EXHIBIT 99.11
-------------
The Item 1115 Agreement.
Item 1115 Agreement dated as of March 29, 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 Credit Suisse International, as
counterparty (the "Counterparty").
RECITALS
WHEREAS, CWABS, CWMBS, CWALT and CWHEQ each have filed Registration
Statements on Form S-3 (each, a "Registration Statement") with the Securities
and Exchange Commission (the "Commission") for purposes of offering mortgage
backed or asset-backed notes and/or certificates (the "Securities") through
special purpose vehicles (each, an "SPV").
WHEREAS, on the closing date (the "Closing Date") of a Transaction
referenced in Exhibit A hereto, the Counterparty and CHL or an underwriter or
dealer with respect to the Transaction, enter into certain derivative
agreements (each, a "Derivative Agreement"), including interest rate caps and
interest rate or currency swaps, for purposes of providing certain yield
enhancements that are assigned to the SPV or the related trustee on behalf of
the SPV or a swap or corridor contract administrator (each, an
"Administrator").
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereby agree as follows:
Section 1. Definitions
Business Days: Any day other than (i) a Saturday or a Sunday or (ii)
a day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to be closed.
Company Information: As defined in Section 4(a)(i).
Company Financial Information: As defined in Section 2(a)(ii).
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).
▇▇▇▇▇: 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 SPV, or if no such Master Agreement exists, the ISDA Master Agreement
assumed to apply to the Derivative Agreement pursuant to its terms.
Prospectus Supplement: The prospectus supplement prepared in
connection with the public offering and sale of the related Securities and
that is the most recent disclosure available to investors at the time of
pricing.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended
from time to time, and subject to such clarification and interpretation as
have been provided by the Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by
the Commission or its staff from time to time.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Transaction: A securities offering involving CWABS, CWMBS, CWALT or
CWHEQ in which the Counterparty provides a Derivative Agreement that
acknowledges and incorporates the terms of this Agreement in accordance with
Section 5(b) hereof.
Section 2. Information to be Provided by or Actions of the Counterparty. The
Counterparty hereby covenants to perform the following with respect
to each Transaction:
(a) Prior to printing the related Prospectus Supplement,
(i) the Counterparty shall provide to the related Depositor such
information regarding the Counterparty, as a derivative
instrument counterparty, as is reasonably requested by the
related Depositor for the purpose of compliance with Item
1115(a)(1) of Regulation AB. Such information shall include:
(A) the Counterparty's legal name (and any d/b/a);
(B) the organizational form of the Counterparty;
(C) a description of the general character of the business of
the Counterparty;
(ii) if requested by the related Depositor (after the aggregate
"significance percentage", determined absent manifest error, of
all derivative instruments provided by Counterparty and any of
its affiliates to the SPV is 8.00% or more in
2
respect of Item 1115(b)(1), or 18.00% or more in respect of
Item 1115(b)(2)) for the purpose of compliance with Item
1115(b) with respect to a Transaction, the Counterparty shall:
(A) provide the financial data required by and which complies
in all material respects with Item 1115(b)(1) or (b)(2) of
Regulation AB (as applicable) with respect to the
Counterparty and any affiliated entities providing
derivative instruments to the SPV (the "Company Financial
Information"), in a form appropriate for use in the
Prospectus Supplement and in Microsoft Word or Microsoft
Excel form; and
(B) if applicable, cause its accountants to issue their
consent to the filing or incorporation by reference of
such financial statements in the Registration Statement.
(b) Following the Closing Date with respect to a Transaction,
(i) if the Counterparty provided Company Financial Information to
the related Depositor for the Prospectus Supplement, within ten
Business Days of the release of any updated financial data, the
Counterparty shall (1) provide current Company Financial
Information as required by and which complies in all material
respects with Item 1115(b) of Regulation AB to the related
Depositor in Microsoft Word or Microsoft Excel form, and (2) if
applicable, cause its accountants to issue their consent to
filing or incorporation by reference of such financial
statements in the Exchange Act Reports of the SPV; and
(ii) if the related Depositor requests Company Financial Information
from the Counterparty (after the aggregate "significance
percentage", determined absent manifest error, of all
derivative instruments provided by Counterparty and any of its
affiliates to the SPV is 8.00% or more in respect of Item
1115(b)(1), or 18.00% or more in respect of Item 1115(b)(2)),
for the purpose of compliance with Item 1115(b) of Regulation
AB following the Closing Date, the Counterparty shall upon ten
Business Days written notice either (A), (1) provide current
Company Financial Information as required by and which complies
in all material respects with Item 1115(b) of Regulation AB to
the related Depositor in Microsoft Word or Microsoft Excel
form, (2) if applicable, cause its accountants to issue their
consent to filing or incorporation by reference of such
financial statements in the Exchange Act Reports of the SPV and
(3) within ten Business Days of the release of any updated
financial data, provide current Company Financial Information
as required by and which complies in all material respects with
Item 1115(b) of Regulation AB to the related Depositor in
Microsoft Word or Microsoft Excel form and if applicable, cause
its accountants to issue their consent to filing or
incorporation by reference of such financial statements in the
Exchange Act Reports of the SPV or (B) assign the Derivative
Agreement or obtain
3
a unconditional guarantee of a parent company as provided in
Section 2(c) below.
(c) If the Counterparty has failed to deliver any information, report,
or accountants' consent when and as required under Section 2(a) or
(b), which continues unremedied for the lesser of five Business Days
after the date on which such information, report, or accountants'
consent was required to be delivered and such period (as specified
in a prior written notice by the applicable Depositor or SPV to the
Counterparty) in which the applicable Exchange Act Report for which
such information is required can be timely filed (without taking
into account any extensions permitted to be filed), then the
Counterparty shall, at its own cost, within the period in which the
applicable Exchange Act Report for which such information is
required can be timely filed, either cause another entity to replace
the Counterparty as party to the Derivative Agreement or obtain a
full and unconditional guaranty of a parent company to honor the
Counterparty's obligations under the Derivative Agreement; provided
that, with respect to the guaranty of a parent company, if the
financial information is not separately presented for the derivative
counterparty then each of the requirements set forth in Rule 3-10(b)
or 3-10(c) of Regulation S-X, as applicable, shall be satisfied,
including with respect to the parent, the Counterparty and the
financial statements of the parent (as though the Counterparty were
the issuer of registered securities), in each case to or from, as
applicable, an entity that (i) has signed an agreement with CHL and
the Depositors substantially in the form of this Agreement and (ii)
has agreed to deliver any information, report, certification or
accountants' consent when and as required under this Section 2
hereof, on terms substantially similar to the Derivative Agreement.
Counterparty agrees that the related Derivative Agreement shall
provide that failure to take the actions provided in this Section
2(c) shall be an Additional Termination Event (as defined in the
Master Agreement) as provided in the related Master Agreement for
each Transaction.
(d) In the event that the Counterparty or the SPV has found a
replacement entity in accordance with Section 2(c), the Counterparty
shall promptly reimburse the SPV for all reasonable incidental
expenses incurred by the SPV, as such are incurred, in connection
with the termination of the Counterparty as counterparty and the
entry into a new Derivative Agreement. The provisions of this
paragraph shall not limit whatever rights the SPV may have under
other provisions of this Agreement or otherwise, whether in equity
or at law, such as an action for damages, specific performance or
injunctive relief.
Section 3. Representations and Warranties and Covenants of the Counterparty.
(a) The Counterparty represents and warrants to the related Depositor,
as of the date on which information is first provided to the related
Depositor under Section 2(a)(ii), Section 2(b)(i) or Section
2(b)(ii)(A), that, except as disclosed in writing the related
Depositor prior to such date:
4
(i) If applicable, the accountants who certify the financial
statements and supporting schedules included in the Company
Financial Information (if applicable) are independent
registered public accountants as required by the Securities
Act.
(ii) If applicable, the financial statements included in the Company
Financial Information present fairly the consolidated financial
position of the Counterparty (or the entity that consolidates
the Counterparty) and its consolidated subsidiaries as at the
dates indicated and the consolidated results of their
operations and cash flows for the periods specified; except as
otherwise stated in the Company Financial Information, said
financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a
consistent basis; and the supporting schedules included in the
Company Financial Information present fairly in accordance with
GAAP the information required to be stated therein. The
selected financial data and summary financial information
included in the Company Financial Information present fairly
the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements of the
Counterparty.
(iii) If applicable, the Company Financial Information and other
Company Information included or incorporated by reference in
the Registration Statement (including through filing on an
Exchange Act Report), at the time they were or hereafter are
filed with the Commission, complied in all material respects
with the requirements of Item 1115(b) of Regulation AB (in the
case of the Company Financial Information) and, did not and
will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not
misleading.
(b) If applicable, the Counterparty represents and warrants to the
related Depositor, as of the date on which it has obtained a full
and unconditional guaranty of a parent company to honor
Counterparties obligations under the Derivative Agreement as a
remedy to failing to deliver any information, report, or
accountants' consent when and as required under Section 2(a) or (b),
that the requirements of Rule 3-10(b) or 3-10(c) of Regulation S-X,
as applicable, have been satisfied with respect to the omission of
the financial information of the Counterparty (assuming the
Counterparty is treated as the Issuer of the registered security
under Rule 3-10).
Section 4. Indemnification; Remedies
(a) The Counterparty shall indemnify CHL and the related Depositor, each
person responsible for execution of a certification pursuant to Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act; each person who
controls any of such parties (within the meaning of Section 15 of
the Securities Act and ▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇
▇
▇▇▇▇▇▇▇▇ ▇▇▇); and the respective present and former directors,
officers, employees and agents of each of the foregoing, and shall
hold each of them harmless from and against any losses, damages,
penalties, fines, forfeitures, legal fees and expenses and related
costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in any information, report,
accountants' consent or other material provided in written or
electronic form under Section 2(a) or (b) by or on behalf of
the Counterparty (collectively, the "Company Information"), or
(B) the omission or alleged omission to state in the Company
Information a material fact required to be stated in the
Company Information or necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; or
(ii) any failure by the Counterparty to comply with Section 2;
provided, however, that notwithstanding anything to the
contrary herein such indemnification shall not cover any
failure by the Counterparty to provide Company Financial
Information while the aggregate "significance percentage", of
all derivative instruments provided by Counterparty and any of
its affiliates to the SPV is below 10.00% in respect of Item
1115(b)(1), or below 20.00% in respect of Item 1115(b)(2).
In the case of any failure of performance described in clause
(a)(ii) of this Section, the Counterparty shall promptly reimburse
the related Depositor and each Person responsible for execution of a
certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the
Exchange Act with respect to the SPV, for all costs reasonably
incurred by each such party in order to obtain the information,
report, certification, accountants' consent or other material not
delivered as required by the Counterparty.
(b) Any failure by the Counterparty to deliver any information, report,
accountants' consent or other material when and in any case only as
required under Section 2(a) or (b) or any breach by the Counterparty
of a representation or warranty set forth in Section 3 and made as
of a date prior to the Closing Date, to the extent that such breach
is not cured by the Closing Date (or in the case of information
needed for purposes of printing the Prospectus Supplement, the date
of printing of the Prospectus Supplement), shall immediately and
automatically, without notice or grace period, constitute an
Additional Termination Event (as defined in the Master Agreement)
with the Counterparty as the sole Affected Party (as defined in the
Master Agreement) under the Derivative Agreement. Following such
termination, a termination payment (if any) shall be payable by the
applicable party as determined by the application of Section
6(e)(ii) of the Master Agreement, with Market Quotation and Second
Method being the applicable method for determining the termination
payment (notwithstanding anything in the Derivative Agreement to the
contrary).
6
Section 5. Miscellaneous.
(a) Company Financial Information. Notwithstanding anything to the
contrary contained herein, if Regulation AB is amended, or the
Commission has issued interpretive guidance uniformly applicable to
registrants of Asset-Backed Securities allowing the presentation of
the financial information required by Item 1115 of Regulation AB
with respect to an affiliate of the Counterparty (a "Permitted
Entity") rather than the Counterparty and any affiliated entities
providing derivatives to the SPV, "Company Financial Information"
shall be deemed to refer to the financial information of such
Permitted Entity provided the Counterparty has received written
confirmation from CHL that no amendment to this Agreement is
necessary. The parties shall reasonably cooperate with respect to
any amendments to this Agreement to reflect such amendment or
interpretation.
(b) Incorporation by Reference. The Counterparty agrees that upon its
consent the terms of this Agreement shall be incorporated by
reference into any Derivative Agreement so that each SPV who is a
beneficiary of a Derivative Agreement shall be an express third
party beneficiary of this Agreement. For avoidance of doubt, any
Transaction where the Counterparty does not consent to the
incorporation by reference of this Agreement shall not be governed
by this Agreement.
(c) Construction. Throughout this Agreement, as the context requires,
(a) the singular tense and number includes the plural, and the
plural tense and number includes the singular; (b) the past tense
includes the present, and the present tense includes the past; and
(c) references to parties, sections, schedules, and exhibits mean
the parties, sections, schedules, and exhibits of and to this
Agreement. The section headings in this Agreement are inserted only
as a matter of convenience, and in no way define, limit, extend, or
interpret the scope of this Agreement or of any particular section.
(d) Assignment. None of the parties may assign their rights under this
Agreement without the prior written consent of the other parties.
Subject to the foregoing, this Agreement shall be binding on and
inure to the benefit of the parties and their respective successors
and permitted assigns.
(e) No Third-Party Benefits Except as Specified. None of the provisions
of this Agreement are intended to benefit, or to be enforceable by,
any third-party beneficiaries except the related SPV and any trustee
of an SPV or any Administrator.
(f) Governing Law. This Agreement and, to the fullest extent permitted
by applicable law, all matters arising out of or related in any way
to this Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York without regard to
the conflict of laws principles thereof.
(g) Waiver of Trial By Jury. Insofar as is permitted by law, each party
irrevocably waives any and all rights to trial by jury in any legal
proceeding in connection
7
with this Agreement, and acknowledges that this waiver is a material
inducement to the other party's entering into this Agreement
hereunder.
(h) Jurisdiction. With respect to any suit, action or proceeding
relating to this Agreement, each party irrevocably submits to the
jurisdiction of courts in the State of New York and the United
States District Court located in the Borough of Manhattan in New
York City.
(i) Amendment and Waiver. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto. No
waiver of any provision of this Agreement or of any rights or
obligations of any party under this Agreement shall be effective
unless in writing and signed by the party or parties waiving
compliance, and shall be effective only in the specific instance and
for the specific purpose stated in that writing.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(k) Additional Documents. Each party hereto agrees to execute any and
all further documents and writings and to perform such other actions
which may be or become reasonably necessary or expedient to
effectuate and carry out this Agreement.
(l) Severability. Any provision hereof which is prohibited or
unenforceable shall be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof.
(m) Integration. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof. There are no
restrictions, agreements, promises, representations, warranties,
covenants or undertakings with respect to the subject matter hereof
other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between
the parties with respect to its subject matter.
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/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
CWMBS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
CWALT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
CWHEQ, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Managing Director
CREDIT SUISSE INTERNATIONAL
9
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Authorized Signatory
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Authorized Signatory
10
EXHIBIT A
---------
Transaction covered by this Agreement
1. CWALT, Inc. Alternative Loan Trust 2006-7CB
11