending against the
Counterparty which may have a material impact on the
Counterparty's ability to perform under the related
Derivative Agreement or (B) any affiliations or
relationships that develop following the Closing Date
between the Counterparty and any of the parties
specified in Section 2(a)(i)(E) (and any other parties
identified in writing by the related Depositor) and
(ii) provide to the related Depositor a description of
such proceedings, affiliations or relationships as
described in Section 2(b)(i)(I)(i); and
(ii) if the Counterparty provided Company Financial
Information to the related Depositor for the
Prospectus Supplement, within 5 Business Days of the
release of any updated financial data, the
Counterparty shall (1) provide current Company
Financial Information as required under Item
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1115(b) of Regulation AB to the related Depositor in
an XXXXX-compatible form, and (2) if applicable, cause
its accountants to issue their consent to filing or
incorporation by reference of such financial
statements in the Exchange Act Reports of the SPV;
(iii) if the related Depositor requests Company Financial
Information from the Counterparty, for the purpose of
compliance with Item 1115(b) of Regulation AB
following the Closing Date, the Counterparty shall
upon five Business Days written notice either (A), (1)
provide current Company Financial Information as
required under Item 1115(b) of Regulation AB to the
related Depositor in an XXXXX-compatible form, (2) if
applicable, cause its accountants to issue their
consent to filing or incorporation by reference of
such financial statements in the Exchange Act Reports
of the SPV and (3) within 5 Business Days of the
release of any updated financial data, provide current
Company Financial Information as required under Item
1115(b) of Regulation AB to the related Depositor in
an XXXXX-compatible form and if applicable, cause its
accountants to issue their consent to filing or
incorporation by reference of such financial
statements in the Exchange Act Reports of the SPV or
(B) assign the Derivative Agreement as provided below.
(c) Prior to printing of any Prospectus Supplement, CHL and
Depositor will inform the Counterparty of the scope and
extent of the information that they need to receive from the
Counterparty for use in the related Prospectus Supplement
for the purpose of compliance with Item 1115 of Regulation
AB (the "Scope of Information"). CHL and the Depositor
acknowledge that the Counterparty need not undertake any
review of the related Prospectus Supplement (other than with
respect to the Company Information and/or the Company
Financial Information) in connection with its provision of
the Company Information and/or the Company Financial
Information.
Section 3. Representations and Warranties and Covenants of the
Counterparty.
(a) The Counterparty represents and warrants to the related
Depositor, as of the date on which information is first
provided to the related Depositor under Section 2(a)(ii),
Section 2(b)(ii) or Section 2(b)(iii)(A), that, except as
disclosed in writing the related Depositor prior to such
date:
(i) The accountants who certify the financial statements
and supporting schedules included in the Company
Financial Information (if applicable) are independent
registered public accountants as required by the
Securities Act.
(ii) If applicable, the financial statements included in
the Company Financial Information present fairly the
consolidated financial position of the Counterparty
(or the entity that consolidates the Counterparty) and
its consolidated subsidiaries as at the dates
indicated and the consolidated
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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) The Company Financial Information and other Company
Information included or incorporated by reference in
the Registration Statement (including through filing
on an Exchange Act Report), at the time they were or
hereafter are filed with the Commission, complied in
all material respects with the requirements of Item
1115(b) of Regulation AB (in the case of the Company
Financial Information) and, did not and will not
contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein
or necessary in order to make the statements therein,
in the light of the circumstances under which they
were made, not misleading.
(b) The Counterparty agrees that the terms of this Agreement
shall be incorporated by reference into any Derivative
Agreement so that each SPV who is a beneficiary of a
Derivative Agreement shall be an express third party
beneficiary of this Agreement.
Section 4. Indemnification; Remedies
(a) The Counterparty shall indemnify CHL and the related
Depositor, each person responsible for the preparation,
execution or filing of any report required to be filed with
the Commission with respect to such SPV, or for execution of
a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d)
under the Exchange Act; each person who controls any of such
parties (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act); and the respective
present and former directors, officers, employees and agents
of each of the foregoing, and shall hold each of them
harmless from and against any losses, damages, penalties,
fines, forfeitures, legal fees and expenses and related
costs, judgments, and any other costs, fees and expenses
that any of them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained
or alleged to be contained in any information, report,
certification, accountants' consent or other material
provided in written or electronic form under Section 2
by or on behalf of the Counterparty (collectively, the
"Company Information"), or (B) the omission or alleged
omission to state in the Company
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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 breach by the Counterparty of a representation or
warranty set forth in Section 3(a) and made as of a
date prior to the Closing Date, to the extent that
such breach is not cured by the Closing Date, or any
breach by the Counterparty of a representation or
warranty pursuant to Section 3 to the extent made as
of a date subsequent to the Closing Date.
(b) (i) Any failure by the Counterparty to deliver any
information, report, certification, accountants'
consent or other material when and as required under
Section 2 or any breach by the Counterparty of a
representation or warranty set forth in Section 3 and
made as of a date prior to the Closing Date, to the
extent that such breach is not cured by the Closing
Date (or in the case of information needed for
purposes of printing the Prospectus Supplement, the
date of printing of the Prospectus Supplement), or any
breach by the Counterparty of a representation or
warranty pursuant to Section 3 to the extent made as
of a date subsequent to such closing date, shall,
except as provided in clause (ii) of this paragraph,
immediately and automatically, without notice or grace
period, constitute an Additional Termination Event (as
defined in the Master Agreement) with the Counterparty
as the sole Affected Party (as defined in the Master
Agreement) under the Derivative Agreement. Following
such termination, a termination payment (if any) shall
be payable by the applicable party as determined by
the application of Section 6(e)(ii) of the Master
Agreement, with Market Quotation and Second Method
being the applicable method for determining the
termination payment (notwithstanding anything in the
Derivative Agreement to the contrary).
(ii) If the Counterparty has failed to deliver any
information, report, certification or accountants'
consent when and as required under Section 2, which
continues unremedied for the lesser of ten calendar
days after the date on which such information, report,
certification or accountants' consent was required to
be delivered or such period in which the applicable
Exchange Act Report for which such information is
required can be timely filed (without taking into
account any extensions permitted to be filed), and the
Counterparty has not, at its own cost, within the
period in which the applicable Exchange Act Report for
which such information is required can be timely filed
caused another entity (which meets any applicable
ratings threshold in the Derivative Agreement) to
replace the Counterparty as party to the Derivative
Agreement that (i) has signed an agreement with CHL
and the Depositors substantially in the form of this
Agreement, (ii) has agreed to deliver any information,
report, certification or accountants' consent when and
as required under Section 2 hereof and (iii) is
approved by the Depositor (which approval shall not be
unreasonably withheld) and any rating agency, if
applicable, on terms
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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
Instrument. The provisions of this paragraph shall not
limit whatever rights the SPV may have under other
provisions of this Agreement or otherwise, whether in
equity or at law, such as an action for damages,
specific performance or injunctive relief.
(c) CHL and the related Depositor shall indemnify the
Counterparty, each person who controls the Counterparty
(within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act); and the respective present
and former directors, officers, employees and agents of each
of the foregoing, and shall hold each of them harmless from
and against any losses, damages, penalties, fines,
forfeitures, legal fees and expenses and related costs,
judgments, and any other costs, fees and expenses that any
of them may sustain arising out of or based upon (A) any
untrue statement of a material fact contained or alleged to
be contained in the related Prospectus Supplement (other
than the Company Information), or (B) the omission or
alleged omission to state in related Prospectus Supplement
(other than the Company Information) a material fact
required to be stated in the Prospectus Supplement or
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
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
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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 necessary or
expedient to effectuate and carry out this Agreement.
(h) Severability. Any provision hereof which is prohibited or
unenforceable shall be ineffective only to the extent of
such prohibition or unenforceability without invalidating
the remaining provisions hereof.
(i) Integration. This Agreement contains the entire
understanding of the parties with respect to the subject
matter hereof. There are no restrictions, agreements,
promises, representations, warranties, covenants or
undertakings with respect to the subject matter hereof other
than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings
between the parties with respect to its subject matter.
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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/ Xxxxx Aviliez
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Name: Xxxxx Xxxxxx
Title: Vice President
CWMBS, INC.
By: /s/ Xxxxx Aviliez
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Name: Xxxxx Xxxxxx
Title: Vice President
CWALT, INC.
By: /s/ Xxxxx Aviliez
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Name: Xxxxx Xxxxxx
Title: Vice President
CWHEQ, INC.
By: /s/ Xxxxx Aviliez
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Name: Xxxxx Xxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxx Aviliez
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Name: Xxxxx Xxxxxx
Title: Vice President
SWISS RE FINANCIAL PRODUCTS CORPORATION
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: President
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