EXHIBIT 99.3
The Item 1115 Agreement
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:
-----------------------------------------
Name:
Title:
CWMBS, INC.
By:
-----------------------------------------
Name:
Title:
CWALT, INC.
By:
-----------------------------------------
Name:
Title:
CWHEQ, INC.
By:
-----------------------------------------
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.
By:
-----------------------------------------
Name:
Title:
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BANK OF AMERICA, N.A.
By:
-----------------------------------------
Name:
Title:
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