EXHIBIT 99.4
(Multicurrency-Cross Border)
SCHEDULE
to the
Master Agreement
dated as of February 28, 2007
between
SWISS RE FINANCIAL PRODUCTS CORPORATION ("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
2007-2, 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 for CWABS, Inc. Asset-Backed Certificates
Trust 2007-2, dated as of February 1, 2007 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").
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 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, except that such term shall not include insurance
contracts entered into in the ordinary course of Party A's Credit
Support Provider's insurance business.
"Threshold Amount" means with respect to Party A an amount equal
to three percent (3%) of the Shareholders' Equity of Party A's
Credit Support Provider.
"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 in 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) to Party A, 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.
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(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 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, 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
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(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 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) 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.
(D) 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)."
(E) 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.
(F) With respect to any Replacement Transaction, Party B shall
determine in its sole discretion, acting in a commercially
reasonable manner, whether a Firm Offer is made in respect
of a Replacement Transaction with commercial terms
substantially the same as those of this Agreement (save for
the exclusion of provisions relating to Transactions that
are not Terminated Transactions); provided however that
notwithstanding the provisions of this Part 5(f), nothing in
this Agreement shall preclude Party A from obtaining Market
Quotations.
(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(c).
Part 2: Tax Representations
(a) Tax Representations.
(i) Payer Representations. For the purpose of Section 3(e) of this
Agreement:
(A) Party A makes the following representation(s):
None.
(B) Party B makes the following representation(s):
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None.
(ii) Payee Representations. For the purpose of Section 3(f) of this
Agreement:
(A) Party A makes the following representation(s):
Party A represents that it is a corporation organized 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.
Part 3: Agreement to Deliver Documents
(a) Tax forms, documents or certificates to be delivered are:
---------------------- -------------------------------------------------- -----------------------------------------------
Party required to Form/Document/ Date by which to
deliver document Certificate be delivered
---------------------- -------------------------------------------------- -----------------------------------------------
Party A An original properly completed and executed (i) upon execution of this Agreement, (ii)
United States Internal Revenue Service Form W-9 on or before the first payment date under
including applicable attachments (or any this Agreement, including any Credit Support
successor thereto) with respect to any payments Document, (iii) promptly upon the reasonable
received or to be received by Party A that demand by Party B, (iv) prior to the
eliminates U.S. federal withholding and backup expiration or obsolescence of any previously
withholding Tax on payments to Party A under delivered form, and (v) promptly upon the
this Agreement. information on any such previously delivered
form becoming inaccurate or incorrect.
---------------------- -------------------------------------------------- -----------------------------------------------
Party B (i) Upon execution of this Agreement, an (i) upon execution of this Agreement, (ii)
original properly completed and executed United on or before the first payment date under
States Internal Revenue Service Form W-9 this Agreement, including any Credit Support
including applicable attachments (or any Document, (iii) promptly upon the reasonable
successor thereto) with respect to any payments demand by Party A, (iv) prior to the
received or to be received by the initial expiration or obsolescence of any previously
beneficial owner of payments to Party B under delivered form, and (v) promptly upon the
this Agreement, and (ii) thereafter, the information on any such previously delivered
appropriate tax certification form (i.e., IRS form becoming inaccurate or incorrect.
Form W-9 or IRS Form X-0XXX, X-0XXX, X-0XXX or
W-8ECI, as applicable (or any successor form
thereto)) with respect to any payments received
or to be received by the beneficial owner of
payments to Party B under this Agreement from
time to time.
---------------------- -------------------------------------------------- -----------------------------------------------
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---------------------- ---------------------------------------- ---------------------------------------- ----------------
Party required to Form/Document/ Date by which to Covered by
deliver document Certificate be delivered Section 3(d)
Representation
---------------------- ---------------------------------------- ---------------------------------------- ----------------
Party A and Any documents required by the Upon the execution and delivery of Yes
Party B receiving party to evidence the this Agreement
authority of the delivering party or
its Credit Support Provider, if any,
for it to execute and deliver the
Agreement, this Confirmation, 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, this Confirmation and any
Credit Support Document, as the case
may be
---------------------- ---------------------------------------- ---------------------------------------- ----------------
Party A and A certificate of an authorized officer Upon the execution and delivery of Yes
Party B of the party, as to the incumbency and this Agreement
authority of the respective officers
of the party signing the Agreement,
this Confirmation, and any relevant
Credit Support Document, as the case
may be
---------------------- ---------------------------------------- ---------------------------------------- ----------------
Party A Annual Report of Party A's Credit Promptly upon becoming publicly Yes
Support Provider containing available
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's Credit Support
Provider is organized
---------------------- ---------------------------------------- ---------------------------------------- ----------------
Party A Semi Annual Financial Statements of Promptly upon becoming publicly Yes
Party A's Credit Support Provider available
containing unaudited, consolidated
financial statements of Party A's
Credit Support Provider's Interim
Report prepared in accordance with
generally accepted accounting
principles in the country in which
Party A's Credit Support Provider is
organized
---------------------- ---------------------------------------- ---------------------------------------- ----------------
Party A A guarantee of Swiss Reinsurance Upon the execution and delivery of No
Company this Agreement
---------------------- ---------------------------------------- ---------------------------------------- ----------------
Party A An opinion of counsel to Party A's Upon the execution and delivery of No
Guarantor this Agreement
---------------------- ---------------------------------------- ---------------------------------------- ----------------
Party B Pooling and Servicing Agreement Upon the execution and delivery of No
this Agreement
---------------------- ---------------------------------------- ---------------------------------------- ----------------
Part 4: Miscellaneous
(a) Addresses for Notices. For the purposes of Section 12(a) of this
Agreement:
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Party A:
Address for notices or communications to Party A:
Address: Swiss Re Financial Products Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Head of Operations
Facsimile No. (000) 000-0000
With a copy to: Swiss Re Financial Products Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
Facsimile No.: (000) 000-0000
Party B:
Address for notices or communications to Party B:
Address: The Bank of New York
000 Xxxxxxx Xxxxxx - 0X Xxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Administration MBS Administration,
CWABS Inc., Series 2007-2
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) Process Agent. For the purposes of Section 13(c) of this Agreement:
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 not 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 shall have occurred with respect to Party A,
Party B shall have the right to appoint as Calculation Agent a third
party, reasonably acceptable to Party A.
(f) Credit Support Document. Credit Support Document means
Party A: The Credit Support Annex, and any guarantee in support of
Party A's obligations under this Agreement.
Party B: 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.
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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. Subparagraph (ii) of Section 2(c) of this Agreement
will apply to all Transactions.
(j) "Affiliate" will have the meaning specified in Section 14 of this
Agreement, 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).
Part 5: Other 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):
8
"(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 to
enter into the Transaction and (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."
(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 Termination Events. The following Additional Termination
Events will apply:
(i) Moody's First Rating Trigger Collateral. If (A) A Moody's First
Trigger Ratings Event has occurred and has been continuing for 30
or more Local Business Days and (B) Party A has failed to either
(i) furnish an Eligible Guarantee of Party A's obligations under
this Agreement from a guarantor that maintains the Moody's First
Trigger Ratings Threshold or (ii) procure an Eligible Replacement
in accordance with the definition of "Permitted Transfer" or (iii)
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) Moody's Second Rating Trigger Replacement. If (A) Party A has
failed to comply with the Second Trigger Conditions and 30 or more
Local Business Days have elapsed since the last time a Moody's
Second Trigger Ratings Event did not apply and (B) (i) at least
one Eligible Replacement
9
has made a Firm Offer to be the transferee of all of Party A's
rights and obligations under this Agreement in accordance with the
definition of "Permitted Transfer" and/or (ii) at least one entity
that maintains the Moody's First Trigger Ratings Threshold has
made a Firm Offer to provide an Eligible Guarantee, in respect of
all of Party A's present and future obligations under this
Agreement, 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) S&P Ratings Event. If (A) An S&P Approved Ratings Event shall
occur and be continuing, and Party A fails, as soon as reasonably
practicable, at its own expense, using commercially reasonable
efforts, to satisfy the conditions set forth under
Collateralization Event or (B) an S&P Required Ratings Event shall
occur and be continuing, and Party A fails, as soon as reasonably
practicable, at its own expense, using commercially reasonable
efforts, to satisfy the conditions set forth under Ratings Event,
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.
(iv) Provision of Information Required by Regulation AB. Party A shall
fail to comply with the terms of the Regulation AB Agreement. For
all purposes of this Agreement, Party A shall be the sole Affected
Party with respect to such Additional Termination Event.
(v) Supplemental Pooling and Servicing Agreement Without Party A's
Prior Written Consent. If Party B enters into an amendment and or
supplement to the Pooling and Servicing Agreement or other
modification to the Pooling and Servicing Agreement that could
reasonably be expected to have a material adverse effect on Party
A (excluding, for the avoidance of doubt, any amendment to the
Pooling and Servicing Agreement that is entered into solely for
the purpose of appointing a successor master servicer or trustee)
without the prior written consent (such consent not to be
unreasonably withheld) of Party A where such consent is required,
then 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. Party B agrees
with Party A that Party A shall be an express third-party
beneficiary of the Pooling and Servicing Agreement.
(d) Required Ratings Downgrade Event. In the event that a Required Ratings
Downgrade Event has occurred and is continuing, then Party A shall, as
soon as reasonably practicable and so long as such 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 entity with credit ratings from S&P at least
equal to the S&P Approved Ratings Threshold.
(e) Compliance with Regulation AB. 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 Exhibit A.
(f) Transfers.
(i) Section 7 is hereby amended to read in its entirety as follows:
"Except with respect to any Permitted Transfer pursuant to Section
6(b)(ii), or the succeeding sentence, neither Party A nor Party B
is permitted to assign, novate or transfer (whether by way of
security or otherwise) as a whole or in part any of its rights,
obligations or interests under the Agreement or any Transaction
unless (a) the prior written consent of the other party is
obtained, and (b) the Rating Agency Condition has been satisfied
with respect to S&P. At any time at which no
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Relevant Entity has credit ratings at least equal to the Approved
Ratings Threshold, Party A may make a Permitted Transfer."
(ii) If an Eligible Replacement has made a Firm Offer 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.
(g) 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 Swap Trust and the proceeds thereof, 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 the 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 the Swap Trust and the proceeds thereof,
should be insufficient to satisfy all claims outstanding and following
the realization of the account held by the Swap Trust and the proceeds
thereof, 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.
(h) Timing of Payments by Party B upon Early Termination. Notwithstanding
anything to the contrary in Section 6(d)(ii), to the extent that all or
a portion (in either case, the "Unfunded Amount") of any amount that is
calculated as being due in respect of any Early Termination Date under
Section 6(e) from Party B to Party A will be paid by Party B from
amounts other than any upfront payment paid to Party B by an Eligible
Replacement that has entered a Replacement Transaction with Party B,
then such Unfunded Amount shall be due on the next subsequent
Distribution Date following the date on which the payment would have
been payable as determined in accordance with Section 6(d)(ii), and on
any subsequent Distribution Dates until paid in full (or if such Early
Termination Date is the final Distribution Date, on such final
Distribution Date); provided, however, that if the date on which the
payment would have been payable as determined in accordance with Section
6(d)(ii) is a Distribution Date, such payment will be payable on such
Distribution Date.
(i) 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 or obligations under
this Agreement shall be made by either party unless each Rating Agency
has been given prior written notice of such designation or transfer.
(j) 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.".
(k) 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 Rating Agencies has been provided prior written notice of the same
and such amendment satisfies the Rating Agency Condition with respect to
S&P.
(l) Notice of Certain Events or Circumstances. Each Party agrees, upon
learning of the occurrence or existence of any event or condition that
constitutes (or that with the giving of notice or passage of time or
both would constitute) an Event of Default or Termination Event with
respect to such party, promptly to give the other Party and to each
Rating Agency notice of such event or condition; provided that failure
to provide notice of such event or condition pursuant to this Part 5(l)
shall not constitute an Event of Default or a Termination Event.
11
(m) Proceedings. No Relevant Entity shall institute against, or cause any
other person to institute against, or join any other person in
instituting against Party B, the Swap Trust, or 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. This
provision will survive the termination of this Agreement.
(n) Swap Contract Administrator Liability Limitations. 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 for CWABS, Inc.
Asset-Backed Certificates Trust 2007-2; (b) in no case shall BNY (or any
person acting as successor Swap Contract Administrator for CWABS, Inc.
Asset-Backed Certificates Trust 2007-2) 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
Pooling and Servicing Agreement. This Part 5(n) shall survive the
termination of this Agreement.
(o) 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.
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.
(p) Agent for Party B. Party A acknowledges that BNY, may act as Party B's
agent to carry out certain functions on behalf of Party B in respect of
this Agreement, and that BNY shall be entitled to give notices and to
perform and satisfy the obligations of Party B hereunder on behalf of
Party B.
(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, and agrees to notify such personnel of
such monitoring or recording.
(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.
12
(t) [Reserved]
(u) [Reserved]
(v) Additional representations.
(i) Capacity. Party A represents to Party B on the date on which Party
A enters into this Agreement that it is entering into the
Agreement and the Transaction as principal and not as agent of any
person. Party B represents to Party A on the date on which Party B
enters into this Agreement it is entering into the Agreement and
the Transaction in its capacity as Swap Contract Administrator.
(w) 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(m), 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 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.
(x) [Reserved]
(y) [Reserved]
(z) 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.
"Collateralization Event" means, the Relevant Entity shall fail to
maintain the S&P Approved Ratings Threshold. For the avoidance of doubt,
the parties hereby acknowledge and agree that notwithstanding the
occurrence of a Collateralization Event, this Agreement and each
Transaction hereunder shall continue to be a Swap Agreement for purposes
of the Trust Agreement. Within 30 calendar days from the date a
Collateralization Event has occurred and so long as such
Collateralization Event is continuing, Party A shall, at its sole
expense, either (i) post collateral in an amount required to be posted
pursuant to terms of the Credit Support Document (such amount which is
the greater of amounts required to be posted by Moody's and S&P), (ii)
upon satisfaction of the Rating Agency Condition, furnish an Eligible
Guarantee of Party A's obligations under this Agreement from a guarantor
that satisfies the S&P Approved Ratings Threshold or (iii) obtain an
Eligible Replacement in accordance with the definition of Permitted
Transfer that (x) upon satisfaction of the Rating Agency Condition,
assumes the obligations of Party A under this
13
Agreement (through an assignment and assumption agreement in form and
substance reasonably satisfactory to Party B) or (y) having provided
prior written notice to S&P, replaces the outstanding Transactions
hereunder with transactions on identical terms; provided that such
Eligible Replacement, as of the date of such assumption or replacement,
will not, as a result thereof, be required to withhold or deduct on
account of tax under the Agreement or the new Transactions, as
applicable, and such assumption or replacement will not lead to a
Termination Event or Event of Default occurring under the Agreement or
new Transactions, as applicable.
"Derivative Provider Trigger Event" means (i) an Event of Default with
respect to which Party A is a Defaulting Party, or (ii) a Termination
Event or an Additional Termination Event with respect to which Party A
is the sole Affected Party.
"Eligible Guarantee" means an unconditional and irrevocable guarantee of
all present and future obligations (for the avoidance of doubt, not
limited to payment obligations) that is provided by a guarantor as
principal debtor rather than surety and that is directly enforceable by
Party B, the form and substance of which guarantee are subject to the
Rating Agency Condition with respect to S&P, and, where 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 withholding
for Tax 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 Replacement" means an entity (A)(i) that (a) has credit
ratings from S&P at least equal to the S&P Approved Ratings Threshold
and (b) has credit ratings from Moody's at least equal to the Moody's
First Trigger Ratings Threshold; or (ii) the present and future
obligations (for the avoidance of doubt, not limited to payment
obligations) of which entity to Party B under this Agreement are
guaranteed pursuant to an Eligible Guarantee provided by an entity with
credit ratings at least equal to the Moody's First Trigger Ratings
Threshold and the S&P Approved Ratings Threshold and (B) has executed an
Item 1115 Agreement with the Depositor or has agreed to incorporate
substantially similar provisions in the relevant Transfer Agreement or
confirmation.
"Firm Offer" means an offer which, when made, remains capable of
becoming legally binding upon acceptance.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor
thereto.
"Moody's First Trigger Ratings Event" means that no Relevant Entity has
credit ratings from Moody's at least equal to the Moody's First Trigger
Ratings Threshold.
"Moody's First Trigger Ratings Threshold" means (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.
"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
14
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 another jurisdiction reasonably acceptable
to Party B; (b) as of the date of such transfer the Transferee would not
be required to withhold or deduct on account of Tax from any payments
under this Agreement or would be required to gross up for such Tax under
Section 2(d)(i)(4); (c) an Event of Default or Termination Event would
not occur as a result of such transfer; (d) 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; (e) 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; (f) 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); (g) either (A) Moody's has been given prior written notice
of such transfer and the Rating Agency Condition is satisfied with
respect to S&P or (B) each Rating Agency has been given prior written
notice of such transfer and such transfer is in connection with the
assignment and assumption of this Agreement without modification of its
terms, other than party names, dates relevant to the effective date of
such transfer, tax representations (provided that the representations in
Part 2(a)(i) are not modified) and any other representations regarding
the status of the substitute counterparty of the type included in Part
5(b)(iv), Part 5(v)(i)(2) or Part 5(v)(ii), notice information and
account details; and (h) such transfer otherwise complies with the terms
of the Pooling and Servicing Agreement.
"Rating Agency" 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 CWALT, Inc. Alternative Loan Trust
2007-OA2, Mortgage Pass-Through Certificates (the "Certificates").
"Rating Agency Condition" means, with respect to any particular proposed
act or omission to act hereunder and each 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 Rating Agencies
and receive from each such 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.
"Ratings Event" means, the Relevant Entity shall fail to satisfy the S&P
Required Ratings Threshold or the Relevant Entity is no longer rated by
S&P. Within 30 calendar days from the date a Ratings Event has occurred
and so long as such Ratings Event is continuing, Party A shall, at its
sole expense, (i) obtain an Eligible Replacement in accordance with the
definition of "Permitted Transfer" that (x) upon satisfaction of the
Rating Agency Condition, assumes the obligations of Party A under this
Agreement (through an assignment and assumption agreement in form and
substance reasonably satisfactory to Party B) or (y) having provided
prior written notice to S&P, replaces the outstanding Transactions
hereunder with transactions on identical terms; provided that such
Eligible Replacement, as of the date of such assumption or replacement,
will not, as a result thereof, be required to withhold or deduct on
account of tax under the Agreement or the new Transactions, as
applicable, and such assumption or replacement will not lead to a
Termination Event or Event of Default occurring under the Agreement or
new Transactions, as applicable, or (ii) upon satisfaction of the Rating
Agency Condition, furnish an Eligible Guarantee of Party A's obligations
under this Agreement from a guarantor that satisfies the S&P Approved
Ratings Requirement. In addition, immediately upon the occurrence of a
Ratings Event, Party A shall be required to post collateral in an amount
required to be posted pursuant to terms of the Credit Support Document
(such amount which is the greater of amounts required to be posted by
Xxxxx'x and S&P).
"Relevant Entity" means Party A and, to the extent applicable, a
guarantor under an Eligible Guarantee.
15
"Replacement Transaction" means, with respect to any Terminated
Transaction or group of Terminated Transactions, a transaction or group
of transactions that would have the effect of 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.
"Required Ratings Downgrade Event" means that no Relevant Entity has
credit ratings from a Rating Agency at least equal to the Required
Ratings Threshold for that Rating Agency.
"Required Ratings Threshold" means each of the S&P Required Ratings
Threshold and the Xxxxx'x 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 Event" means an event which is deemed to occur
with respect to Party A on any day on which no Relevant Entity has
current credit ratings from S&P at least equal to the S&P Approved
Ratings Threshold.
"S&P Approved Ratings Threshold" means 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 unsubordinated debt rating or counterparty
rating from S&P of "A+".
"S&P Required Ratings Event" means an event which is deemed to occur
with respect to Party A on any day on which no Relevant Entity has
current credit ratings from S&P at least equal to the S&P Required
Ratings Threshold.
"S&P Required Ratings Threshold" means a long-term unsecured and
unsubordinated debt rating or counterparty rating from S&P of "BBB+".
"Second Trigger Conditions" mean so long as a Xxxxx'x Second Trigger
Ratings Event has occurred and is occurring, Party A shall, at its own
expense, use commercially reasonable efforts, as soon as reasonably
practicable, to either (i) furnish an Eligible Guarantee of Party A's
obligations under this Agreement from a guarantor that maintains the
Xxxxx'x First Trigger Ratings Threshold or (ii) obtain an Eligible
Replacement in accordance with the definition of "Permitted Transfer"
that assumes the obligations of Party A under this Agreement (through a
novation or other assignment and assumption agreement in form and
substance reasonably satisfactory to Party B) or replaces the
outstanding Transactions hereunder with transactions on identical terms.
In addition, Party A shall comply with or perform any obligation to be
complied with or performed by Party A in accordance with the Credit
Support Annex.
[Remainder of this page intentionally left blank.]
16
IN WITNESS WHEREOF, the parties have executed this document by their duly
authorized officers with effect from the date so specified on the first page
hereof.
SWISS RE FINANCIAL PRODUCTS THE BANK OF NEW YORK, not in its
CORPORATION individual or corporate capacity
but solely as Swap Contract Administrator
for CWABS, Inc. Asset-Backed Certificates
Trust 2007-2, pursuant to a Swap Contract
Administration Agreement
(Party A) (Party B)
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxxxx Xxxxxx
------------------ -------------------
Name: Xxxxx Xxxxx Name: Xxxxxxx Xxxxxx
Title: Managing Director Title: Assistant Treasurer
17
EXHIBIT A
Regulation AB Agreement
18
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);
2
(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
3
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
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substantially similar to the Derivative Agreement, then an
Additional Termination Event (as defined in the Master
Agreement) shall have occurred with the Counterparty as the
sole Affected Party. Following such termination, a termination
payment (if any) shall be payable by the applicable party as
determined by the application of Section 6(e)(ii) of the Master
Agreement, with Market Quotation and Second Method being the
applicable method for determining the termination payment
(notwithstanding anything in the Derivative Agreement to the
contrary).
(iii) In the event that the Counterparty or the SPV has found a
replacement entity in accordance with Section 2(b)(ii), the
Counterparty shall promptly reimburse the SPV for all
reasonable incidental expenses incurred by the SPV, as such are
incurred, in connection with the termination of the
Counterparty as counterparty and the entry into a new
Derivative Instrument. The provisions of this paragraph shall
not limit whatever rights the SPV may have under other
provisions of this Agreement or otherwise, whether in equity or
at law, such as an action for damages, specific performance or
injunctive relief.
(c) CHL and the related Depositor shall indemnify the Counterparty, each
person who controls the Counterparty (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act); and
the respective present and former directors, officers, employees and
agents of each of the foregoing, and shall hold each of them
harmless from and against any losses, damages, penalties, fines,
forfeitures, legal fees and expenses and related costs, judgments,
and any other costs, fees and expenses that any of them may sustain
arising out of or based upon (A) any untrue statement of a material
fact contained or alleged to be contained in the related Prospectus
Supplement (other than the Company Information), or (B) the omission
or alleged omission to state in related Prospectus Supplement (other
than the Company Information) a material fact required to be stated
in the Prospectus Supplement or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
Section 5. Miscellaneous.
(a) Construction. Throughout this Agreement, as the context requires,
(a) the singular tense and number includes the plural, and the
plural tense and number includes the singular; (b) the past tense
includes the present, and the present tense includes the past; and
(c) references to parties, sections, schedules, and exhibits mean
the parties, sections, schedules, and exhibits of and to this
Agreement. The section headings in this Agreement are inserted only
as a matter of convenience, and in no way define, limit, extend, or
interpret the scope of this Agreement or of any particular section.
(b) Assignment. None of the parties may assign their rights under this
Agreement without the prior written consent of the other parties.
Subject to the foregoing, this
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.
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IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
CWABS, INC.
By: /s/ Xxxxx 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
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SWISS RE FINANCIAL PRODUCTS CORPORATION
By: /s/ Xxxxxx X. Xxxx
-------------------------------
Name: Xxxxxx X. Xxxx
Title: President
10