EXHIBIT 99.4
(Multicurrency-Cross Border)
SCHEDULE
to the
Master Agreement
dated as of December 29, 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
Trust 2006-26 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 December 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, The Bank of New York, as
Trustee and The Bank of New York Trust Company, N.A., as Co-Trustee (the
"Pooling and Servicing Agreement") and in the Swap Contract
Administration Agreement dated as of December 29, 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.
For the purposes of this Agreement:-
(a) "Specified Entity" will not apply to Party A or Party B for any purpose.
(b) "Specified Transaction" will not apply to Party A or Party B for any
purpose.
(c) Events of Default.
The statement below that an Event of Default will apply to a specific
party means that upon the occurrence of such an Event of Default with
respect to such party, the other party shall have the rights of a
Non-defaulting Party under Section 6 of this Agreement; conversely, the
statement below that such event will not apply to a specific party means
that the other party shall not have such rights.
(i) The "Failure to Pay or Deliver" provisions of Section 5(a)(i) will
apply to Party A and will apply to Party B; provided, however, that
Section 5(a)(i) is hereby amended by replacing the word "third" with
the word "first"; provided, further, that notwithstanding anything to
the contrary in Section 5(a)(i), any failure by Party A to comply
with or perform any obligation to be complied with or performed by
Party A under the Credit Support Annex shall not constitute an Event
of Default under Section 5(a)(i) unless (A) a Required Ratings
Downgrade Event has occurred and been continuing for 30 or more Local
Business Days and (B) such failure is not remedied on or before the
third Local Business Day after notice of such failure is given to
Party A.
(ii) The "Breach of Agreement" provisions of Section 5(a)(ii) will apply
to Party A and will not apply to Party B.
(iii) The "Credit Support Default" provisions of Section 5(a)(iii) will
apply to Party A and will not apply to Party B except that Section
5(a)(iii)(1) will apply to Party B solely in respect of Party B's
obligations under Paragraph 3(b) of the Credit Support Annex;
provided, however, that notwithstanding anything to the contrary in
Section 5(a)(iii)(1), any failure by Party A to comply with or
perform any obligation to be complied with or performed by Party A
under the Credit
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Support Annex shall not constitute an Event of Default under Section
5(a)(iii) unless (A) a Required Ratings Downgrade Event has occurred
and been continuing for 30 or more Local Business Days and (B) such
failure is not remedied on or before the third Local Business Day
after notice of such failure is given to Party A.
(iv) The "Misrepresentation" provisions of Section 5(a)(iv) will apply to
Party A and will not apply to Party B.
(v) The "Default under Specified Transaction" provisions of Section
5(a)(v) will not apply to Party A and will not apply to Party B.
(vi) The "Cross Default" provisions of Section 5(a)(vi) will apply to
Party A and will not apply to Party B. For purposes of Section
5(a)(vi), solely with respect to Party A:
"Specified Indebtedness" will have the meaning specified in Section
14.
"Threshold Amount" means three percent (3%) of the Shareholders'
Equity of Xxxxxx Brothers Holdings Inc. ("Xxxxxx Brothers Holdings
Inc." or "Holdings"), in the case of Party A (or its equivalent in
any other currency) or, if applicable, the Eligible Guarantor.
"Shareholders' Equity" means with respect to an entity, at any
time, the sum (as shown in the most recent annual audited financial
statements of such entity) of (i) its capital stock (including
preferred stock) outstanding, taken at par value, (ii) its capital
surplus and (iii) its retained earnings, minus (iv) treasury stock,
each to be determined in accordance with generally accepted
accounting principles.
(vii) The "Bankruptcy" provisions of Section 5(a)(vii) will apply to Party
A and will apply to Party B except that the provisions of Section
5(a)(vii)(2), (6) (to the extent that such provisions refer to any
appointment contemplated or effected by the Pooling and Servicing
Agreement or any appointment to which Party B has not become
subject), (7) and (9) will not apply to Party B; provided that, with
respect to Party B only, (i) Section 5(a)(vii)(4) is hereby amended
by adding after the words "against it" the words "(excluding any
proceeding or petition instituted or presented by Party A or its
Affiliates)", and (ii) Section 5(a)(vii)(8) is hereby amended by
deleting the words "to (7) inclusive" and inserting lieu thereof ",
(3), (4) as amended, (5) and (6) as amended".
(viii) The "Merger Without Assumption" provisions of Section 5(a)(viii)
will apply to Party A and will apply to Party B.
(d) Termination Events.
The statement below that a Termination Event will apply to a specific
party means that upon the occurrence of such a Termination Event, if such
specific party is the Affected Party with respect to a Tax Event, the
Burdened Party with respect to a Tax Event Upon Merger (except as noted
below) or the non-Affected Party with respect to a Credit Event Upon
Merger, as the case may be, such specific party shall have the right to
designate an Early Termination Date in accordance with Section 6 of this
Agreement; conversely, the statement below that such an event will not
apply to a specific party means that such party shall not have such right;
provided, however, with respect to "Illegality" the statement that such
event will apply to a specific party means that upon the occurrence of
such a Termination Event with respect to such party, either party shall
have the right to designate an Early Termination Date in accordance with
Section 6 of this Agreement.
(i) The "Illegality" provisions of Section 5(b)(i) will apply to Party A
and will apply to Party B.
(ii) The "Tax Event" provisions of Section 5(b)(ii) will apply to Party A,
except that, for purposes of the application of Section 5(b)(ii),
Section 5(b)(ii) is hereby amended by deleting the words "(x) any
action taken by a taxing authority, or brought in a court of
competent jurisdiction, on or after the date on which a Transaction
is entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (y), and the
"Tax Event" provisions of Section 5(b)(ii) will apply to Party B.".
20
(iii) The "Tax Event Upon Merger" provisions of Section 5(b)(iii) will
apply to Party A and will apply to Party B, provided that Party A
shall not be entitled to designate an Early Termination Date by
reason of a Tax Event upon Merger in respect of which it is the
Affected Party.
(iv) 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:
(i) Market Quotation will apply, provided, however, that, in the event
of a Derivative Provider Trigger Event, the following provisions
will apply:
(A) The definition of Market Quotation in Section 14 shall be
deleted in its entirety and replaced with the following:
"Market Quotation" means, with respect to one or more Terminated
Transactions, a Firm Offer which is (1) made by a Reference
Market-maker that is an Eligible Replacement, (2) for an amount
that would be paid to Party B (expressed as a negative number)
or by Party B (expressed as a positive number) in consideration
of an agreement between Party B and such Reference Market-maker
to enter into a "Replacement Transaction", and (3) made on the
basis that Unpaid Amounts in respect of the Terminated
Transaction or group of Transactions are to be excluded but,
without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required
(assuming satisfaction of each applicable condition precedent)
after that Early Termination Date is to be included.
(B) The definition of Settlement Amount shall be deleted in its
entirety and replaced with the following:
"Settlement Amount" means, with respect to any Early Termination
Date, an amount (as determined by Party B) equal to:
(a) If a Market Quotation for the relevant Terminated
Transaction or group of Terminated Transactions is accepted
by Party B so as to become legally binding on or before the
day falling ten Local Business Days after the day on which
the Early Termination Date is designated, or such later day
as Party B may specify in writing to Party A, but in either
case no later than one Local Business Day prior to the
Early Termination Date (such day, the "Latest Settlement
Amount Determination Day"), the Termination Currency
Equivalent of the amount (whether positive or negative) of
such Market Quotation;
(b) If, on the Latest Settlement Amount Determination Day, no
Market Quotation for the relevant Terminated Transaction or
group of Terminated Transactions has been accepted by Party
B so as to become legally binding and one or more Market
Quotations from Approved Replacements have been made and
remain capable of becoming legally binding upon acceptance,
the Settlement Amount shall equal the Termination Currency
Equivalent of the amount (whether positive or negative) of
the lowest of such Market Quotations (for the avoidance of
doubt, the lowest of such Market Quotations shall be the
lowest Market Quotation of such Market Quotations expressed
as a positive number or,
21
if any of such Market Quotations is expressed as a negative
number, the Market Quotation expressed as a negative number
with the largest absolute value); or
(c) If, on the Latest Settlement Amount Determination Day, no
Market Quotation for the relevant Terminated Transaction or
group of Terminated Transactions is accepted by Party B so
as to become legally binding and no Market Quotation from
an Approved Replacement remains capable of becoming legally
binding upon acceptance, the Settlement Amount shall equal
Party B's Loss (whether positive or negative and without
reference to any Unpaid Amounts) for the relevant
Terminated Transaction or group of Terminated Transactions.
(C) At any time on or before the Latest Settlement Amount
Determination Day at which two or more Market Quotations remain
capable of becoming legally binding upon acceptance, Party B
shall be entitled to accept only the lowest of such Market
Quotations.
(D) If Party B requests Party A in writing to obtain Market
Quotations, Party A shall use its reasonable efforts to do so
before the Latest Settlement Amount Determination Day.
(E) If the Settlement Amount is a negative number, Section
6(e)(i)(3) shall be deleted in its entirety and replaced with
the following:
"(3) Second Method and Market Quotation. If the Second Method
and Market Quotation apply, (I) Party B shall pay to Party A an
amount equal to the absolute value of the Settlement Amount in
respect of the Terminated Transactions, (II) Party B shall pay
to Party A the Termination Currency Equivalent of the Unpaid
Amounts owing to Party A and (III) Party A shall pay to Party B
the Termination Currency Equivalent of the Unpaid Amounts owing
to Party B; provided, however, that (x) the amounts payable
under the immediately preceding clauses (II) and (III) shall be
subject to netting in accordance with Section 2(c) of this
Agreement and (y) notwithstanding any other provision of this
Agreement, any amount payable by Party A under the immediately
preceding clause (III) shall not be netted-off against any
amount payable by Party B under the immediately preceding clause
(I)."
(ii) The Second Method will apply.
(g) "Termination Currency" means USD.
(h) Additional Termination Events. Additional Termination Events will apply
as provided in Part 5(e).
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Part 2. Tax Matters.
(a) Tax Representations.
(i) Payer Representations. For the purpose of Section 3(e) of this
Agreement:
(A) Party A makes the following representation(s):
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 Section 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: the accuracy of any
representations made by the other party pursuant to Section 3(f)
of this Agreement; (ii) the satisfaction of the agreement
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) by reason
of material prejudice to its legal or commercial position.
(B) Party B makes the following representation(s):
None.
(ii) Payee Representations. For the purpose of Section 3(f) of this
Agreement:
(A) Party A makes the following representation(s):
it is a corporation duly organized and validly existing under
the laws of the State of Delaware.
(B) Party B makes the following representation(s):
None.
(b) Tax Provisions.
(i) Gross Up. Section 2(d)(i)(4) shall not apply to Party B as X, and
Section 2(d)(ii) shall not apply to Party B as Y, in each case such
that Party B shall not be required to pay any additional amounts
referred to therein.
(ii) Indemnifiable Tax. The definition of "Indemnifiable Tax" in Section
14 is deleted in its entirety and replaced with the following:
"Indemnifiable Tax" means, in relation to payments by Party A, any
Tax and, in relation to payments by Party B, no Tax.
23
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
Party B described in Section 4(a) the other party.
(iii) of the Agreement.
(b) Other documents to be delivered are:
Party required Form/Document/ Date by which to Covered by
to deliver Certificate be delivered Section 3(d)
document Representation
Party A and Any documents required by Upon the execution Yes
Party B the receiving party to and delivery of this
evidence the authority of Agreement
the delivering party or
its Credit Support
Provider, if any, for it
to execute and deliver
the Agreement and any
Credit Support Documents
to which it is a party,
and to evidence the
authority of the delivering
party or its Credit Support
Provider to perform its
obligations under the
Agreement, any Confirmation
and any Credit Support
Document, as the case may be
Party A and A certificate of an Upon the execution Yes
Party B authorized officer of the and delivery of
party, as to the this Agreement
incumbency and authority
of the respective officers
of the part signing the
Agreement and any relevant
Credit Support Document,
as the case may be
Party A Annual Report of Party A's Promptly upon becoming Yes
Credit Support Provider publicly available
containing consolidated
financial statements
certified by independent
certified public accountants
and prepared in accordance
with generally accepted
accounting principles in
the country in which Party
A is organized
Party B Copy of any notice Upon availability. Yes
delivered under the
Pooling and Servicing
Agreement that impacts
this Agreement.
Party B Monthly Report At such time as each
Yes Monthly Report is
delivered to the Trustee.
Party A Quarterly Financial Promptly upon becoming Yes
Statements of Party A publicly available
24
Party required Form/Document/ Date by which to Covered by
to deliver Certificate be delivered Section 3(d)
document Representation
containing unaudited,
consolidated financial
statements of Party A's
fiscal quarter prepared in
accordance with generally
accepted accounting
principles in the country
in which Party A is
organized
Party A An opinion of counsel Upon the execution No
to Party A, substantially and delivery of this
in the form of Exhibit Agreement.
C to this Schedule
Party B An opinion of counsel to
Party B, substantially in
the form of Exhibit B to
this Schedule
Party A A guarantee of Xxxxxx Upon the execution No
Brothers Holdings Inc. and delivery of this
("Holdings") substantially Agreement
in the form of Exhibit A
to this Schedule.
Part 4. Miscellaneous.
(a) Address for Notices: For the purposes 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:
Address: The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Administration MBS Administration,
CWABS, Series 2006-26
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
For all purposes.
25
(b) Process Agent. For the purpose of Section 13(c):
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.
Party A: The Credit Support Annex, and a guarantee of Party A's
obligations hereunder substantially in the form annexed
hereto as Exhibit A to this Schedule.
Party B: From and including the date of its execution, the Pooling
and Servicing Agreement and the Credit Support Annex, solely
in respect of Party B's obligations under Paragraph 3(b) of
the Credit Support Annex.
(g) Credit Support Provider.
Party A: The guarantor under any guarantee in support of Party A's
obligations under this Agreement.
Party B: None.
(h) Governing Law. The parties to this Agreement hereby agree that the law of
the State of New York shall govern their rights and duties in whole,
without regard to the conflict of law provisions thereof other than New
York General Obligations Law Sections 5-1401 and 5-1402.
(i) Netting of Payments. The parties agree that subparagraph (ii) of Section
2(c) will apply to each Transaction hereunder.
(j) Affiliate. "Affiliate" shall have the meaning assigned thereto in Section
14; provided, however, that Party B shall be deemed to have no Affiliates
for purposes of this Agreement, including for purposes of Section
6(b)(ii) 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.
26
Part 5. Others Provisions.
(a) Definitions. Unless otherwise specified in a Confirmation, this Agreement
and each Transaction under this Agreement are subject to the 2000 ISDA
Definitions as published and copyrighted in 2000 by the International
Swaps and Derivatives Association, Inc. (the "Definitions"), and will be
governed in all relevant respects by the provisions set forth in the
Definitions, without regard to any amendment to the Definitions
subsequent to the date hereof. The provisions of the Definitions are
hereby incorporated by reference in and shall be deemed a part of this
Agreement, except that (i) references in the Definitions to a "Swap
Transaction" shall be deemed references to a "Transaction" for purposes
of this Agreement, and (ii) references to a "Transaction" in this
Agreement shall be deemed references to a "Swap Transaction" for purposes
of the Definitions.
(b) Amendments to ISDA Master Agreement.
(i) Single Agreement. Section 1(c) is hereby amended by the adding the
words "including, for the avoidance of doubt, the Credit Support
Annex" after the words "Master Agreement".
(ii) Conditions Precedent. Section 2(a)(iii) is hereby amended by adding
the following at the end thereof:
Notwithstanding anything to the contrary in Section 2(a)(iii)(1),
if an Event of Default with respect to Party B or Potential Event
of Default with respect to Party B has occurred and been continuing
for more than 30 Local Business Days and no Early Termination Date
in respect of the Affected Transactions has occurred or been
effectively designated by Party A, the obligations of Party A under
Section 2(a)(i) shall cease to be subject to the condition
precedent set forth in Section 2(a)(iii)(1) with respect to such
specific occurrence of such Event of Default or such Potential
Event of Default (the "Specific Event"); provided, however, for the
avoidance of doubt, the obligations of Party A under Section
2(a)(i) shall be subject to the condition precedent set forth in
Section 2(a)(iii)(1) (subject to the foregoing) with respect to any
subsequent occurrence of the same Event of Default with respect to
Party B or Potential Event of Default with respect to Party B after
the Specific Event has ceased to be continuing and with respect to
any occurrence of any other Event of Default with respect to Party
B or Potential Event of Default with respect to Party B that occurs
subsequent to the Specific Event.
(iii) Change of Account. Section 2(b) is hereby amended by the addition
of the following after the word "delivery" in the first line
thereof:
"to another account in the same legal and tax jurisdiction as the
original account".
(iv) Representations. Section 3 is hereby amended by adding at the end
thereof the following subsection (g):
"(g) Relationship Between Parties.
(1) Nonreliance. (i) It is not relying on any statement or
representation of the other party regarding the
Transaction (whether written or oral), other than the
representations expressly made in this Agreement or the
Confirmation in respect of that Transaction and (ii) it
has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisors
to the extent it has deemed necessary, and it has made
its own investment, hedging and trading decisions based
upon its own judgment and upon any advice from such
advisors as it has deemed necessary and not upon any
view expressed by the other party.
(2) Evaluation and Understanding. (i) It has the capacity
to evaluate (internally or through independent
professional advice) the Transaction and has made its
own decision subject to Section 6(n) of this Agreement
to enter into the Transaction and
27
(ii) It understands the terms, conditions and risks of
the Transaction and is willing and able to accept those
terms and conditions and to assume those risks,
financially and otherwise.
(3) Purpose. It is entering into the Transaction for the
purposes of managing its borrowings or investments,
hedging its underlying assets or liabilities or in
connection with a line of business.
(4) Status of Parties. The other party is not acting as an
agent, fiduciary or advisor for it in respect of the
Transaction.
(5) Eligible Contract Participant. It is an "eligible swap
participant" as such term is defined in, Section
35.1(b)(2) of the regulations (17 C.F.R. 35)
promulgated under, and an "eligible contract
participant" as defined in Section 1(a)(12) of the
Commodity Exchange Act, as amended."
(6) No Agency. Party A represents to Party B that 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). Party B
represents to Party A that 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 Swap Contract Administrator.
(v) Transfer to Avoid Termination Event. Section 6(b)(ii) is hereby
amended by (i) deleting the words "or if a Tax Event Upon Merger
occurs and the Burdened Party is the Affected Party," and (ii) by
deleting the words "to transfer" and inserting the words "to effect
a Permitted Transfer" in lieu thereof.
(vi) Jurisdiction. Section 13(b) is hereby amended by: (i) deleting in
the second line of subparagraph (i) thereof the word "non-", (ii)
deleting "; and" from the end of subparagraph 1 and inserting "."
in lieu thereof, and (iii) deleting the final paragraph thereof.
(vii) Local Business Day. The definition of Local Business Day in Section
14 is hereby amended by the addition of the words "or any Credit
Support Document" after "Section 2(a)(i)" and the addition of the
words "or Credit Support Document" after "Confirmation".
(c) 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:
(i) Constitutional Documents. Party B is in compliance, in all material
respects, with its constitutional documents (including, but not
limited to, the Pooling and Servicing Agreement, as amended from
time-to-time, and any and all resolutions, investment policies,
guidelines, procedures or restrictions), and each Transaction
contemplated hereunder is and will be an authorized and permitted
transaction thereunder and an Authorizing Resolution is in full
force and effect.
(ii) Compliance with Laws. Party B is in compliance, in all respects,
with all applicable laws, rules, regulations, interpretations,
guidelines, procedures, and policies of applicable regulatory
authorities affecting Party B, this Agreement, the Transactions, or
the performance of Party B's obligations hereunder.
(d) 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.
28
(e) Additional Termination Events. The following Additional Termination
Events will apply:
(i) First Rating Trigger Collateral. If (A) it is not the case that a
Moody's Second Trigger Ratings Event has occurred and been
continuing for 30 or more Local Business Days and (B) Party A has
failed to comply with or perform any obligation to be complied with
or performed by Party A in accordance with the Credit Support
Annex, 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.
(ii) Second Rating Trigger Replacement. If (A) a Required Ratings
Downgrade Event has occurred and been continuing for 30 or more
Local Business Days and (B) (i) at least one Eligible Replacement
has made a Firm Offer to be the transferee of all of Party A's
rights and obligations under this Agreement (and such Firm Offer
remains an offer that will become legally binding upon such
Eligible Replacement upon acceptance by the offeree) and/or (ii) an
Eligible Guarantor has made a Firm Offer to provide an Eligible
Guarantee (and such Firm Offer remains an offer that will become
legally binding upon such Eligible Guarantor immediately upon
acceptance by the offeree), 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.
(iii) Amendment of Pooling and Servicing Agreement. If, without the prior
written consent of Party A where such consent is required under the
Pooling and Servicing Agreement (such consent not to be
unreasonably withheld), an amendment is made to the Pooling and
Servicing Agreement which amendment could reasonably be expected to
have a material adverse effect on the interests of Party A under
this Agreement, an Additional Termination Event shall have occurred
with respect to Party B and Party B shall be the sole Affected
Party with respect to such Additional Termination Event.
(f) Required Ratings Downgrade Event. In the event that no Relevant Entity
has credit ratings at least equal to the Required Ratings Threshold (such
event, a "Required Ratings Downgrade Event"), then Party A shall, as soon
as reasonably practicable and so long as a Required Ratings Downgrade
Event is in effect, at its own expense, using commercially reasonable
efforts, procure either (A) a Permitted Transfer or (B) an Eligible
Guarantee from an Eligible Guarantor.
(g) Item 1115 Agreement. Party A and Party B agree that the terms of the Item
1115 Agreement dated as of February 24, 2006, as amended from time to
time (the "Regulation AB Agreement"), between Countrywide Home Loans,
Inc., CWABS, INC., CWMBS, Inc., CWALT, Inc., CWHEQ, Inc. and Xxxxxx
Brothers Special Financing Inc. 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 Item 1115
Agreement is annexed hereto at Annex D.
29
(h) Transfers.
(i) 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 identical
(except for necessary factual changes as to the identity of the new
counterparty and the effective date of the assignment) 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;
4. The Transferee is an Eligible Replacement;
5. Party B shall determine in its sole discretion, acting in a
commercially reasonable manner, whether or not a transfer relates
to all or substantially all of Party A's rights and obligations
under this Agreement.
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).
(ii) Eligible Replacement. If an Eligible Replacement has made a Firm
Offer (which remains an offer that will become legally binding upon
acceptance by Party B) to be the transferee pursuant to a Permitted
Transfer, Party B shall, at Party A's written request and at Party
A's expense, take any reasonable steps required to be taken by
Party B to effect such transfer.
(i) Non-Recourse. Party A acknowledges and agrees that, notwithstanding any
provision in this Agreement to the contrary, the obligations of Party B
hereunder are limited recourse obligations of Party B, payable solely
from the assets available under the Swap Contract Administration
Agreement or the Pooling and Servicing Agreement, in accordance with the
priority of payments and other terms of the Pooling and Servicing
Agreement and that Party A will not have any recourse to any of the
directors, officers, employees, shareholders or affiliates of Party B
with respect to any claims, losses, damages, liabilities, indemnities or
other obligations in connection with any transactions contemplated
hereby. In the event that these assets should be insufficient to satisfy
all claims outstanding, any claims against or obligations of Party B
under the ISDA Master Agreement or any other confirmation thereunder
still outstanding shall be extinguished and thereafter not revive. This
provision will survive the termination of this Agreement.
(j) Rating Agency Notifications. Notwithstanding any other provision of this
Agreement, no Early Termination Date shall be effectively designated
hereunder by Party B and no transfer of any rights
30
or obligations under this Agreement shall be made by either party unless
each Swap Rating Agency has been given prior written notice of such
designation or transfer.
(k) No Set-off. Except as expressly provided for in Section 2(c), Section 6
or Part 1(f)(i)(D) hereof, and notwithstanding any other provision of
this Agreement or any other existing or future agreement, each party
irrevocably waives any and all rights it may have to set off, net, recoup
or otherwise withhold or suspend or condition payment or performance of
any obligation between it and the other party hereunder against any
obligation between it and the other party under any other agreements.
Section 6(e) shall be amended by deleting the following sentence: "The
amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.".
(l) Amendment. Notwithstanding any provision to the contrary in this
Agreement, no amendment of either this Agreement or any Transaction under
this Agreement shall be permitted by either party unless each of the Swap
Agencies has been provided prior written notice of the same and S&P
confirms in writing (including by facsimile transmission) that it will
not downgrade, withdraw or otherwise modify its then-current ratings of
the Certificates or the Notes.
(m) 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.
(n) Proceedings. No Relevant Entity shall institute against, or cause any
other person to institute against, or join any other person in
instituting against the trust formed pursuant to the Pooling and
Servicing Agreement, in any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other proceedings under any
federal or state bankruptcy or similar law for a period of one year (or,
if longer, the applicable preference period) and one day following
payment in full of the Certificates and any Notes; provided, that this
provision shall not restrict or 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. This provision will survive the
termination of this Agreement.
(o) Limited Liabilities. 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
(p) 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) in any
respect, 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; 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 in connection with any such Section) shall be so
held to be invalid or unenforceable.
31
The parties shall endeavor to engage in good faith negotiations to
replace any invalid or unenforceable term, provision, covenant or
condition with a valid or enforceable term, provision, covenant or
condition, the economic effect of which comes as close as possible to
that of the invalid or unenforceable term, provision, covenant or
condition.
(q) Escrow Payments. If (whether by reason of the time difference between the
cities in which payments are to be made or otherwise) it is not possible
for simultaneous payments to be made on any date on which both parties
are required to make payments hereunder, either Party may at its option
and in its sole discretion notify the other Party that payments on that
date are to be made in escrow. In this case deposit of the payment due
earlier on that date shall be made by 2:00 pm (local time at the place
for the earlier payment) on that date with an escrow agent selected by
the notifying party, accompanied by irrevocable payment instructions (i)
to release the deposited payment to the intended recipient upon receipt
by the escrow agent of the required deposit of any corresponding payment
payable by the other party on the same date accompanied by irrevocable
payment instructions to the same effect or (ii) if the required deposit
of the corresponding payment is not made on that same date, to return the
payment deposited to the party that paid it into escrow. The party that
elects to have payments made in escrow shall pay all costs of the escrow
arrangements.
(r) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any
and all communications between trading, marketing, and operations
personnel of the parties and their Affiliates, waives any further notice
of such monitoring or recording,. Promptly upon the request by a party,
the other party will provide a copy of such recording to the party making
the request.
(s) Waiver of Jury Trial. Each party waives any right it may have to a trial
by jury in respect of any in respect of any suit, action or proceeding
relating to this Agreement or any Credit Support Document.
(t) Payment Instructions. Party A hereby agrees that, unless notified in
writing by Party B of other payment instructions, any and all amounts
payable by Party A to Party B under this Agreement shall be paid to the
account specified in Item 4 of this Confirmation, below.
(u) 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."
(v) Acknowledgements.
(i) Substantial financial transactions. Each party hereto is hereby
advised and acknowledges as of the date hereof that the other party
has engaged in (or refrained from engaging in) substantial
financial transactions and has taken (or refrained from taking)
other material actions in reliance upon the entry by the parties
into the Transaction being entered into on the terms and conditions
set forth herein and in the Pooling and Servicing Agreement
relating to such Transaction, as applicable. This paragraph shall
be deemed repeated on the trade date of each Transaction.
(ii) Bankruptcy Code. Subject to Part 5(n), without limiting the
applicability if any, of any other provision of the U.S. Bankruptcy
Code as amended (the "Bankruptcy Code") (including without
limitation Sections 362, 546, 556, and 560 thereof and the
applicable definitions in Section 101 thereof), the parties
acknowledge and agree that all Transactions entered into hereunder
will
32
constitute "forward contracts" or "swap agreements" as defined in
Section 101 of the Bankruptcy Code or "commodity contracts" as
defined in Section 761 of the Bankruptcy Code, that the rights of
the parties under Section 6 of this Agreement will constitute
contractual rights to liquidate Transactions, that any margin or
collateral provided under any margin, collateral, security, pledge,
or similar agreement related hereto will constitute a "margin
payment" as defined in Section 101 of the Bankruptcy Code, and that
the parties are entities entitled to the rights under, and
protections afforded by, Sections 362, 546, 556, and 560 of the
Bankruptcy Code.
(w) Additional Definitions.
As used in this Agreement, the following terms shall have the meanings
set forth below, unless the context clearly requires otherwise:
"Approved Ratings Threshold" means each of the S&P Approved Ratings Threshold
and the Moody's First Trigger Ratings Threshold.
"Approved Replacement" means, with respect to a Market Quotation, an entity
making such Market Quotation, which entity would satisfy conditions (a), (b),
(c) and (e) of the definition of Permitted Transfer (as determined by Party B
in its sole discretion, acting in a commercially reasonable manner) if such
entity were a Transferee, as defined in the definition of Permitted Transfer.
"Derivative Provider Trigger Event" means (i) an Event of Default with respect
to which Party A is a Defaulting Party, (ii) a Tax Event Upon Merger with
respect to which Party A is the sole Affected Party or (iii) an Additional
Termination Event with respect to which Party A is the sole Affected Party.
"Eligible Guarantee" means an unconditional and irrevocable guarantee, which is
identical, mutatis mutandis, to the exhibit attached as Exhibit A, of all
present and future obligations (for the avoidance of doubt, not limited to
payment obligations) of Party A or an Eligible Replacement to
33
Party A under this Agreement that is provided by an Eligible Guarantor as
principal debtor rather than surety and that is directly enforceable by Party
B, the form and substance of which guarantee are provided in advance to S&P,
and either (A) a law firm has given a legal opinion confirming that none of the
guarantor's payments to Party B under such guarantee will be subject to Tax
collected by withholding or (B) such guarantee provides that, in the event that
any of such guarantor's payments to Party B are subject to Tax collected by
withholding, such guarantor is required to pay such additional amount as is
necessary to ensure that the net amount actually received by Party B (free and
clear of any Tax collected by withholding) will equal the full amount Party B
would have received had no such withholding been required.
"Eligible Guarantor" means an entity that (A) has credit ratings at least equal
to the Approved Ratings Threshold or (B) has credit ratings at least equal to
the Required Ratings Threshold, provided, for the avoidance of doubt, that an
Eligible Guarantee of an Eligible Guarantor with credit ratings below the
Approved Ratings Threshold will not cause a Collateral Event (as defined in the
Credit Support Annex) not to occur or continue.
"Eligible Replacement" means an entity (A) (i) that has credit ratings at least
equal to the Approved Ratings Threshold, (ii) has credit ratings at least equal
to the Required Ratings Threshold, provided, for the avoidance of doubt, that
an Eligible Guarantee of an Eligible Guarantor with credit ratings below the
Approved Ratings Threshold will not cause a Collateral Event (as defined in the
Credit Support Annex) not to occur or continue, or (iii) the present and future
obligations (for the avoidance of doubt, not limited to payment obligations) of
which entity
34
to Party B under this Agreement are guaranteed pursuant to an Eligible
Guarantee provided by an Eligible Guarantor and (B) that has executed an Item
1115 Agreement with the Depositor.
"Firm Offer" means (A) with respect to an Eligible Replacement, a quotation
from such Eligible Replacement (i) in an amount equal to the actual amount
payable by or to Party B in consideration of an agreement between Party B and
such Eligible Replacement to replace Party A as the counterparty to this
Agreement by way of novation or, if such novation is not possible, an agreement
between Party B and such Eligible Replacement to enter into a Replacement
Transaction (assuming that all Transactions hereunder become Terminated
Transactions), and (ii) that constitutes an offer by such Eligible Replacement
to replace Party A as the counterparty to this Agreement or enter a Replacement
Transaction that will become legally binding upon such Eligible Replacement
upon acceptance by Party B, and (B) with respect to an Eligible Guarantor, an
offer by such Eligible Guarantor to provide an Eligible Guarantee that will
become legally binding upon such Eligible Guarantor upon acceptance by the
offeree.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor thereto.
"Moody's First Trigger Ratings Threshold" means, with respect to Party A, the
guarantor under an Eligible Guarantee or an Eligible Replacement, (i) if such
entity has a short-term unsecured and unsubordinated debt rating from Moody's,
a long-term unsecured and unsubordinated debt rating or counterparty rating
from Moody's of "A2" and a short-term unsecured and unsubordinated debt rating
from Moody's of "Prime-1", or (ii) if such entity does not have a short-term
unsecured and unsubordinated debt rating or counterparty rating from Moody's, a
long-term unsecured and unsubordinated debt rating or counterparty rating from
Moody's of "A1".
"Moody's Second Trigger Ratings Event" means that no Relevant Entity has credit
ratings from Moody's at least equal to the Moody's Second Trigger Ratings
Threshold.
35
"Moody's Second Trigger Ratings Threshold" means, with respect to Party A, the
guarantor under an Eligible Guarantee or an Eligible Replacement, (i) if such
entity has a short-term unsecured and unsubordinated debt rating from Moody's,
a long-term unsecured and unsubordinated debt rating or counterparty rating
from Moody's of "A3" and a short-term unsecured and unsubordinated debt rating
from Moody's of "Prime-2", or (ii) if such entity does not have a short-term
unsecured and unsubordinated debt rating from Moody's, a long-term unsecured
and unsubordinated debt rating or counterparty rating from Moody's of "A3".
"Permitted Transfer" means a transfer by novation by Party A to a transferee
(the "Transferee") of all, but not less than all, of Party A's rights,
liabilities, duties and obligations under this Agreement, with respect to which
transfer each of the following conditions is satisfied: (a) the Transferee is
an Eligible Replacement that is a recognized dealer in interest rate swaps
organized under the laws of the United States of America or a jurisdiction
located in the United States of America (or another jurisdiction reasonably
acceptable to Party B), (b) an Event of Default or Termination Event would not
occur as a result of such transfer, (c) pursuant to a written instrument (the
"Transfer Agreement"), the Transferee acquires and assumes all rights and
obligations of Party A under the Agreement and the relevant Transaction, (d)
Party B shall have determined, in its sole discretion, acting in a commercially
reasonable manner, that such Transfer Agreement is effective to transfer to the
Transferee all, but not less than all, of Party A's rights and obligations
under the Agreement and all relevant Transactions; (e) Party A will be
responsible for any costs or expenses incurred in connection with such transfer
(including any replacement cost of entering into a replacement transaction),
(f) Moody's and S&P have been given prior written notice of such transfer, (g)
such transfer otherwise complies with the terms of the Pooling and Servicing
Agreement and (h) the Swap Contract is identical, mutatis mutandis, to the
existing Swap Contract.
"Rating Agency Condition" means, with respect to any particular proposed act or
omission to act hereunder and each Swap Rating Agency specified in connection
with such proposed act or omission, that the party acting or failing to act
must consult with each of the specified Swap Rating Agencies and receive from
each such Swap Rating Agency a prior written confirmation that the proposed
action or inaction would not cause a downgrade or withdrawal of the
then-current rating of any Certificates or Notes.
"Relevant Entity" means Party A and, to the extent applicable, a guarantor
under an Eligible Guarantee.
"Replacement Transaction" means, with respect to any Terminated Transaction or
group of Terminated Transactions, a transaction or group of transactions that
(i) would have the effect of
36
preserving for Party B the economic equivalent of any payment or delivery
(whether the underlying obligation was absolute or contingent and assuming the
satisfaction of each applicable condition precedent) by the parties under
Section 2(a)(i) in respect of such Terminated Transaction or group of
Terminated Transactions that would, but for the occurrence of the relevant
Early Termination Date, have been required after that Date, and (ii) has terms
which are substantially the same as this Agreement, including, without
limitation, rating triggers, Regulation AB compliance, and credit support
documentation, save for the exclusion of provisions relating to Transactions
that are not Terminated Transactions, as determined by Party B in its sole
discretion, acting in a commercially reasonable manner.
"Required Ratings Downgrade Event" shall have the meaning assigned thereto in
Part 5(f).
"Required Ratings Threshold" means each of the S&P Required Ratings Threshold
and the Moody's Second Trigger Ratings Threshold.
"S&P" means Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx
Companies, Inc., or any successor thereto.
"S&P Approved Ratings Threshold" means, with respect to Party A, the guarantor
under an Eligible Guarantee or an Eligible Replacement, a short-term unsecured
and unsubordinated debt rating from S&P of "A-1", or, if such entity does not
have a short-term unsecured and unsubordinated debt rating from S&P, a
long-term unsecured and
37
unsubordinated debt rating from S&P of "A+".
"S&P Required Ratings Threshold" means, with respect to Party A, the guarantor
under an Eligible Guarantee or an Eligible Replacement, a long-term unsecured
and unsubordinated debt rating from S&P of "BBB+".
"Swap Rating Agencies" means, with respect to any date of determination, each
of S&P and Moody's, to the extent that each such rating agency is then
providing a rating for any of the Series 2006-26 Asset-Backed Certificates (the
"Certificates") or any notes backed by the Certificates (the "Notes").
[Remainder of this page intentionally left blank.]
38
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 Trust
2006-26, pursuant to a Swap Contract
Administration Agreement
Party A Party B
/s/ Xxxxxx X. Xxxxxxxx /s/ Xxxxxxxx Xxxxxx
-------------------------------------- ------------------------------------
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxxxx Xxxxxx
Title: Authorized Signatory Title: Authorized Signatory
Date: December 29, 2006 Date: December 29, 2006
39
EXHIBIT A to Schedule
---------------------
[Filed as Ex. 99.6 herein.]
EXHIBIT 99.6
XXXXXX BROTHERS
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 Trust 2006-26, pursuant
to a Swap Contract Administration Agreement, ("Party B") have entered into a
Master Agreement dated as of December 29, 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 in connection with each
Transaction when and as Party A's obligations thereunder shall become due and
payable in accordance with the terms of the Agreement (whether at maturity, by
acceleration or otherwise). 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
any amendments to the Agreement, 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 the first
to occur of (i) receipt by Party B of a written notice of termination from
Guarantor or (ii) none of the obligations of Party A remain outstanding.
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.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of laws principles.
All capitalized terms not defined in this Guarantee, but defined in the
Agreement, shall have the meanings assigned thereto in the Agreement.
A-1
XXXXXX BROTHERS HOLDINGS INC.
000 XXXXXXX XXXXXX, XXX XXXX, XXX XXXX 00000
XXXXXX BROTHERS
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:
A-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]
December 29, 2006
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 Trust 2006-26
---------------------------------------
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 December 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 December 29, 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 2799624 and a trade date of
December 29, 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 December 29, 2006 (collectively,
the "Master Agreement"), between the Swap Counterparty and the Swap Contract
Administrator and (iv) the Swap Contract Assignment Agreement, dated as of
December 29, 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.
B-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;
B-2
(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
(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
X-0
00 X.X.X. 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.
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,
B-4
EXHIBIT C to Schedule
---------------------
[Form of Opinion of Counsel for
Xxxxxx Brothers Special Financing Inc. and
Xxxxxx Brothers Holdings Inc.]
December 29, 0000
XXX XXXX XX XXX XXXX,
not in its individual or corporate capacity
but solely as Swap Contract Administrator for
CWABS, Inc. Asset-Backed Certificates Trust 2006-26
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 2006-26
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 December 29, 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 Trust 2006-26, 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.
C-1
Based on the foregoing but subject to the assumptions, exceptions,
qualifications and limitations hereinafter expressed, I am of the opinion that:
(i) Based on certificates of the Secretary of State of the State of
Delaware dated December 19, 2006, 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 the termination and close-out methodology under the
Master Agreement, including but not limited to Section 6(e), (b) regarding
indemnification and contribution rights and obligations, (c) regarding the
waiver or limitation of rights to trial by jury, oral amendments to written
agreements or rights of setoff, (d) relating to submission to jurisdiction,
venue or service of process, and (e) 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
C-2
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.
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,
C-3
EXHIBIT D to Schedule
---------------------
[REGULATION AB AGREEMENT]
-------------------------
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.
D-1
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);
D-2
(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)
D-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.
D-4
(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
D-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
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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.
D-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
D-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.
D-9
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
D-10
XXXXXX BROTHERS SPECIAL FINANCING INC.
By: /s/ Xxxxxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxxxxx X. Xxxxxx
Title: Vice President
D-11
