EXHIBIT 99.3
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The Item 1115 Agreement
Item 1115 Agreement dated as of February 16, 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 BARCLAYS BANK PLC, as counterparty (the
"Counterparty").
RECITALS
WHEREAS, CWABS, CWMBS, CWALT and CWHEQ each have filed Registration
Statements on Form S-3 (each, a "Registration Statement") with the Securities
and Exchange Commission (the "Commission") for purposes of offering mortgage
backed or asset-backed notes and/or certificates (the "Securities") through
special purpose vehicles (each, an "SPV").
WHEREAS, from time to time, on the closing date (the "Closing Date")
of a transaction pursuant to which Securities are offered (each, a
"Transaction"), the Counterparty and CHL or an underwriter or dealer with
respect to the Transaction, enter into certain derivative agreements (each, a
"Derivative Agreement"), including interest rate caps and interest rate or
currency swaps, for purposes of providing certain yield enhancements that are
assigned to the SPV or the related trustee on behalf of the SPV or a swap or
corridor contract administrator (each, an "Administrator").
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereby agree as follows:
Section 1. Definitions
Company Information: As defined in Section 4(a)(i).
Company Financial Information: As defined in Section 2(a)(ii).
Countrywide Indemnified Party: As defined in Section 4(a).
Counterparty Indemnified Party: As defined in Section 4(b).
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.
Indemnified Party: As defined in Section 4(b).
Master Agreement: The ISDA Master Agreement between the Counterparty
and CHL, or if no such Master Agreement exists, the ISDA Master Agreement
assumed to apply to the Derivative Agreement pursuant to its terms.
Prospectus Supplement: The prospectus supplement prepared in
connection with the public offering and sale of the related Securities.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have been
provided by the Commission in the adopting release (Asset-Backed Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or
by the staff of the Commission, or as may be provided by the Commission or its
staff from time to time.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Section 2. Information to Be Provided by the Counterparty.
(a) Prior to printing the related Prospectus Supplement,
(i) the Counterparty shall provide to the related Depositor such
information regarding the Counterparty, as a derivative
instrument counterparty, as is reasonably requested by the
related Depositor for the purpose of compliance with Item
1115(a)(1) of Regulation AB. Such information shall include,
at a minimum:
(A) The Counterparty's legal name (and any d/b/a);
(B) the organizational form of the Counterparty;
(C) a description of the general character of the business
of the Counterparty;
(D) a description of any affiliation or relationship between
the Counterparty and any of the following parties:
(1) CHL (or any other sponsor identified to the
Counterparty by CHL);
(2) the related Depositor (as identified to the
Counterparty by CHL);
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(3) the SPV;
(4) Countrywide Home Loans Servicing LP (or any other
servicer or master servicer identified to the
Counterparty by CHL);
(5) The Bank of New York (or any other trustee
identified to the Counterparty by CHL);
(6) any originator identified to the Counterparty by
CHL;
(7) any enhancement or support provider identified to
the Counterparty by CHL; and
(8) any other material transaction party identified to
the Counterparty by CHL.
(ii) if requested by the related Depositor for the purpose of
compliance with Item 1115(b) with respect to a Transaction,
the Counterparty shall:
(A) provide the financial data required by Item 1115(b)(1)
or (b)(2) of Regulation AB (as specified by the related
Depositor to the Counterparty) with respect to the
Counterparty (or any entity that consolidates the
Counterparty) and any affiliated entities providing
derivative instruments to the SPV (the "Company
Financial Information"), in a form appropriate for use
in the Prospectus Supplement and in an XXXXX-compatible
form (if not incorporated by reference) and hereby
authorizes the related Depositor to incorporate by
reference the financial data required by Item 1115(b)(2)
of Regulation AB; and
(B) if applicable, cause its accountants to issue their
consent to the filing or the incorporation by reference
of such financial statements in the Registration
Statement.
(b) Following the Closing Date with respect to a Transaction,
(i) no later than the 25th calendar day of each month, the
Counterparty shall (1) notify the related Depositor in
writing of any affiliations or relationships that
develop following the Closing Date between the
Counterparty and any of the parties specified in Section
2(a)(i)(E) (and any other parties identified in writing
by the related Depositor) and (2) provide to the related
Depositor a description of such proceedings,
affiliations or relationships as described in Section
2(b)(i)(1);
(ii) if the Counterparty provided Company Financial
Information to the related Depositor for the Prospectus
Supplement, within 5 Business Days of the release of any
updated financial data, the Counterparty shall (1)
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provide current Company Financial Information as
required under Item 1115(b) of Regulation AB to the
related Depositor in an XXXXX-compatible form (if not
incorporated by reference) and hereby authorizes the
related Depositor to incorporate by reference the
financial data required by Item 1115(b)(2) of Regulation
AB, and (2) if applicable, cause its accountants to
issue their consent to filing or incorporation by
reference of such financial statements in the Exchange
Act Reports of the SPV; and
(iii) if the related Depositor requests Company Financial
Information from the Counterparty, for the purpose of
compliance with Item 1115(b) of Regulation AB following
the Closing Date, the Counterparty shall upon five
Business Days written notice either (A), (1) provide
current Company Financial Information as required under
Item 1115(b) of Regulation AB to the related Depositor
in an XXXXX-compatible form (if not incorporated by
reference) and hereby authorizes the related Depositor
to incorporate by reference the financial data required
by Item 1115(b)(2) of Regulation AB, (2) if applicable,
cause its accountants to issue their consent to filing
or incorporation by reference of such financial
statements in the Exchange Act Reports of the SPV and
(3) within 5 Business Days of the release of any updated
financial data, provide current Company Financial
Information as required under Item 1115(b) of Regulation
AB to the related Depositor in an XXXXX-compatible form
and if applicable, cause its accountants to issue their
consent to filing or incorporation by reference of such
financial statements in the Exchange Act Reports of the
SPV or (B) assign the Derivative Agreement as provided
below.
Section 3. Representations and Warranties and Covenants of the Counterparty.
(a) The Counterparty represents and warrants to the related Depositor,
as of the date on which information is first provided to the related
Depositor under Section 2(a)(ii), Section 2(b)(ii) or Section
2(b)(iii)(A), that, except as disclosed in writing the related
Depositor prior to such date:
(i) The Counterparty or the entity that consolidates the
Counterparty is required to file reports with the Commission
pursuant to section 13(a) or 15(d) of the Exchange Act.
(ii) The Counterparty or the entity that consolidates the
Counterparty has filed all reports and other materials
required to be filed by such requirements during the preceding
12 months (or such shorter period that such party was required
to file such reports and materials).
(iii) The reports filed by the Counterparty, or entity that
consolidates the Counterparty, include (or properly
incorporate by reference) the financial statements of the
Counterparty.
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(iv) The accountants who certify the financial statements and
supporting schedules included in the Company Financial
Information (if applicable) are independent registered public
accountants as required by the Securities Act.
(v) If applicable, the financial statements included in the
Company Financial Information present fairly the consolidated
financial position of the Counterparty (or the entity that
consolidates the Counterparty) and its consolidated
subsidiaries as at the dates indicated and the consolidated
results of their operations and cash flows for the periods
specified; except as otherwise stated in the Company Financial
Information, said financial statements have been prepared in
conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis; and the supporting
schedules included in the Company Financial Information
present fairly in accordance with GAAP the information
required to be stated therein. The selected financial data and
summary financial information included in the Company
Financial Information present fairly the information shown
therein and have been compiled on a basis consistent with that
of the audited financial statements of the Counterparty.
(vi) The Company Financial Information and other Company
Information included or incorporated by reference in the
Registration Statement (including through filing on an
Exchange Act Report), at the time they were or hereafter are
filed with the Commission, complied in all material respects
with the requirements of Item 1115(b) of Regulation AB (in the
case of the Company Financial Information) and, did not and
will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(b) If the Counterparty has provided Company Financial Information that
is incorporated by reference into the Registration Statement of the
related Depositor, the Counterparty, so long as the related
Depositor is required to file Exchange Act Reports with respect to
the SPV, will file promptly all documents required to be filed with
the Commission pursuant to Section 13 or 14 of the 1934 Act.
(c) If at any time the representations and warranties set forth in
3(a)(i) through (iii) are no longer true and correct, the
Counterparty shall provide notice to the related Depositor, and if
any Company Financial Information is required to be included in the
Registration Statement, or the Exchange Act Reports of the SPV, will
provide to the related Depositor such Company Financial Information
in XXXXX-compatible format no later than the 25th calendar day of
the month in which any of the representations or warranties in
Section 3(a)(i) through (iii) ceased to be correct.
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(d) The Counterparty agrees that the terms of this Agreement shall be
incorporated by reference into any Derivative Agreement so that each
SPV who is a beneficiary of a Derivative Agreement shall be an
express third party beneficiary of this Agreement.
Section 4. Indemnification; Remedies
(a) The Counterparty shall indemnify CHL and the related Depositor, each
person responsible for execution of a certification pursuant to Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act; each broker
dealer acting as underwriter, each person who controls any of such
parties (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act); and the respective present and
former directors, officers, employees and agents of each of the
foregoing (each, a "Countrywide Indemnified Party"), and shall hold
each of them harmless from and against any losses, damages,
penalties, fines, forfeitures, legal fees and expenses and related
costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in any information, report,
accountants' consent or other material provided in written or
electronic form under Section 2 by or on behalf of the
Counterparty (collectively, the "Company Information"), or (B)
the omission or alleged omission to state in the Company
Information a material fact required to be stated in the
Company Information or necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) any failure by the Counterparty to deliver any information,
certification, accountants' consent or other material or to
assign the Derivative Agreement when and as required under
Section 2; or
(iii) 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.
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) The Depositor shall indemnify the Counterparty, each of its
officers and directors and each person who controls the
Counterparty (within the meaning of Section 15
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of the Securities Act and Section 20 of the Exchange Act)
(each, a "Counterparty Indemnified Party"; and each of the
Countrywide Indemnified Party and the Counterparty Indemnified
Party shall be referred to as the "Indemnified Party"), 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 any untrue statement or alleged untrue statement
of any material fact contained in the Prospectus Supplement or
any free writing prospectus with respect to the related
Securities or the omission or alleged omission to state a
material fact necessary in order to make the statements
therein not misleading; provided, however, that the indemnity
set forth in this Section 4(b) shall not apply insofar as such
losses, claims, expenses, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material
fact contained in the Company Information or the omission or
alleged omission to state in the Company Information a
material fact necessary in order to make the statements
therein not misleading and/or (ii) a breach of the
representations set forth in Sections 3(a) above.
(c) Promptly after the Indemnified Party receives notice of the
commencement of any such action, the Indemnified Party will,
if a claim in respect thereof is to be made pursuant to this
Agreement, promptly notify the indemnifying party in writing
of the commencement thereof. In case any such action is
brought against the Indemnified Party, and it notifies the
indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's
expense to represent the Indemnified Party in any action for
which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the
Indemnified Party except as set forth below); provided,
however, that such counsel shall be reasonably satisfactory to
the Indemnified Party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the
Indemnified Party in an action, the Indemnified Party shall
have the right to employ separate counsel (including local
counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent
the Indemnified Party would present such counsel with a
conflict of interest, (ii) the actual or potential defendants
in, or targets of, any such action include both the
Indemnified Party and the indemnifying party, and the
Indemnified Party shall have reasonably concluded that there
may be legal defenses available to it that are different from
or additional to those available to the indemnifying party,
(iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party within a reasonable time after notice of
the institution of such action or (iv) the indemnifying party
shall authorize the Indemnified Party to employ separate
counsel at the expense of the indemnifying party. The
indemnifying party will not, without the prior written consent
of the Indemnified Party, settle or compromise or consent to
the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of
which
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indemnification or contribution may be sought hereunder
(whether or not the Indemnified Party is an actual or
potential party to such claim or action) unless such
settlement, compromise or consent includes an unconditional
release of each Indemnified Party from all liability arising
out of such claim, action, suit or proceeding. In addition,
for so long as the indemnifying party is covering all costs
and expenses of the Indemnified Party as provided herein, no
Indemnified Party will settle or compromise or consent to the
entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder
without the consent of the indemnifying party, which consent
shall not be unreasonably withheld.
(d) Nothing in this agreement shall be construed to allow the
Indemnified Party to recover punitive damages or consequential
damages from the indemnifying party.
(e) (i) Any failure by the Counterparty to deliver any
information, report, accountants' consent or other
material when and in any case only as required under
Section 2 or any breach by the Counterparty of a
representation or warranty set forth in Section 3 and
made as of a date prior to the Closing Date, to the
extent that such breach is not cured by the Closing Date
(or in the case of information needed for purposes of
printing the Prospectus Supplement, the date of printing
of the Prospectus Supplement), 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, 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, 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
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Depositors substantially in the form of this Agreement,
(ii) has agreed to deliver any information, report,
certification or accountants' consent when and as
required under Section 2 hereof and (iii) is approved by
the Depositor (which approval shall not be unreasonably
withheld) and any rating agency, if applicable, on terms
substantially similar to the Derivative Agreement, then
an Additional Termination Event (as defined in the
Master Agreement) shall have occurred with the
Counterparty as the sole Affected Party. Following such
termination, a termination payment (if any) shall be
payable by the applicable party as determined by the
application of Section 6(e)(ii) of the Master Agreement,
with Market Quotation and Second Method being the
applicable method for determining the termination
payment (notwithstanding anything in the Derivative
Agreement to the contrary).
(iii) In the event that the Counterparty or the SPV has found
a replacement entity in accordance with Section
2(b)(ii), the Counterparty shall promptly reimburse the
SPV for all reasonable incidental expenses incurred by
the SPV, as such are incurred, in connection with the
termination of the Counterparty as counterparty and the
entry into a new Derivative 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.
Section 5. Miscellaneous.
(a) Construction. Throughout this Agreement, as the context requires,
(a) the singular tense and number includes the plural, and the
plural tense and number includes the singular; (b) the past tense
includes the present, and the present tense includes the past; and
(c) references to parties, sections, schedules, and exhibits mean
the parties, sections, schedules, and exhibits of and to this
Agreement. The section headings in this Agreement are inserted only
as a matter of convenience, and in no way define, limit, extend, or
interpret the scope of this Agreement or of any particular section.
(b) Assignment. None of the parties may assign their rights under this
Agreement without the prior written consent of the other parties.
Subject to the foregoing, this Agreement shall be binding on and
inure to the benefit of the parties and their respective successors
and permitted assigns.
(c) No Third-Party Benefits Except as Specified. None of the provisions
of this Agreement are intended to benefit, or to be enforceable by,
any third-party beneficiaries except the related SPV and any trustee
of an SPV or any Administrator.
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(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without
regard to the conflict of laws principles thereof.
(e) Amendment and Waiver. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto. No
waiver of any provision of this Agreement or of any rights or
obligations of any party under this Agreement shall be effective
unless in writing and signed by the party or parties waiving
compliance, and shall be effective only in the specific instance and
for the specific purpose stated in that writing.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(g) Additional Documents. Each party hereto agrees to execute any and
all further documents and writings and to perform such other actions
which may be or become reasonably necessary or expedient to
effectuate and carry out this Agreement.
(h) Severability. Any provision hereof which is prohibited or
unenforceable shall be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof.
(i) Integration. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof. There are no
restrictions, agreements, promises, representations, warranties,
covenants or undertakings with respect to 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/ Xxxxxx Xxxxx
-----------------------------------
Name:
Title:
CWMBS, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name:
Title:
CWALT, INC.
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name:
Title:
CWHEQ, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name:
Title:
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BARCLAYS BANK PLC
By: /s/ Xxxxxxx Xxxx
---------------------------------
Name: Xxxxxxx Xxxx
Title: Managing Director
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