EXHIBIT 99.3
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The Item 1115 Agreement
Exhibit 99.3
Item 1115 Agreement dated as of March 27, 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 BANK OF AMERICA, N.A., 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 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.
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;
(ii) if requested by the related Depositor for the
purpose of compliance with Item 1115(b) with
respect to a Transaction prior to the related
Depositor taking the steps necessary to suspend its
obligation to file Exchange Act Reports, with
respect to the SPV, under Sections 13 and 15(d) of
the Exchange Act, in accordance with the
requirements of Regulation AB, the Counterparty
shall:
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(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 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 and until the related Depositor
takes the steps necessary to suspend its obligation to file
Exchange Act Reports, with respect to the SPV, under
Sections 13 and 15(d) of the Exchange Act with respect to a
Transaction,
(i) 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
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
(ii) 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.
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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:
(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.
(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
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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 Exchange Act.
If permitted by the Exchange Act, the related Depositor will
take the steps necessary to suspend its obligation to file
Exchange Act Reports, with respect to the SPV, under
Sections 13 and 15(d) of the Exchange 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 20th calendar day of the month in
which any of the representations or warranties in Section
3(a)(i) through (iii) ceased to be correct.
(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 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 (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
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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) CHL shall indemnify the Counterparty, each of its officers
and directors and each person who controls the Counterparty
(within the meaning of Section 15 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
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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 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), 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
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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), or
if the Counterparty has provided Company
Information 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, 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
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. In the
event that an Early Termination Date is designated
in connection with such Additional Termination
Event, a termination payment (if any) shall be
payable by the applicable party as of the Early
Termination Date 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 4(e)(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 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 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 rather than the Counterparty
and any affiliated entities providing derivatives to the
SPV, "Company Financial Information" shall be deemed to
refer to the financial
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information of such permitted entity provided the
Counterparty has received written confirmation from CHL that
such amendment or interpretive guidance can be relied upon.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
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(j) 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/ Xxxxxxx Xxxxxxxxxxxx
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Name: Xxxxxxx Xxxxxxxxxxxx
Title: Vice President
CWMBS, INC.
By: /s/ Xxxxxxx Xxxxxxxxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxxxxxxxx
Title: Vice President
CWALT, INC.
By: /s/ Xxxxxxx Xxxxxxxxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxxxxxxxx
Title: Vice President
CWHEQ, INC.
By: /s/ Xxxxxxx Xxxxxxxxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxxxxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxxx Xxxxxxxxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxxxxxxxx
Title: Managing Director
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BANK OF AMERICA, N.A.
By: /s/ Xxxxx X Xxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
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