EXHIBIT 99.2
SWISS RE FINANCIAL PRODUCTS CORPORATION
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000/Phone: (000) 000-0000
DATE: March 29, 2007
TO: Countrywide Home Loans, Inc. ("Party B")
0000 Xxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Documentation Unit
FROM: Swiss Re Financial Products Corporation ("Party A")
RE: CORRIDOR TRANSACTION - Class A-1A Certificates
Our Reference Number: 1365946
Dear Sir or Madam:
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between Countrywide Home Loans, Inc.
and Swiss Re Financial Products Corporation (each a "party" and together "the
parties") on the Trade Date specified below (the "Transaction").
This letter agreement constitutes a "Confirmation" and the definitions and
provisions contained in the 2000 ISDA Definitions (the "Definitions") as
published by the International Swaps and Derivatives Association, Inc., ("ISDA")
are incorporated into this Confirmation. In the event of any inconsistency
between the Definitions and this Confirmation, this Confirmation will govern.
This Confirmation will be governed by and subject to the terms and conditions
which would be applicable if, prior to the Trade Date, the parties had executed
and delivered an ISDA Master Agreement (Multicurrency-Cross Border), in the form
published by ISDA in 1992 (the "Master Agreement"), with the attached Schedule B
as the Schedule to the Master Agreement and the modifications provided below
(collectively, the "Agreement"). In the event of any inconsistency between the
provisions of the Master Agreement and this Confirmation and the attached
Schedule B, this Confirmation will govern.
Capitalized terms used and not defined in this Confirmation, the ISDA Master
Agreement, the Credit Support Annex or the Definitions shall have the meanings
given to such terms in the Pooling and Servicing Agreement, dated as of March 1,
2007 among CWABS, Inc., as depositor, Countrywide Home Loans Servicing LP., as
master servicer, Countrywide Home Loans, Inc., as a seller, Park Granada LLC, as
a seller, Park Monaco Inc., as a seller, Park Sienna LLC, as a seller, and The
Bank of New York, as trustee (the "Pooling and Servicing Agreement").
In this Confirmation "Party A" means Swiss Re Financial Products Corporation and
"Party B" means Countrywide Home Loans, Inc.
1. This Confirmation evidences a complete binding agreement between the
parties as to the terms of the Transaction to which this Confirmation relates.
In addition, each party represents to the other party and will be deemed to
represent to the other party on the date on which it enters into a Transaction
that
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(absent a written agreement between the parties that expressly imposes
affirmative obligations to the contrary for that Transaction):
(i) Principal. In the case of Party A, and Party B it is acting as principal
and not as agent when entering into the Transaction.
(ii) Non-Reliance. In the case of both parties, it is acting for its own
account, it has made its own independent decisions to enter into the
Transaction and as to whether the Transaction is appropriate or proper for
it based upon its own judgment and upon advice from such advisors as it
has deemed necessary. It is not relying on any communication (written or
oral) of the other party as investment advice or as a recommendation to
enter into the Transaction; it being understood that information and
explanations related to the terms and conditions of the Transaction shall
not be considered investment advice or a recommendation to enter into the
Transaction. No communication (written or oral) received from the other
party shall be deemed to be an assurance or guarantee as to the expected
results of that Transaction.
(iii) Evaluation and Understanding. It is capable of evaluating and
understanding (on its own behalf or through independent professional
advice), and understands and accepts, the terms, conditions and risks of
the Agreement and the Transaction. It is also capable of assuming, and
assumes, the financial and other risks of the Agreement and the
Transaction.
(iv) Status of Parties. The other party is not acting as an agent, fiduciary or
advisor for it in respect of that Transaction.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Notional Amount: The amount set forth on the
attached Amortization Schedule,
Schedule A
Trade Date: March 20, 2007
Effective Date: Xxxxx 00, 0000
Xxxxxxxxxxx Date: December 25, 2008, subject to
adjustment in accordance with the
Following Business Day Convention.
Fixed Amounts:
Fixed Rate Payer: Party B
Fixed Rate Payer Payment Date: March 29, 2007
Fixed Amount: USD 15,000
Floating Amounts:
Floating Rate Payer: Party A
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Cap Rate: With respect to any Calculation
period, the amount set forth for
such period on Schedule A attached
hereto under the heading Cap Rate
(%)
Floating Rate Payer Period End Dates: The 25th day of each month,
subject to adjustment in
accordance with the Following
Business Day Convention.
Floating Rate Payer Payment Dates: Two (2) Business Days prior to
each Period End Date, commencing
on April 23, 2007
Floating Rate Option: USD-LIBOR-BBA; provided, however,
that if the Floating Rate
determined from such Floating Rate
Option for any Calculation Period
is greater an 9.00% then the
Floating Rate for such Calculation
Period shall be deemed to be
9.00%.
Designated Maturity: One month
Spread: None
Floating Rate Day Count Fraction: Actual/360
Reset Dates: The first day of each Calculation
Period.
Compounding: Inapplicable
Business Days for payment: New York
Calculation Agent: Party A; provided, however, that
if an Event of Default occurs with
respect to Party A, then Party B
shall be entitled to appoint a
financial institution which would
qualify as a Reference
Market-maker to act as Calculation
Agent (such financial institution
subject to Party A's consent).
3. Recording of Conversations
Each party (i) consents to the recording of the telephone conversations of
trading and marketing personnel of the parties, (ii) agrees to obtain any
necessary consent of, and give notice of such recording to, such personnel of
it, and (iii) agrees that recordings may be submitted in evidence in any
proceedings relating to this Agreement or any potential Transaction.
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4. Account Details:
Account for payments to Party A: JPMorgan Chase Bank
SWIFT: XXXXXX00
Account of: Swiss Re Financial
Products
Account No.: 066-911184
ABA# 000000000
Account for payments to Party B: As per Party B's standard
settlement instructions.
5. Offices:
The Office of Party A for this
Transaction is: New York, NY
The Office of Party B for this
Transaction: New York, NY
6. This Agreement may be executed in several counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
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Please promptly confirm that the foregoing correctly sets forth the terms
of the Transaction entered into between us by executing this Confirmation and
returning it to us by facsimile to:
Swiss Re Financial Products Corporation
Attention: Derivatives Documentation
Fax: (000) 000-0000 Phone: (000) 000-0000
Swiss Re Financial Products Corporation Accepted and confirmed as of the
date first written:
Countrywide Home Loans, Inc.
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxxxx Xxxxx
--------------------------------------- ----------------------------------
Name: Xxxxx Xxxxx Name: Xxxxxxx Xxxxx
--------------------------------------- ----------------------------------
Title: Authorized Signatory Title: MD, Valuation and Analysis
--------------------------------------- ----------------------------------
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Schedule A to the Confirmation dated as March 29, 2007
Re: Reference Number: 1365946
Between Swiss Re Financial Products Corporation and Countrywide Home Loans, Inc.
("Party B").
Amortization Schedule, subject to adjustment in accordance with the Following
Business Day Convention
------------------- ----------------- ------------------------ -----------------
From and including To but excluding Notional Amount (USD) Cap Rate (%)
------------------- ----------------- ------------------------ -----------------
29-Mar-07 25-Apr-07 184,585,000.00 8.35339
------------------- ----------------- ------------------------ -----------------
25-Apr-07 25-May-07 182,364,188.00 7.51791
------------------- ----------------- ------------------------ -----------------
25-May-07 25-Jun-07 178,987,432.00 7.27525
------------------- ----------------- ------------------------ -----------------
25-Jun-07 25-Jul-07 174,447,737.00 7.51761
------------------- ----------------- ------------------------ -----------------
25-Jul-07 25-Aug-07 168,743,713.00 7.27496
------------------- ----------------- ------------------------ -----------------
25-Aug-07 25-Sep-07 161,879,781.00 7.27482
------------------- ----------------- ------------------------ -----------------
25-Sep-07 25-Oct-07 153,866,329.00 7.51715
------------------- ----------------- ------------------------ -----------------
25-Oct-07 25-Nov-07 144,719,836.00 7.27451
------------------- ----------------- ------------------------ -----------------
25-Nov-07 25-Dec-07 134,462,941.00 7.51682
------------------- ----------------- ------------------------ -----------------
25-Dec-07 25-Jan-08 123,131,679.00 7.27419
------------------- ----------------- ------------------------ -----------------
25-Jan-08 25-Feb-08 111,492,583.00 7.27417
------------------- ----------------- ------------------------ -----------------
25-Feb-08 25-Mar-08 100,072,489.00 7.77330
------------------- ----------------- ------------------------ -----------------
25-Mar-08 25-Apr-08 88,867,158.00 7.25611
------------------- ----------------- ------------------------ -----------------
25-Apr-08 25-May-08 77,871,602.00 7.49796
------------------- ----------------- ------------------------ -----------------
25-May-08 25-Jun-08 67,083,051.00 7.25606
------------------- ----------------- ------------------------ -----------------
25-Jun-08 25-Jul-08 56,497,640.00 7.49790
------------------- ----------------- ------------------------ -----------------
25-Jul-08 25-Aug-08 46,111,574.00 7.25600
------------------- ----------------- ------------------------ -----------------
25-Aug-08 25-Sep-08 35,921,129.00 7.25597
------------------- ----------------- ------------------------ -----------------
25-Sep-08 25-Oct-08 25,922,651.00 7.49781
------------------- ----------------- ------------------------ -----------------
25-Oct-08 25-Nov-08 16,112,553.00 7.25592
------------------- ----------------- ------------------------ -----------------
25-Nov-08 25-Dec-08 6,487,315.00 7.49775
------------------- ----------------- ------------------------ -----------------
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Schedule B to the Confirmation dated as of March 29, 2007
Re: Reference Number: 1365946
Between Swiss Re Financial Products Corporation ("Party A") and Countrywide Home
Loans, Inc. ("Party B").
Part 1. Termination Provisions.
(a) "Specified Entity" means in relation to Party A for the purpose of the
Agreement:
Section 5(a)(v): None.
Section 5(a)(vi): None.
Section 5(a)(vii): None.
Section 5(b)(iv): None.
and in relation to Party B for the purpose of the Agreement:
Section 5(a)(v): None.
Section 5(a)(vi): None.
Section 5(a)(vii): None.
Section 5(b)(iv): None.
(b) "Specified Transaction" will have the meaning specified in Section 14 of
the Agreement.
(c) The "Breach of Agreement" provisions of Section 5(a)(ii) of the Agreement
will be inapplicable to Party B.
(d) The "Credit Support Default" provisions of Section 5(a)(iii) of the
Agreement will be inapplicable to Party B.
(e) The "Misrepresentation" provisions of Section 5(a)(iv) of the Agreement
will be inapplicable to Party B.
(f) The "Default Under Specified Transaction" provisions of Section 5(a)(v) of
the Agreement will be inapplicable to Party A and Party B.
(g) The "Cross Default" provisions of Section 5(a)(vi) of the Agreement will
be inapplicable to Party A and Party B.
(h) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) of the
Agreement will be inapplicable to Party A and Party B.
(i) The "Automatic Early Termination" provision of Section 6(a) of the
Agreement will be inapplicable to Party A and Party B
(j) Payments on Early Termination. For the purpose of Section 6(e) of the
Agreement:
(i) Market Quotation will apply; and
(ii) The Second Method will apply.
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(k) "Termination Currency" means United States Dollars.
(l) "Additional Termination Event" will not apply, except as provided in Part
5(k) hereof, any confirmation and in the Regulation AB Agreement as
defined in Part 5(m) hereof.
Part 2. Tax Representations.
Payer Representations. For the purpose of Section 3(e) of the Agreement,
Party A and B will not make any representations.
Payee Representations. For the purpose of Section 3(f) of the Agreement,
the following representations are made:
(i) Party A represents that it is a corporation organized under the laws
of the State of Delaware.
(ii) Party B represents that it is a "United States person" as such term
is defined in Section 7701(a)(30) of the Internal Revenue Code of
1986, as amended.
Part 3. Agreement to Deliver Documents.
For the purpose of Sections 4(a)(i) and (ii) of the Agreement, Party A and Party
B agree to deliver the following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are:
--------------------------- ---------------------------------------------------- ----------------------------
Party Required to Deliver Form/Document/Certificate Date by Which
Document to be Delivered
--------------------------- ---------------------------------------------------- ----------------------------
Party A and Party B Any form or document required or reasonably Promptly upon reasonable
requested to allow the other party to make Demand by the other party.
payments under the Agreement without any
deduction or withholding for or on account
of any Tax, or with such deduction or
withholding at a reduced rate.
--------------------------- ---------------------------------------------------- ----------------------------
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(b) Other documents to be delivered and covered by the Section 3(d)
representation are:--
---------------------------- --------------------------------- ---------------------------- -------------------------
Party required to deliver Form/Document/or Certificate Date by which to be Covered by Section 3(d)
delivered representation
---------------------------- --------------------------------- ---------------------------- -------------------------
Party A Certified copy of the Board of Concurrently with the Yes
Directors resolution (or execution and delivery of
equivalent authorizing the Confirmation.
documentation) which sets forth
the authority of each signatory
to the Confirmation signing on
its behalf and the authority of
such party to enter into
Transactions contemplated and
performance of its obligations
hereunder.
---------------------------- --------------------------------- ---------------------------- -------------------------
Party A and Party B Incumbency Certificate (or, if Concurrently with the Yes
available the current execution and delivery of
authorized signature book or the Confirmation unless
equivalent authorizing previously delivered and
documentation) specifying the still in full force and
names, titles, authority and effect.
specimen signatures of the
persons authorized to execute
the Confirmation which sets
forth the specimen signatures
of each signatory to the
Confirmation signing on its
behalf.
---------------------------- --------------------------------- ---------------------------- -------------------------
Party A The Guaranty of Swiss Concurrently with the No
Reinsurance Company ("Swiss execution and delivery of
Re"), dated as of the date the Confirmation.
hereof, issued by Swiss Re as
Party A's Credit Support
Provider (in the form annexed
hereto as Exhibit A).
---------
---------------------------- --------------------------------- ---------------------------- -------------------------
Party B The Pooling and Servicing Concurrently with the No
Agreement. execution and delivery of
the Confirmation.
---------------------------- --------------------------------- ---------------------------- -------------------------
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Part 4. Miscellaneous.
(a) Addresses for Notices. For the purposes of Section 12(a) of the Agreement:
Addresses for notices or communications to Party A and to Party B shall be
those set forth on the first page of the Confirmation.
(b) Process Agent. For the purpose of Section 13(c) of the Agreement:
Party A appoints as its Process Agent: None.
Party B appoints as its Process Agent: None.
(c) Offices. With respect to Party A, the provisions of Section 10(a) of the
Agreement will apply.
(d) Multibranch Party. For the purpose of Section 10(c) of the Agreement:
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) Credit Support Document. Details of any Credit Support Document: Guaranty
of Swiss Re dated as of the date hereof in the form annexed hereto as
Exhibit A.
(f) Credit Support Provider.
Credit Support Provider means in relation to Party A: Swiss Re.
Credit Support Provider means in relation to Party B: None.
(g) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without reference to
conflicts of law provisions thereof).
(h) Netting of Payments. Subparagraph (ii) of Section 2(c) of the Agreement
will apply to the Transaction evidenced by the Confirmation.
(i) "Affiliate" will have the meaning specified in Section 14 of the
Agreement.
(j) Jurisdiction. Section 13(b) of the Agreement is hereby amended by: (i)
deleting in the second line of subparagraph (i) thereof the word "non-":
and (ii) deleting the final paragraph thereof.
Part 5. Other Provisions.
(a) Modifications to the Agreement. Section 3(a) of the Agreement shall be
amended to include the following additional representations after paragraph
3(a)(v):
(vi) Eligible Contract Participant etc. It is an "eligible contract
participant" as defined in Section 1a(12) of the U.S. Commodity Exchange
Act (7 U.S.C. 1a), as amended by the Commodity Futures Modernization Act
of 2000 and the Transaction evidenced hereby has been the subject of
individual negotiations and is intended to be exempt from, or otherwise
not subject to regulation thereunder.
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(b) Waiver of Right to Trial by Jury. Each party hereby irrevocably waives any
and all rights to trial by jury in any legal proceeding arising out of or
relating to this Agreement or any Transaction hereunder.
(c) Absence of Litigation. In Section 3(c) of the Agreement the words "or any
of its Affiliates" shall be deleted.
(d) Tax Event. In Section 5(b)(ii)(y) of the Agreement the words ", or there
is a substantial likelihood that it will," shall be deleted.
(e) Fully-paid Party Protected.
Notwithstanding the terms of Sections 5 and 6 of the Agreement, if Party B
has satisfied its payment obligations under Section 2(a)(i) of the
Agreement, then unless Party A is required pursuant to appropriate
proceedings to return to Party B or otherwise returns to Party B upon
demand of Party B any portion of such payment, the occurrence of an event
described in Section 5(a) of the Agreement with respect to Party B with
respect to this Transaction shall not constitute an Event of Default or
Potential Event of Default with respect to Party B as the Defaulting
Party. For purposes of the Transaction to which this Confirmation relates,
Party B's only payment obligation under Section 2(a)(i) of the Agreement
is to pay the Fixed Amount on the Fixed Rate Payer Payment Date.
(f) Proceedings.
Party A shall not institute against or cause any other person to institute
against, or join any other person in instituting against, CWABS
Asset-Backed Certificates Trust 2007-4, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings
under any federal or state bankruptcy, dissolution or similar law, for a
period of one year and one day following indefeasible payment in full of
the CWABS Asset-Backed Certificates Trust 2007-4, Class A-1A Certificates
(the "Securities").
(g) Set-off.
The provisions for Set-off set forth in Section 6(e) of the Agreement
shall not apply for purposes of this Transaction.
(h) Section 1(c)
For purposes of Section 1(c) of the Agreement, this Transaction shall be
the sole Transaction under the Agreement.
(i) [Reserved]
(j) Amendment to ISDA Form.
The "Failure to Pay or Deliver" provision in Section 5(a)(i) of the
Agreement is hereby amended by deleting the word "third" in the third line
thereof and inserting the word "first" in place thereof.
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(k) Regulation AB Compliance.
Party A and Party B agree that the terms of the Item 1115 Agreement dated
as of January 26, 2006 (the "Regulation AB Agreement"), between
Countrywide Home Loans, Inc., CWABS, Inc., CWMBS, Inc., CWALT, Inc.,
CWHEQ, Inc. and Swiss Re Financial Products Corporation shall be
incorporated by reference into this Agreement so that Party B shall be an
express third party beneficiary of the Regulation AB Agreement. A copy of
the Regulation AB Agreement is attached hereto as Annex B.
8
Annex A
---------
GUARANTY
--------
To: The Bank of New York, not in an individual capacity, but solely as Corridor
Contract Administrator for CWABS Asset-Backed Certificates Trust 2007-4 (Class
A-1A Certificates) (the "Rated Securities").
1. The undersigned, SWISS REINSURANCE COMPANY, a Swiss company (the
"Guarantor"), hereby absolutely and unconditionally guarantees the prompt
payment as and when due of all obligations of its indirect, wholly-owned
subsidiary SWISS RE FINANCIAL PRODUCTS CORPORATION, a Delaware corporation ("THE
GUARANTEED SUBSIDIARY") under, in connection with or ancillary to a long form
confirmation (Reference Number 1365946) dated as of March 29, 2007 between the
Beneficiary and THE GUARANTEED SUBSIDIARY as amended or restated from time to
time (the "Agreements") which support the issuance of the Rated Securities. In
this Guarantee these obligations are referred to as the "Guaranteed
Obligations". This Guarantee is given solely for the benefit of, and is
enforceable only by, the Beneficiary or any trustee as assignee of the
Beneficiary to which this Guarantee has been validly assigned in accordance with
applicable law and who is acting as trustee for the investors in the Rated
Securities.
2. This Guarantee constitutes a Guarantee of payment and not of collection
and is not conditional or contingent upon any attempts to collect from, or
pursue or exhaust any rights or remedies against, THE GUARANTEED SUBSIDIARY. A
demand for payment hereunder may at the Beneficiary's option be made in writing
addressed to the Chief Financial Officer of the Guarantor. This Guarantee is not
however dependent in any way on the manner of the demand for payment. Delay in
making a claim will not affect the Guarantor's obligations under this Guarantee
unless the relevant legal limitation period has expired.
3. This Guarantee constitutes, and is intended by the Guarantor to
constitute, an unlimited non-accessory undertaking (,,unbeschrankte, nicht
akzessorische Verpflichtung") within the meaning of Article 111 of the Swiss
Code of Obligations (,CO`) and is not a mere surety (,,Burgschaft") within the
meaning of Article 492 et seq of the CO.
4. Notwithstanding any reference to the obligations of THE GUARANTEED
SUBSIDIARY, the Guarantor's obligations under this Guarantee are its absolute
and independent obligations as a primary obligor. Payment of a claim hereunder
is required as soon as the Guaranteed Obligations are due and payable.
5. To the extent that any event or circumstance would give rise to any legal
or equitable discharge, defence or other rights of the Guarantor under this
Guarantee, but which event or circumstance would not give rise to any discharge,
defence or other rights of THE GUARANTEED SUBSIDIARY under the Agreements, the
Guarantor hereby fully waives, subject to paragraph 7 below, such discharge,
defence, or other rights and the Guarantor's liability hereunder shall continue
as if such event or circumstance had not arisen.
6. The Guarantor further agrees, subject to paragraph 7 below, that to the
extent that any event or circumstance gives rise to any legal or equitable
discharge, defence or other rights available to both the Guarantor under the
Guarantee and THE GUARANTEED SUBSIDIARY under the Agreements, the Guarantor
hereby agrees to waive such discharge, defense or other rights against the
Beneficiary, until such time as all the Guaranteed Obligations in relation to
the same event or circumstance have been fully met as required to protect
investors in the Rated Securities.
7. Notwithstanding any other provision of this Guarantee, the Guarantor will
have the right, prior to making any payment under this Guarantee, to (a) assert
such rights of offset as are set forth in the Agreements to the extent that such
rights relate to amounts due and payable by the Beneficiary to THE GUARANTEED
SUBSIDIARY and not to amounts which are subject to dispute; and (b) defend
manifestly fraudulent claims under this Guarantee made by the Beneficiary.
9
8. This Guarantee will continue in full force and effect in relation to all
Guaranteed Obligations until all the Guaranteed Obligations have been satisfied
in full. For the avoidance of doubt, all Guaranteed Obligations entered into by
THE GUARANTEED SUBSIDIARY during the term of this Guarantee shall be honoured in
accordance with this Guarantee and shall be binding on the Guarantor and its
successors and assigns. This Guarantee may be amended only as necessary to
reflect changes to the Guaranteed Obligations which are validly agreed to by the
Beneficiary (or the trustee as assignee of the Beneficiary) in accordance with
the terms of the Rated Securities, including any requirement to obtain the
consent of some or all of the investors in the Rated Securities.
9. If any payment by THE GUARANTEED SUBSIDIARY is avoided, recaptured or
reduced as a result of insolvency or any similar event affecting creditors
rights generally having occurred in respect of THE GUARANTEED SUBSIDIARY, the
Guarantor's liability under this Guarantee shall continue as if the avoided,
recaptured or reduced payment had not occurred.
10. Upon payment by the Guarantor to the Beneficiary of any amount due under
this Guarantee, the Guarantor shall be entitled to require the assignment to it
of the rights of the Beneficiary against THE GUARANTEED SUBSIDIARY to the extent
satisfied by such payment, and the Beneficiary will take at the Guarantor's
expense such steps as the Guarantor may reasonably require to implement such
assignment. The Guarantor shall not exercise any rights against THE GUARANTEED
SUBSIDIARY which it may acquire in consequence of such payment and assignment
unless and until all the Guaranteed Obligations to the Beneficiary shall have
been paid in full.
11. This Guarantee is governed and will be construed in accordance with Swiss
law. The exclusive place of jurisdiction for any legal proceeding hereunder
shall be Zurich, Switzerland.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be executed in
its name as of the 29th day of March, 2007.
SWISS REINSURANCE COMPANY
10
Annex B
Item 1115 Agreement
12
Item 1115 Agreement dated as of January 26, 2006 (this "Agreement"),
between COUNTRYWIDE HOME LOANS, INC., a New York corporation ("CHL"), CWABS,
INC., a Delaware corporation ("CWABS"), CWMBS, Inc., a Delaware corporation
("CWMBS"), CWALT, Inc., a Delaware corporation ("CWALT"), CWHEQ, Inc., a
Delaware corporation ("CWHEQ") and SWISS RE FINANCIAL PRODUCTS CORPORATION, as
counterparty (the "Counterparty").
RECITALS
WHEREAS, CWABS, CWMBS, CWALT and CWHEQ each have filed Registration
Statements on Form S-3 (each, a "Registration Statement") with the Securities
and Exchange Commission (the "Commission") for purposes of offering mortgage
backed or asset-backed notes and/or certificates (the "Securities") through
special purpose vehicles (each, an "SPV").
WHEREAS, from time to time, on the closing date (the "Closing Date")
of a transaction pursuant to which Securities are offered (each, a
"Transaction"), the Counterparty and CHL or an underwriter or dealer with
respect to the Transaction, enter into certain derivative agreements (each, a
"Derivative Agreement"), including interest rate or currency swaps, for
purposes of providing certain yield enhancements that are assigned to the SPV
or the related trustee on behalf of the SPV or a swap or corridor contract
administrator (each, an "Administrator").
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereby agree as follows:
Section 1. Definitions
Company Information: As defined in Section 4(a)(i).
Company Financial Information: As defined in Section 2(a)(ii).
Depositor: Means CWABS, CWMBS, CWALT or CWHEQ with respect to the
related Registration Statement for which the entity of the registrant.
GAAP: As defined in Section 3(a)(v).
XXXXX: The Commission's Electronic Data Gathering, Analysis and
Retrieval system.
Exchange Act: The Securities Exchange Act of 1934, as amended and
the rules and regulations promulgated thereunder.
Exchange Act Reports: All Distribution Reports on Form 10-D, Current
Reports on Form 8-K and Annual Reports on Form 10-K that are to be filed with
respect to the related SPV pursuant to the Exchange Act.
Master Agreement: The ISDA Master Agreement between the Counterparty
and CHL, or if no such Master Agreement exists, the ISDA Master Agreement
assumed to apply to the Derivative Agreement pursuant to its terms.
Prospectus Supplement: The prospectus supplement prepared in
connection with the public offering and sale of the related Securities.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended
from time to time, and subject to such clarification and interpretation as
have been provided by the Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by
the Commission or its staff from time to time.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Section 2. Information to be Provided by the Counterparty.
(a) Prior to printing the related Prospectus Supplement,
(i) the Counterparty shall provide to the related Depositor such
information regarding the Counterparty, as a derivative
instrument counterparty, as is reasonably requested by the
related Depositor for the purpose of compliance with Item
1115(a)(1) of Regulation AB. Such information shall include, at
a minimum:
(A) The Counterparty's legal name (and any d/b/a);
(B) the organizational form of the Counterparty;
(C) a description of the general character of the business of
the Counterparty;
(D) a description of any material legal or governmental
proceedings pending (or known to be contemplated) against
the Counterparty which may have a material impact on the
Counterparty's ability to perform under the related
Derivative Agreement;
(E) a description of any affiliation or relationship between
the Counterparty and any of the following parties:
(1) CHL (or any other sponsor identified to the
Counterparty by CHL);
(2) the related Depositor (as identified to the
Counterparty by CHL);
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(3) the SPV;
(4) Countrywide Home Loans Servicing LP (or any other
servicer or master servicer identified to the
Counterparty by CHL);
(5) The Bank of New York (or any other trustee identified
to the Counterparty by CHL);
(6) any originator identified to the Counterparty by CHL;
(7) any enhancement or support provider identified to the
Counterparty by CHL; and
(8) any other material transaction party identified to
the Counterparty by CHL.
(ii) if requested by the related Depositor for the purpose of
compliance with Item 1115(b) with respect to a Transaction, the
Counterparty shall:
(A) provide the financial data required by Item 1115(b)(1) or
(b)(2) of Regulation AB (as specified by the related
Depositor to the Counterparty) with respect to the
Counterparty (or any entity that consolidates the
Counterparty) and any affiliated entities providing
derivative instruments to the SPV (the "Company Financial
Information"), in a form appropriate for use in the
Prospectus Supplement and in an XXXXX-compatible form; and
(B) if applicable, cause its accountants to issue their
consent to the filing of such financial statements in the
Registration Statement.
(b) Following the Closing Date with respect to a Transaction,
(i) (I) no later than the 25th calendar day of each month, the
Counterparty shall (i) notify the related Depositor in writing
of (A) any material litigation or governmental proceedings
pending against the Counterparty which may have a material
impact on the Counterparty's ability to perform, under the
related Derivative Agreement or (B) any affiliations or
relationships that develop following the Closing Date between
the Counterparty and any of the parties specified in Section
2(a) (i) (E) (and any other parties identified in writing by
the related Depositor) and (ii) provide to the related
Depositor a description of such proceedings, affiliations or
relationships as described in Section 2(b)(i)(I)(i); and
(ii) if the Counterparty provided Company Financial Information to
the related Depositor for the Prospectus Supplement, within 5
Business Days of the release of any updated financial data, the
Counterparty shall (1) provide current Company Financial
Information as required under Item
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1115(b) of Regulation AB to the related Depositor in an
XXXXX-compatible form, and (2) if applicable, cause its
accountants to issue their consent to filing or incorporation
by reference of such financial statements in the Exchange Act
Reports of the SPV;
(iii) if the related Depositor requests Company Financial
Information from the Counterparty, for the purpose of
compliance with Item 1115(b) of Regulation AB following the
Closing Date, the Counterparty shall upon five Business Days
written notice either (A), (1) provide current Company
Financial Information as required under Item 1115(b) of
Regulation AB to the related Depositor in an XXXXX-compatible
form, (2) if applicable, cause its accountants to issue their
consent to filing or incorporation by reference of such
financial statements in the Exchange Act Reports of the SPV and
(3) within 5 Business Days of the release of any updated
financial data, provide current Company Financial Information
as required under Item 1115(b) of Regulation AB to the related
Depositor in an XXXXX-compatible form and if applicable, cause
its accountants to issue their consent to filing or
incorporation by reference of such financial statements in the
Exchange Act Reports of the SPV or (B) assign the Derivative
Agreement as provided below.
(c) Prior to printing of any Prospectus Supplement, CHL and Depositor
will inform the Counterparty of the scope and extent of the
information that they need to receive from the Counterparty for use
in the related Prospectus Supplement for the purpose of compliance
with Item 1115 of Regulation AB (the "Scope of Information"). CHL
and the Depositor acknowledge that the Counterparty need not
undertake any review of the related Prospectus Supplement (other
than with respect to the Company Information and/or the Company
Financial Information) in connection with its provision of the
Company Information and/or the Company Financial Information.
Section 3. Representations and Warranties and Covenants of the Counterparty.
(a) The Counterparty represents and warrants to the related Depositor,
as of the date on which information is first provided to the related
Depositor under Section 2(a) (ii), Section 2(b) (ii) or Section 2(b)
(iii) (A), that, except as disclosed in writing the related
Depositor prior to such date:
(i) The accountants who certify the financial statements and
supporting schedules included in the Company Financial
Information (if applicable) are independent registered public
accountants as required by the Securities Act.
(ii) If applicable, the financial statements included in the Company
Financial Information present fairly the consolidated financial
position of the Counterparty (or the entity that consolidates
the Counterparty) and its consolidated subsidiaries as at the
dates indicated and the consolidated
4
results of their operations and cash flows for the periods
specified; except as otherwise stated in the Company Financial
Information, said financial statements have been prepared in
conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis; and the supporting
schedules included in the Company Financial Information present
fairly in accordance with GAAP the information required to be
stated therein. The selected financial data and summary
financial information included in the Company Financial
Information present fairly the information shown therein and
have been compiled on a basis consistent with that of the
audited financial statements of the Counterparty.
(iii) The Company Financial Information and other Company
Information included or incorporated by reference in the
Registration Statement (including through filing on an Exchange
Act Report), at the time they were or hereafter are filed with
the Commission, complied in all material respects with the
requirements of Item 1115(b) of Regulation AB (in the case of
the Company Financial Information) and, did not and will not
contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The Counterparty agrees that the terms of this Agreement shall be
incorporated by reference into any Derivative Agreement so that each
SPV who is a beneficiary of a Derivative Agreement shall be an
express third party beneficiary of this Agreement.
Section 4. Indemnification; Remedies
(a) The Counterparty shall indemnify CHL and the related Depositor, each
person responsible for the preparation, execution or filing of any
report required to be filed with the Commission with respect to such
SPV, or for execution of a certification pursuant to Rule 13a-14(d)
or Rule 15d-14(d) under the Exchange Act; each person who controls
any of such parties (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act); and the
respective present and former directors, officers, employees and
agents of each of the foregoing, and shall hold each of them
harmless from and against any losses, damages, penalties, fines,
forfeitures, legal fees and expenses and related costs, judgments,
and any other costs, fees and expenses that any of them may sustain
arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in any information, report,
certification, accountants' consent or other material provided
in written or electronic form under Section 2 by or on behalf
of the Counterparty (collectively, the "Company Information"),
or (B) the omission or alleged omission to state in the Company
5
Information a material fact required to be stated in the
Company Information or necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; or
(ii) any breach by the Counterparty of a representation or warranty
set forth in Section 3(a) and made as of a date prior to the
Closing Date, to the extent that such breach is not cured by
the Closing Date, or any breach by the Counterparty of a
representation or warranty pursuant to Section 3 to the extent
made as of a date subsequent to the Closing Date.
(b) (i) Any failure by the Counterparty to deliver any information,
report, certification, accountants' consent or other material
when and as required under Section 2 or any breach by the
Counterparty of a representation or warranty set forth in
Section 3 and made as of a date prior to the Closing Date, to
the extent that such breach is not cured by the Closing Date
(or in the case of information needed for purposes of printing
the Prospectus Supplement, the date of printing of the
Prospectus Supplement), or any breach by the Counterparty of a
representation or warranty pursuant to Section 3 to the extent
made as of a date subsequent to such closing date, shall,
except as provided in clause (ii) of this paragraph,
immediately and automatically, without notice or grace period,
constitute an Additional Termination Event (as defined in the
Master Agreement) with the Counterparty as the sole Affected
Party (as defined in the Master Agreement) under the Derivative
Agreement. Following such termination, a termination payment
(if any) shall be payable by the applicable party as determined
by the application of Section 6(e)(ii) of the Master Agreement,
with Market Quotation and Second Method being the applicable
method for determining the termination payment (notwithstanding
anything in the Derivative Agreement to the contrary).
(ii) If the Counterparty has failed to deliver any information,
report, certification or accountants' consent when and as
required under Section 2, which continues unremedied for the
lesser of ten calendar days after the date on which such
information, report, certification or accountants' consent was
required to be delivered or such period in which the applicable
Exchange Act Report for which such information is required can
be timely filed (without taking into account any extensions
permitted to be filed), and the Counterparty has not, at its
own cost, within the period in which the applicable Exchange
Act Report for which such information is required can be timely
filed caused another entity (which meets any applicable ratings
threshold in the Derivative Agreement) to replace the
Counterparty as party to the Derivative Agreement that (i) has
signed an agreement with CHL and the Depositors substantially
in the form of this Agreement, (ii) has agreed to deliver any
information, report, certification or accountants' consent when
and as required under Section 2 hereof and (iii) is approved by
the Depositor (which approval shall not be unreasonably
withheld) and any rating agency, if applicable, on terms
6
substantially similar to the Derivative Agreement, then an
Additional Termination Event (as defined in the Master
Agreement) shall have occurred with the Counterparty as the
sole Affected Party. Following such termination, a termination
payment (if any) shall be payable by the applicable party as
determined by the application of Section 6(e)(ii) of the Master
Agreement, with Market Quotation and Second Method being the
applicable method for determining the termination payment
(notwithstanding anything in the Derivative Agreement to the
contrary).
(iii) In the event that the Counterparty or the SPV has found a
replacement entity in accordance with Section 2(b)(ii), the
Counterparty shall promptly reimburse the SPV for all
reasonable incidental expenses incurred by the SPV, as such are
incurred, in connection with the termination of the
Counterparty as counterparty and the entry into a new
Derivative Instrument. The provisions of this paragraph shall
not limit whatever rights the SPV may have under other
provisions of this Agreement or otherwise, whether in equity or
at law, such as an action for damages, specific performance or
injunctive relief.
(c) CHL and the related Depositor shall indemnify the Counterparty, each
person who controls the Counterparty (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act); and
the respective present and former directors, officers, employees and
agents of each of the foregoing, and shall hold each of them
harmless from and against any losses, damages, penalties, fines,
forfeitures, legal fees and expenses and related costs, judgments,
and any other costs, fees and expenses that any of them may sustain
arising out of or based upon (A) any untrue statement of a material
fact contained or alleged to be contained in the related Prospectus
Supplement (other than the Company Information), or (B) the omission
or alleged omission to state in related Prospectus Supplement (other
than the Company Information) a material fact required to be stated
in the Prospectus Supplement or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
Section 5. Miscellaneous.
(a) Construction. Throughout this Agreement, as the context requires,
(a) the singular tense and number includes the plural, and the
plural tense and number includes the singular; (b) the past tense
includes the present, and the present tense includes the past; and
(c) references to parties, sections, schedules, and exhibits mean
the parties, sections, schedules, and exhibits of and to this
Agreement. The section headings in this Agreement are inserted only
as a matter of convenience, and in no way define, limit, extend, or
interpret the scope of this Agreement or of any particular section.
(b) Assignment. None of the parties may assign their rights under this
Agreement without the prior written consent of the other parties.
Subject to the foregoing, this
7
Agreement shall be binding on and inure to the benefit of the
parties and their respective successors and permitted assigns.
(c) No Third-Party Benefits Except as Specified. None of the provisions
of this Agreement are intended to benefit, or to be enforceable by,
any third-party beneficiaries except the related SPV and any trustee
of an SPV or any Administrator.
(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York
without regard to the conflict of laws principles thereof.
(e) Amendment and Waiver. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto. No
waiver of any provision of this Agreement or of any rights or
obligations of any party under this Agreement shall be effective
unless in writing and signed by the party or parties waiving
compliance, and shall be effective only in the specific instance and
for the specific purpose stated in that writing.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(g) Additional Documents. Each party hereto agrees to execute any and
all further documents and writings and to perform such other actions
which may be or become necessary or expedient to effectuate and
carry out this Agreement.
(h) Severability. Any provision hereof which is prohibited or
unenforceable shall be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof.
(i) Integration. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof. There are no
restrictions, agreements, promises, representations, warranties,
covenants or undertakings with respect to the subject matter hereof
other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between
the parties with respect to its subject matter.
8
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
CWABS, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
CWMBS, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
CWALT, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
CWHEQ, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
9
SWISS RE FINANCIAL PRODUCTS CORPORATION
By: /s/ Xxxxxx X. Xxxx
-------------------------------
Name: Xxxxxx X. Xxxx
Title: President
10
