Exhibit 99.5
(Multicurrency-Cross Border)
SCHEDULE
to the
Master Agreement
dated as of September 28, 2006
between
SWISS RE FINANCIAL PRODUCTS CORPORATION ("Party A"),
a corporation organized under the laws of
the State of Delaware
and
THE BANK OF NEW YORK, not in its individual or corporate capacity
but solely as Swap Contract Administrator for CWABS, Inc.
Asset-Backed Certificates Series 2006-18, 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
Series 2006-18 dated as of September 1, 2006 among CWABS, Inc. as depositor,
Park Monaco Inc., as a seller, Park Sienna LLC, as a seller, Countrywide Home
Loans, Inc. as a seller, Countrywide Home Loans Servicing LP, as master
servicer, and The Bank of New York, as trustee (the "Pooling and Servicing
Agreement") and in the Swap Contract Administration Agreement dated as of
September 28, 2006, among the Bank of New York, as Swap Contract Administrator
(in such capacity, the "Swap Contract Administrator") and as Trustee under the
Pooling and Servicing Agreement referred to below (in such capacity, the
"Trustee"), and Countrywide Home Loans, Inc.(the "Swap Contract Administration
Agreement").
Part 1: Termination Provisions
In this Agreement:-
(a) "Specified Entity" means in relation to Party A for the purpose of:-
Section 5(a)(v), Not applicable.
Section 5(a)(vi), Not applicable.
Section 5(a)(vii), Not applicable.
Section 5(b)(iv), Not applicable.
and in relation to Party B for the purpose of:-
Section 5(a)(v), Not applicable.
Section 5(a)(vi), Not applicable.
Section 5(a)(vii), Not applicable.
Section 5(b)(iv), Not applicable.
(b) "Specified Transaction" will have the meaning specified in Section 14 of
this Agreement.
(c) Events of Default.
(i) The "Breach of Agreement" provisions of Section 5(a)(ii) will not
apply to Party A and will not apply to Party B.
(ii) The "Credit Support Default" provisions of Section 5(a)(iii) will
apply to Party A and will not apply to Party B.
(iii) The "Misrepresentation" provisions of Section 5(a)(iv) will not
apply to Party A and will not apply to Party B.
(iv) The "Default under Specified Transaction" provisions of Section
5(a)(v) will not apply to Party A and will not apply to Party B.
(v) "Cross Default" provisions of Section 5(a)(vi) will not apply to
Party A and will not apply to Party B.
(vi) Clause (2) of the "Bankruptcy" provisions of Section 5(a)(vii) will
not apply to Party B with respect to either party's inability to pay its
subordinated debt.
(d) Termination Events.
(i) The "Tax Event Upon Merger" provisions of Section 5(b)(iii) will not
apply to Party A and will not apply to Party B.
(ii) 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, Market Quotation and the Second Method will apply.
(g) "Termination Currency" means USD.
(h) Additional Termination Events will apply. Each of the following shall
constitute an Additional Termination Event:
(A) Approved Ratings Threshold. Upon the occurrence of a
Collateralization Event (as defined below) Party A has not, within 30
days after such ratings downgrade (unless, within 30 days after such
downgrade, each such Swap Rating Agency has reconfirmed the rating of the
Swap Certificates which was in effect immediately prior to such downgrade
(determined without regard to any financial guaranty insurance policy, if
applicable), unless the rating of the Swap Certificates were changed due
to a circumstance other than the downgrading of Party A's (or its Credit
Support Provider's) rating), complied with one of the four solutions
listed below, 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.
In the event that (A) either (i) the unsecured, long-term senior debt
obligations of Party A (or its Credit Support Provider) are rated below
"A1" by ▇▇▇▇▇'▇ or are rated "A1" by ▇▇▇▇▇'▇ and such rating is on watch
for possible downgrade (but only for so long as it is on watch for
possible downgrade) or (ii) the unsecured, short-term debt obligations of
Party A (or its Credit Support Provider) are rated below "P-1" by ▇▇▇▇▇'▇
or are rated "P-1" by ▇▇▇▇▇'▇ and such rating is on watch for possible
downgrade (but only for so long as it is on watch for possible
downgrade), (B) no short-term rating is available from ▇▇▇▇▇'▇ and the
unsecured, long-term senior debt obligations of Party A (or its Credit
Support Provider) are rated below "Aa3" by ▇▇▇▇▇'▇ or are rated "Aa3" by
▇▇▇▇▇'▇ and such rating is on watch for possible downgrade (but only for
so long as it is on watch for possible downgrade), or (C) or either (i)
the unsecured, short-term debt obligations of Party A (or its Credit
Support Provider) are rated below "A-1" by S&P or (ii) if Party A (or its
Credit Support Provider) does not have a short-term rating from S&P, the
unsecured, long-term senior debt obligations of Party A (or its Credit
Support Provider) are rated below "A+" by S&P (such event, a
"Collateralization Event"), then, Party A, at its own cost and subject to
the Rating Agency Condition, shall within 30 days either (i) cause
another entity to replace Party A as party to this Agreement that
satisfies the Swap Counterparty Ratings Requirement and that is approved
by the Trustee (which approval shall not be unreasonably withheld) on
terms substantially similar to this Agreement; (ii) obtain a guaranty of,
or a contingent agreement of another person that satisfies the Swap
Counterparty Ratings Requirement, to honor Party A's obligations under
this Agreement, provided that such other person is approved by the
Trustee such approval not to be unreasonably withheld; (iii) post
collateral in accordance with a Credit Support Annex which satisfies the
Rating Agency Condition; or (iv) establish any other arrangement
satisfactory to the applicable Swap Rating Agency which will be
sufficient to restore the immediately prior ratings of the Swap
Certificates (determined without regard to any financial guaranty
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insurance policy, if applicable). All collateral posted by Party A shall
be returned to Party A immediately upon Party A securing a substitute
counterparty that satisfies the Swap Counterparty Ratings Requirement.
"Swap Counterparty Ratings Requirement" shall mean (a) either (i) the
unsecured, short-term debt obligations of the substitute counterparty (or
its Credit Support Provider) are rated at least "A-1" by S&P or (ii) if
the substitute counterparty does not have a short-term rating from S&P,
the unsecured, long-term senior debt obligations of the substitute
counterparty (or its Credit Support Provider) are rated at least "A+" by
S&P, and (b) either (i) the unsecured, long-term senior debt obligations
of such substitute counterparty (or its Credit Support Provider) are
rated at least "A1" by ▇▇▇▇▇'▇ (and if rated "A1" by ▇▇▇▇▇'▇, such rating
is not on watch for possible downgrade) and the unsecured, short-term
debt obligations of such substitute counterparty (or its Credit Support
Provider) are rated at least "P-1" by ▇▇▇▇▇'▇ (and if rated "P-1" by
▇▇▇▇▇'▇, such rating is not on watch for possible downgrade and remaining
on watch for possible downgrade), or (ii) if such substitute counterparty
(or its Credit Support Provider) does not have a short-term debt rating
from ▇▇▇▇▇'▇, the unsecured, long-term senior debt obligations of such
substitute counterparty (or its Credit Support Provider) are rated at
least "Aa3" by ▇▇▇▇▇'▇ (and if rated "Aa3" by ▇▇▇▇▇'▇, such rating is not
on watch for possible downgrade).
(B) Ratings Event. Upon the occurrence of a Ratings Event (as defined
below) Party A has not, within 10 days after such rating withdrawal or
downgrade (unless, within 10 days after such withdrawal or downgrade,
each such Swap Rating Agency has reconfirmed the rating of the Swap
Certificates which was in effect immediately prior to such withdrawal or
downgrade (determined without regard to any financial guaranty insurance
policy, if applicable), unless the rating of the Swap Certificates were
changed due to a circumstance other than the withdrawal or downgrading of
Party A's (or its Credit Support Provider's) rating), complied with one
of the solutions listed below, 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.
It shall be a ratings event ("Ratings Event") if at any time after the
date hereof Party A shall fail to satisfy the Swap Counterparty Ratings
Threshold. Swap Counterparty Ratings Threshold shall mean (A) the
unsecured, long-term senior debt obligations of Party A (or its Credit
Support Provider) are rated at least "BBB-" by S&P, and (B) either (i)
the unsecured, long-term senior debt obligations of Party A (or its
Credit Support Provider) are rated at least "A2" by ▇▇▇▇▇'▇ (including if
such rating is on watch for possible downgrade) and the unsecured,
short-term debt obligations of Party A (or its Credit Support Provider)
are rated at least "P-1" by ▇▇▇▇▇'▇ (including if such rating is on watch
for possible downgrade) or (ii) if Party A (or its Credit Support
Provider) does not have a short-term rating from ▇▇▇▇▇'▇, the unsecured,
long-term senior debt obligations of Party A (or its Credit Support
Provider) are rated at least "A1" by ▇▇▇▇▇'▇ (including if such rating is
on watch for possible downgrade).
Following a Ratings Event, Party A shall take the following actions at
its own expense and subject to the Rating Agency Condition, (A)
immediately post collateral in accordance with a Credit Support Annex
(until such time as it has secured a substitute counterparty or a
guarantor that satisfies the Swap Counterparty Ratings Requirement), and
(B) not later than 10 days after the occurrence of such a downgrade or
withdrawal by S&P or ▇▇▇▇▇'▇, either (I) assign all of its rights and
obligations under the Transactions to a counterparty that satisfies the
Swap Counterparty Ratings Requirement or whose guarantor satisfies the
Swap Counterparty Ratings Requirement pursuant to documentation
substantially similar to the documentation then in place and subject to
prior notification to the Rating Agencies, or (II) provide a guaranty
from a guarantor that satisfies the Swap Counterparty Ratings Requirement
pursuant to documentation substantially similar to the documentation then
in place and subject to prior notification to the Rating Agencies.
The occurrence of the Additional Termination Event described in Part
1(h)(A) and (B) shall have no effect on Party A's obligation to undertake
the steps set forth hereunder in the event Party B does not exercise its
right to terminate hereunder. Notwithstanding the foregoing, in the event
that S&P has other published criteria with respect to the downgrade of a
counterparty in effect at the time of such a downgrade of Party A, Party
A shall be entitled to elect to take such other measures specified in
such published criteria subject to the satisfaction of the Rating Agency
Condition.
(C) Supplemental Pooling and Servicing Agreement without Party A's Prior
Written Consent. Party B enters into an amendment and or supplement to
the Pooling and Servicing Agreement or other modification to
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the Pooling and Servicing Agreement that could reasonably be expected to
have a material adverse effect on Party A without the prior written
consent of Party A. For the purpose of the foregoing Termination Event,
Party B shall be the sole Affected Party.
Part 2: Tax Representations
(a) Payer Tax Representations. For the purpose of Section 3(e) of this
Agreement, Party A and Party B will each make the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from
any payment (other than interest under Sections 2(e), 6(d)(ii) or 6(e) of
this Agreement) to be made by it to the other party under this Agreement.
In making this representation, it may rely on (i) the accuracy of any
representation made by the other party pursuant to Section 3(f) of this
Agreement, (ii) the satisfaction(s) of the agreement of the other party
contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the
accuracy and effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement; and (iii) the
satisfaction of the agreement of the other party contained in Section
4(d) of this Agreement, provided that it shall not be a breach of this
representation where reliance is placed on clause (ii) and the other
party does not deliver a form or document under Section 4(a)(iii) of this
Agreement by reason of material prejudice to its legal or commercial
position.
(b) Payee Tax Representations.
For the purpose of Section 3(f) of this Agreement, Party A represents
that it is a corporation duly organized and validly existing under the
laws of the State of Delaware and Party B represents that it is a "United
States person" as such term is defined in Section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended.
Part 3: Agreement to Deliver Documents
(a) Tax forms, documents or certificates to be delivered are:
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Party required to deliver document Form/Document/Certificate Date by which to be delivered
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Party A and Party B Any document required or reasonably Promptly after the earlier of (i)
requested to allow the other party reasonable demand by either party or
to make payments under this (ii) within 30 days of the execution.
Agreement without any deduction or
withholding for or on the account of
any Tax or with such deduction or
withholding at a reduced rate.
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(b) Other Documents to be delivered are:
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Party required to deliver Form/Document/Certificate Date by which to be Covered by Section 3(d)
document delivered representation
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Party A and Party B Any documents required or reasonably Upon execution. Yes
requested by the receiving party to
evidence authority of the delivering
party
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or its Credit Support Provider, if
any, to execute and deliver this
Agreement, any Confirmation, and any
Credit Support Documents to which it
is a party, and to evidence the
authority of the delivering party
to its Credit Support Provider to
perform its obligations under this
Agreement, such Confirmation and/or
Credit Support Document, as the case
may be.
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Party A and Party B A certificate of an authorized officer Upon execution Yes
of the party, as to the incumbency and
authority of the respective officers of
the party signing this agreement, any
relevant Credit Support Document, or
any Confirmation, as the case may be.
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Party A The Guaranty of Swiss Reinsurance Upon execution No
Company, dated on or about the date
of this Agreement in the form annexed
hereto as Exhibit A.
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Party A and Party B An opinion of counsel to such party Upon execution No
reasonably satisfactory in form and
substance to the other party.
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Party B Executed copy of the Swap Upon execution Yes
Contract Administration
Agreement
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Party B Executed copy of the Pooling and Upon execution Yes
Servicing Agreement
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Part 4: Miscellaneous
(a) Addresses for Notices. For the purposes of Section 12(a) of this
Agreement:
Party A:
(1) Address for notices or communications to Party A (other than by
facsimile):-
Address: ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Attention: (1) Head of Operations;
New York, New York (2) Legal Department
10055
(2) For the purpose of facsimile notices or communications under this
Agreement (other than a notice or communication under Section 5 or 6):-
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Operations
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with a copy to:
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Legal Department
Telephone number for oral confirmation of receipt of facsimile in
legible form: (▇▇▇) ▇▇▇-▇▇▇▇
Party B:
Address for notices or communications to Party B:-
Address: The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration MBS Administration,
CWABS, Series 2006-18
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(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,
if an Event of Default occurs with respect to Party A, then the
Calculation Agent shall be Party B or Party B shall be entitled to
appoint a financial institution which would qualify, as a Reference
Market-maker to act as Calculation Agent.
(f) Credit Support Document. Credit Support Document means
With respect to Party A: The Guaranty of Swiss Reinsurance Company,
dated on or about the date of this Agreement in the form annexed hereto
as Exhibit A.
With respect to Party B: The Pooling and Servicing Agreement.
(g) Credit Support Provider.
Credit Support Provider means in relation to Party A: Swiss Reinsurance
Company.
Credit Support Provider means in relation to Party B: Not Applicable.
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without reference to
choice of law doctrine other than Sections 5-1401 and 5-1402 of the New
York General Obligations Law).
(i) Netting of Payments. Subparagraph (ii) of Section 2(c) of this Agreement
will apply to all Transactions (in each case starting from the date of
this Agreement).
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(j) "Affiliate" will have the meaning specified in Section 14 of this
Agreement, provided that Party B shall be deemed to have no Affiliates.
(k) Jurisdiction. Section 13(b) is hereby amended by: (i) deleting in the
second line of subparagraph (i) thereof the word "non-": and (ii)
deleting the final paragraph thereof.
(l) Waiver of Jury Trial. Each party waives, to the fullest extent permitted
by applicable law, any right it may have to a trial by jury in respect
of any suit, action or proceeding relating to this Agreement or any
Credit Support Document. Each party certifies (i) that no
representative, agent or attorney of the other party or any Credit
Support Provider has represented, expressly or otherwise, that such
other party would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other party have been induced to enter into this
Agreement and provide for any Credit Support Document, as applicable,
by, among other things, the mutual waivers and certifications in this
Section.
(m) 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 illegal, invalid or unenforceable (in whole or in
part) for any reason, the remaining terms, provisions, covenants and
conditions hereof shall continue in full force and effect as if this
Agreement had been executed with the illegal, 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 to this Agreement.
Part 5: Other Provisions
(a) Section 3(a) of this Agreement is hereby amended to include the following
additional representations after paragraph 3(a)(v):
(vi) Eligible Contract Participant. It is an "eligible contract
participant" as defined in the U.S. Commodity Exchange Act.
(vii) Individual Negotiation. This Agreement and each Transaction
hereunder is subject to individual negotiation by the parties.
(viii) Relationship between Party A and Party B. Each of Party A and
Party B will be deemed to represent to the other on the date on which it
enters into a Transaction or an amendment thereof that (absent a written
agreement between Party A and Party B that expressly imposes affirmative
obligations to the contrary for that Transaction):
(1) Principal. It is acting as principal and not as agent when
entering into this Agreement and each Transaction.
(2) Non-Reliance. It is acting for its own account and it has made
its own independent decisions to enter into that Transaction and as
to whether that Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisors as it has
deemed necessary. It is not relying on any communication (written
or oral) of the other party as investment advice or as a
recommendation to enter into that Transaction; it being understood
that information and explanations related to the terms and
conditions of a Transaction shall not be considered investment
advice or a recommendation to enter into that Transaction. No
communication (written or oral) received from the other party shall
be deemed to be an assurance or guarantee as to the expected
results of that Transaction.
(3) Evaluation and Understanding. It is capable of evaluating and
understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms,
conditions and risks of this Agreement and each Transaction
hereunder. It is also capable of assuming, and assumes, all
financial and other risks of this Agreement and each Transaction
hereunder.
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(4) Status of Parties. The other party is not acting as a fiduciary
or an advisor for it in respect of that Transaction.
(b) Additional Representations and Warranties of Party B. Party B represents
to Party A in accordance with Section 3 of the Agreement (which
representations will be deemed to be repeated by Party B at all times until
the termination of this Agreement) that all representations and warranties in
the Swap Contract Administration Agreement are incorporated hereby as if made
under this Agreement and all references to the Swap Contract Administration
Agreement are references to this Agreement.
(c) Third-Party Beneficiary. Party B agrees with Party A that Party A shall be
an express third-party beneficiary of the Pooling and Servicing Agreement and
the Swap Contract Administration Agreement.
(d) No Set-off. Notwithstanding any provision of this Agreement or any other
existing or future agreements, each of Party A and Party B irrevocably waives
as to itself any and all contractual rights it may have to set off, net,
recoup or otherwise withhold or suspend or condition its payment or
performance of any obligation to the other party under this Agreement against
any obligation of one party hereto to the other party hereto arising outside
of this Agreement (which Agreement includes without limitation, the Master
Agreement to which this Schedule is attached, this Schedule and the
Confirmation). Accordingly, the provisions for set-off in Section 6(e) of this
Agreement shall not apply for purposes of this Transaction.
(e) Transfer. Section 7 is hereby amended to read in its entirety as follows:
Except as stated under Section 6(b)(ii), in this Section 7, and Part 5(e)
of the Schedule, 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 this Agreement
or any Transaction without the prior written consent of the other party;
provided, however, that (i) Party A may make such a transfer of this
Agreement pursuant to a consolidation or amalgamation with, or merger with
or into, or transfer of substantially all of its assets to, another
entity, or an incorporation, reincorporation or reconstitution, and (ii)
Party A may transfer this Agreement to any Person, including, without
limitation, another of Party A's offices, branches or affiliates (any such
Person, office, branch or affiliate, a "Transferee") on at least five
Business Days' prior written notice to Party B; provided that, with
respect to clause (ii), (A) as of the date of such transfer the Transferee
will not be required to withhold or deduct on account of a Tax from any
payments under this Agreement unless the Transferee will be required to
make payments of additional amounts pursuant to Section 2(d)(i)(4) of this
Agreement in respect of such Tax (B) a Termination Event or Event of
Default does not occur under this Agreement as a result of such transfer;
(C) such notice is accompanied by a written instrument pursuant to which
the Transferee acquires and assumes the rights and obligations of Party A
so transferred; and (D) Party A will be responsible for any costs or
expenses incurred in connection with such transfer. Party B will execute
such documentation as is reasonably deemed necessary by Party A for the
effectuation of any such transfer. Notwithstanding the foregoing, no such
transfer or assignment shall be made unless it satisfies the Rating Agency
Condition.
(f) Notices. For the purposes of subsections (iii) and (v) of Section 12(a),
the date of receipt shall be presumed to be the date sent if sent on a Local
Business Day or, if not sent on a Local Business Day, the date of receipt
shall be presumed to be the first Local Business Day following the date sent.
(g) Amendments. Section 9(b) is hereby amended by adding at the end thereof
the sentence: "In addition, any amendment or modification of this Agreement
shall be subject to the Rating Agency Condition."
(h) Amendments to Operative Documents. Party B agrees that it will obtain
Party A's written consent (which consent shall not be unreasonably withheld)
prior to amending or supplementing the Pooling and Servicing Agreement (or any
other transaction document), if such amendment and/or supplement would: (a)
materially adversely affect any of Party A's rights or obligations hereunder;
or (b) modify the obligations of, or impact the ability of, Party B to fully
perform any of Party B's obligations hereunder.
(i) No Bankruptcy Petition. Party A agrees that it will not, until a period of
one year and one day or, if longer the applicable preference period, after the
payment in full of all of the Swap Certificates, acquiesce, petition, invoke
or otherwise cause Party B to invoke the process of any governmental authority
for the purpose of commencing or
8
sustaining a case (whether voluntary or involuntary) against Party B under any
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of Party
B or any substantial part of its property or ordering the winding-up or
liquidation of the affairs of Party B; provided, that this provision shall not
restrict or prohibit Party A from joining any other person, including, without
limitation, the Trustee, in any bankruptcy, reorganization, arrangement,
insolvency, moratorium or liquidation proceedings already commenced or other
analogous proceedings already commenced under applicable law.
(j) Deduction or Withholding for Tax. The provisions of Section 2(d)(i)(4) and
2(d)(ii) will not apply to Party B and Party B shall not be required to pay
any additional amounts referred to therein.
(k) Additional Definitions. Section 14 is hereby amended by adding the
following definitions in their appropriate alphabetical order:
"Moody's" means ▇▇▇▇▇'▇ Investor Services, Inc.
"Rating Agency Condition" means, with respect to any particular proposed
act or omission to act hereunder, that the party acting or failing to act
has consulted with each Rating Agency then providing a rating of any Swap
Certificates and has received from each Rating Agency a written
confirmation that the proposed action or inaction would not cause such
Rating Agency to downgrade or withdraw its then-current rating of any Swap
Certificates (determined without regard to any financial guaranty
insurance policy, if applicable).
"S&P" means Standard & Poor's Ratings Services, a division of ▇▇▇▇▇▇-▇▇▇▇,
Inc.
"Swap Rating Agency" means Moody's and S&P.
"USD" means United States Dollars.
(l) Limited Liability. Party A and Party B agree to the following: (a) The
Bank of New York ("BNY") is entering into this Agreement not in its individual
or corporate capacity, but solely in its capacity as Swap Contract
Administrator under the Swap Contract Administration Agreement; (b) in no case
shall BNY (or any person acting as successor Swap Contract Administrator under
the Swap Contract Administration Agreement) be personally liable for or on
account of any of the statements, representations, warranties, covenants or
obligations stated to be those of Party B under the terms of this Agreement,
all such liability, if any, being expressly waived by Party A and any person
claiming by, through or under Party A; and (c) recourse against Party B shall
be limited to the assets available under the Swap Contract Administration
Agreement or the Pooling and Servicing Agreement.
(m) Regulation AB Compliance. Party A and Party B agree that the terms of the
Item 1115 Agreement dated as of January 26, 2006 (the "Regulation AB
Agreement"), between Countrywide Home Loans, Inc., CWABS, INC., CWMBS, Inc.,
CWALT, Inc., CWHEQ, Inc. and Swiss Re Financial Products Corporation shall be
incorporated by reference into this Agreement so that Party B shall be an
express third party beneficiary of the Regulation AB Agreement. A copy of the
Regulation AB Agreement is attached hereto as Exhibit B.
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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.
THE BANK OF NEW YORK, not in its
individual or corporate capacity but
solely as Swap Contract Administrator
SWISS RE FINANCIAL PRODUCTS for CWABS, Inc. Asset-Backed
CORPORATION Certificates Series 2006-18, pursuant
to a Swap Contract Administration
Agreement
("Party A") ("Party B")
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------ -------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President Title: Assistant Vice President
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EXHIBIT A
The Guaranty of Swiss Reinsurance Company
[Filed as Ex. 99.6 herein.]
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EXHIBIT B
Item 1115 Agreement
12
Item 1115 Agreement dated as of January 26, 2006 (this "Agreement"),
between COUNTRYWIDE HOME LOANS, INC., a New York corporation ("CHL"), CWABS,
INC., a Delaware corporation ("CWABS"), CWMBS, Inc., a Delaware corporation
("CWMBS"), CWALT, Inc., a Delaware corporation ("CWALT"), CWHEQ, Inc., a
Delaware corporation ("CWHEQ") and SWISS RE FINANCIAL PRODUCTS CORPORATION, as
counterparty (the "Counterparty").
RECITALS
WHEREAS, CWABS, CWMBS, CWALT and CWHEQ each have filed Registration
Statements on Form S-3 (each, a "Registration Statement") with the Securities
and Exchange Commission (the "Commission") for purposes of offering mortgage
backed or asset-backed notes and/or certificates (the "Securities") through
special purpose vehicles (each, an "SPV").
WHEREAS, from time to time, on the closing date (the "Closing Date")
of a transaction pursuant to which Securities are offered (each, a
"Transaction"), the Counterparty and CHL or an underwriter or dealer with
respect to the Transaction, enter into certain derivative agreements (each, a
"Derivative Agreement"), including interest rate or currency swaps, for
purposes of providing certain yield enhancements that are assigned to the SPV
or the related trustee on behalf of the SPV or a swap or corridor contract
administrator (each, an "Administrator").
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereby agree as follows:
Section 1. Definitions
Company Information: As defined in Section 4(a)(i).
Company Financial Information: As defined in Section 2(a)(ii).
Depositor: Means CWABS, CWMBS, CWALT or CWHEQ with respect to the
related Registration Statement for which the entity of the registrant.
GAAP: As defined in Section 3(a)(v).
▇▇▇▇▇: The Commission's Electronic Data Gathering, Analysis and
Retrieval system.
Exchange Act: The Securities Exchange Act of 1934, as amended and
the rules and regulations promulgated thereunder.
Exchange Act Reports: All Distribution Reports on Form 10-D, Current
Reports on Form 8-K and Annual Reports on Form 10-K that are to be filed with
respect to the related SPV pursuant to the Exchange Act.
Master Agreement: The ISDA Master Agreement between the Counterparty
and CHL, or if no such Master Agreement exists, the ISDA Master Agreement
assumed to apply to the Derivative Agreement pursuant to its terms.
Prospectus Supplement: The prospectus supplement prepared in
connection with the public offering and sale of the related Securities.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended
from time to time, and subject to such clarification and interpretation as
have been provided by the Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by
the Commission or its staff from time to time.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Section 2. Information to be Provided by the Counterparty.
(a) Prior to printing the related Prospectus Supplement,
(i) the Counterparty shall provide to the related Depositor such
information regarding the Counterparty, as a derivative
instrument counterparty, as is reasonably requested by the
related Depositor for the purpose of compliance with Item
1115(a)(1) of Regulation AB. Such information shall include, at
a minimum:
(A) The Counterparty's legal name (and any d/b/a);
(B) the organizational form of the Counterparty;
(C) a description of the general character of the business of
the Counterparty;
(D) a description of any material legal or governmental
proceedings pending (or known to be contemplated) against
the Counterparty which may have a material impact on the
Counterparty's ability to perform under the related
Derivative Agreement;
(E) a description of any affiliation or relationship between
the Counterparty and any of the following parties:
(1) CHL (or any other sponsor identified to the
Counterparty by CHL);
(2) the related Depositor (as identified to the
Counterparty by CHL);
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(3) the SPV;
(4) Countrywide Home Loans Servicing LP (or any other
servicer or master servicer identified to the
Counterparty by CHL);
(5) The Bank of New York (or any other trustee identified
to the Counterparty by CHL);
(6) any originator identified to the Counterparty by CHL;
(7) any enhancement or support provider identified to the
Counterparty by CHL; and
(8) any other material transaction party identified to
the Counterparty by CHL.
(ii) if requested by the related Depositor for the purpose of
compliance with Item 1115(b) with respect to a Transaction, the
Counterparty shall:
(A) provide the financial data required by Item 1115(b)(1) or
(b)(2) of Regulation AB (as specified by the related
Depositor to the Counterparty) with respect to the
Counterparty (or any entity that consolidates the
Counterparty) and any affiliated entities providing
derivative instruments to the SPV (the "Company Financial
Information"), in a form appropriate for use in the
Prospectus Supplement and in an ▇▇▇▇▇-compatible form; and
(B) if applicable, cause its accountants to issue their
consent to the filing of such financial statements in the
Registration Statement.
(b) Following the Closing Date with respect to a Transaction,
(i) (I) no later than the 25th calendar day of each month, the
Counterparty shall (i) notify the related Depositor in writing
of (A) any material litigation or governmental proceedings
pending against the Counterparty which may have a material
impact on the Counterparty's ability to perform, under the
related Derivative Agreement or (B) any affiliations or
relationships that develop following the Closing Date between
the Counterparty and any of the parties specified in Section
2(a) (i) (E) (and any other parties identified in writing by
the related Depositor) and (ii) provide to the related
Depositor a description of such proceedings, affiliations or
relationships as described in Section 2(b)(i)(I)(i); and
(ii) if the Counterparty provided Company Financial Information to
the related Depositor for the Prospectus Supplement, within 5
Business Days of the release of any updated financial data, the
Counterparty shall (1) provide current Company Financial
Information as required under Item
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1115(b) of Regulation AB to the related Depositor in an
▇▇▇▇▇-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 ▇▇▇▇▇-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 ▇▇▇▇▇-compatible form and if applicable, cause
its accountants to issue their consent to filing or
incorporation by reference of such financial statements in the
Exchange Act Reports of the SPV or (B) assign the Derivative
Agreement as provided below.
(c) Prior to printing of any Prospectus Supplement, CHL and Depositor
will inform the Counterparty of the scope and extent of the
information that they need to receive from the Counterparty for use
in the related Prospectus Supplement for the purpose of compliance
with Item 1115 of Regulation AB (the "Scope of Information"). CHL
and the Depositor acknowledge that the Counterparty need not
undertake any review of the related Prospectus Supplement (other
than with respect to the Company Information and/or the Company
Financial Information) in connection with its provision of the
Company Information and/or the Company Financial Information.
Section 3. Representations and Warranties and Covenants of the Counterparty.
(a) The Counterparty represents and warrants to the related Depositor,
as of the date on which information is first provided to the related
Depositor under Section 2(a) (ii), Section 2(b) (ii) or Section 2(b)
(iii) (A), that, except as disclosed in writing the related
Depositor prior to such date:
(i) The accountants who certify the financial statements and
supporting schedules included in the Company Financial
Information (if applicable) are independent registered public
accountants as required by the Securities Act.
(ii) If applicable, the financial statements included in the Company
Financial Information present fairly the consolidated financial
position of the Counterparty (or the entity that consolidates
the Counterparty) and its consolidated subsidiaries as at the
dates indicated and the consolidated
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results of their operations and cash flows for the periods
specified; except as otherwise stated in the Company Financial
Information, said financial statements have been prepared in
conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis; and the supporting
schedules included in the Company Financial Information present
fairly in accordance with GAAP the information required to be
stated therein. The selected financial data and summary
financial information included in the Company Financial
Information present fairly the information shown therein and
have been compiled on a basis consistent with that of the
audited financial statements of the Counterparty.
(iii) The Company Financial Information and other Company
Information included or incorporated by reference in the
Registration Statement (including through filing on an Exchange
Act Report), at the time they were or hereafter are filed with
the Commission, complied in all material respects with the
requirements of Item 1115(b) of Regulation AB (in the case of
the Company Financial Information) and, did not and will not
contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The Counterparty agrees that the terms of this Agreement shall be
incorporated by reference into any Derivative Agreement so that each
SPV who is a beneficiary of a Derivative Agreement shall be an
express third party beneficiary of this Agreement.
Section 4. Indemnification; Remedies
(a) The Counterparty shall indemnify CHL and the related Depositor, each
person responsible for the preparation, execution or filing of any
report required to be filed with the Commission with respect to such
SPV, or for execution of a certification pursuant to Rule 13a-14(d)
or Rule 15d-14(d) under the Exchange Act; each person who controls
any of such parties (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act); and the
respective present and former directors, officers, employees and
agents of each of the foregoing, and shall hold each of them
harmless from and against any losses, damages, penalties, fines,
forfeitures, legal fees and expenses and related costs, judgments,
and any other costs, fees and expenses that any of them may sustain
arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in any information, report,
certification, accountants' consent or other material provided
in written or electronic form under Section 2 by or on behalf
of the Counterparty (collectively, the "Company Information"),
or (B) the omission or alleged omission to state in the Company
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.
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: Vice President
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SWISS RE FINANCIAL PRODUCTS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
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