CWABS 1996-__
INDEMNIFICATION
AND
CONTRIBUTION AGREEMENT
AGREEMENT, dated [________], 199__ (this "Agreement"), among CWABS,
Inc., a Delaware corporation ("CWABS"), the Seller (as defined below) and the
Broker Dealers (as defined below).
WITNESSETH:
WHEREAS, CWABS and one or more of the Broker Dealers are parties to the
Underwriting Agreement (defined below), providing for the sale by CWABS and the
purchase, severally and not jointly, by such Broker Dealers of the Public
Certificates (defined below); and
[WHEREAS, CWABS and one or more of the Broker Dealers are parties to the
Purchase Agreement (defined below), providing for the sale by CWABS and the
purchase, severally and not jointly, of the Private Certificates (defined
below); and]
WHEREAS, as an inducement to the Broker Dealers to enter into the
Underwriting Agreement [and the Purchase Agreement], CWABS and the Broker
Dealers wish to provide for indemnification and contribution on the terms and
conditions hereinafter set forth; and
WHEREAS, the purchase price to be paid by CWABS to the Seller for the
Mortgage Loans will be the proceeds of the sale by CWABS to the Broker Dealers
of the Public Certificates [and the Private Certificates] and as an inducement
to the Broker Dealers to enter into the Underwriting Agreement [and the Purchase
Agreement], the Seller agrees to perform certain obligations set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
1.1 Certain Defined Terms.
The following terms shall have the meanings set forth below,
unless the context clearly indicates otherwise:
Act: The Securities Act of 1933, as amended.
Agreement: This Indemnification and Contribution
Agreement, as the same may be amended in accordance with the
terms hereof.
Base Prospectus: The prospectus dated [______________], 199__, as
the same may be amended or supplemented, of CWABS relating to the offering from
time to time of one or more series of asset backed certificates.
Broker Dealer: Each of the signatories to this
Agreement other than CWABS or the Seller.
Certificates: Asset Backed Certificates, Series 1996-
___ of CWABS.
Closing Date: On or about [_______________], 199__.
Computational Materials: Computer generated tables and/or charts
displaying, with respect to any Class or Classes of Certificates, any of the
following: yield; average life; duration; expected maturity; interest rate
sensitivity; loss sensitivity; cash flow characteristics; background information
regarding the Mortgage Loans; the proposed structure; decrement tables; or
similar information (tabular or otherwise) of a statistical, mathematical,
tabular or computational nature.
CWABS: CWABS, Inc., a Delaware corporation and its successors in
interest.
[CWABS Memorandum Information: All information contained or
incorporated in the Memorandum other than the Purchaser Information.]
CWABS Prospectus Information: All information contained or
incorporated in the Prospectus other than the Underwriter Information.
CWABS Registration Information: All information contained or
incorporated in the Registration Statement.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Form 8-K: The Current Report on Form 8-K, if any, filed by or on
behalf of CWABS with respect to the Mortgage Loans and including any
Computational Materials furnished by one or more of the Broker Dealers.
[Memorandum: The Confidential Private Placement Memorandum, if
any, dated the Closing Date, as the same may be amended or supplemented, of
CWABS relating to the Private Certificates.]
Offered Certificates: The Public Certificates.
[Private Certificates: Class ____ Certificates.]
Prospectus: The Base Prospectus together with the Prospectus
Supplement.
Prospectus Supplement: The Prospectus Supplement dated the date
hereof, as the same may be amended or supplemented, of CWABS relating to the
offering of the Public Certificates.
Public Certificates: The Class ___ Certificates.
[Purchase Agreement: The Purchase Agreement, if any, dated the
date hereof, between CWABS and the Purchaser providing for the purchase and sale
of the Private Certificates.
Purchase Spread: The excess, if any, of (i) the purchase prices
paid by investors to the Purchaser for the Private Certificates over (ii) the
purchase price paid by the Purchaser to CWABS for the Private Certificates
pursuant to the Purchase Agreement.
Purchaser: The Broker Dealer which is purchasing the Private
Certificates pursuant to the Purchase Agreement.
Purchaser Information: The only written information furnished by
or on behalf of the Purchaser to CWABS specifically for use in connection with
the preparation of the Memorandum, such information being the information
relating to the Purchaser set forth in the Memorandum under the caption "Method
of Placement."]
Registration Statement: As defined in the Underwriting Agreement.
[Retained Certificates: The Class Certificates.]
Seller: [Countrywide Home Loans, Inc., a New York] corporation
and its successors in interest.
Seller Mortgage Loan Information: Information relating to the
Mortgage Loans furnished by the Seller to any
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Underwriter upon which the mathematical calculations reflected in the
Computational Materials of such Underwriter are based.
[Senior Certificates: The Class ___ Certificates.]
Spread: As to any Underwriter, the excess, if any, of (i) the
purchase prices paid by investors to such Underwriter for the Certificates sold
by it over (ii) the purchase price paid by such Underwriter to CWABS for the
Certificates purchased by it, pursuant to the Underwriting Agreement.
Underwriter: Each Broker Dealer which is purchasing
the Certificates pursuant to the Underwriting Agreement.
Underwriter Information: As to any Underwriter, the only written
information furnished by or on behalf of such Underwriter to CWABS specifically
for use in connection with the preparation of the Registration Statement or the
Prospectus, such information being (i) the information relating to such
Underwriter set forth in the Prospectus Supplement in the last two paragraphs of
the cover page thereof and under the caption "Method of Distribution" therein
and (ii) any Computational Materials prepared by such Underwriter, furnished to
CWABS and included in the Form 8-K; provided, however, that such Computational
Materials shall not include any Seller Mortgage Loan Information or any errors
in the mathematical calculations reflected in such Computational Materials to
the extent such errors result from such Seller Mortgage Loan Information.
Underwriting Agreement: The Underwriting Agreement, dated the
date hereof, among CWABS and each Underwriter providing for the purchase and
sale of the Public Certificates [other than any Retained Certificates].
1.2 Other Terms.
Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Underwriting Agreement [or the Purchase
Agreement, as applicable].
ARTICLE II
Representations and Warranties
2.1 Mutual Representation.
Each party hereto represents to the other parties hereto that:
(a) the execution, performance and delivery of this
Agreement has been duly authorized by such party;
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(b) this Agreement has been duly executed and delivered by
such party; and
(c) this Agreement constitutes the legal and valid
obligations of such party.
2.2 Other Representations.
(a) CWABS has all requisite corporate power and authority
to execute, deliver and perform its obligations under this
Agreement; and
(b) The Seller has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement.
2.3 Computational Materials.
Each Broker Dealer which desires to furnish Computational
Materials to CWABS shall furnish fifteen (15) copies thereof to Xxxxx & Xxxx LLP
no later than 3:00 p.m. New York City time on the business day prior to the day
on which the Prospectus Supplement is being cleared for printing. In addition,
each Broker Dealer which has so furnished Computational Materials to CWABS
hereby represents as to the materials it has furnished as follows:
(a) The Computational Materials so furnished by such Broker Dealer
include all Computational Materials prepared by such Broker Dealer that:
(i) are generated based on assumptions regarding the
payment priorities and characteristics of a Class of Certificates
that is actually issued and purchased by a Broker Dealer; and
(ii) are provided to prospective investors under the
following conditions prior to the time of filing of the
Prospectus pursuant to Rule 424(b):
(A) in the case of each prospective investor that has
orally indicated to such Broker Dealer that it will
purchase all or a portion of the Class of Certificates to
which such Computational Materials relate, the
Computational Materials relating to such Class that are
sent to such prospective investor; and
(B) for any other prospective investor, all Computational
Materials that are sent to such prospective investor after
the structure for the Certificates is finalized;
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provided, however, that the Computational Materials so furnished
need not include any Computational Materials that relate to
abandoned structures or that are furnished to prospective
investors prior to the time that the structure of the
Certificates is finalized where such investors have not indicated
to such Broker Dealer their intention to purchase the Class or
Classes of Certificates described in such Computational
Materials.
(b) The Computational Materials included in the Underwriter
Information of such Broker Dealer pursuant to the definitions thereof do not
contain an untrue statement of a material fact or, when read in conjunction with
the Prospectus as an integral document, omit to state a material fact necessary
to make such statements, in light of the circumstances under which they were
made, not misleading; provided, however, that no representation is made that the
Prospectus (exclusive of such Computational Materials and the Underwriter
Information provided by such Underwriter) does not include any untrue statements
of a material fact and does not omit to state any material facts necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading.
(c) The Computational Materials contain customary legends
regarding the assumptions on which they are based and the absence of assurances
or representations as to the actual rate or timing of principal payments or
prepayments on any of the Mortgage Loans or the performance characteristics of
the Certificates, and a statement to the effect that the Computational Materials
were prepared by the applicable Broker Dealer in reliance on information
regarding the Mortgage Loans furnished by the Seller.
(d) Neither CWABS nor any of its affiliates participated in the
preparation of the Computational Materials other than by supplying the Seller
Mortgage Loan Information to the Broker Dealer.
(e) At or prior to the time any Computational Materials are
furnished to CWABS for filing on the Form 8-K, the Broker Dealer furnishing such
Computational Materials will provide to CWABS and such Broker Dealer a letter,
in form and substance reasonably satisfactory to CWABS and such Broker Dealer,
of a firm of independent public accountants of national reputation to the effect
that such accountants have performed certain specified procedures with respect
to such Computational Materials and have found no exceptions, other than such
exceptions as are acceptable to CWABS and the Broker Dealer. [Fifty percent
(50%) of the costs and expenses of such letter will be paid by each of the
Broker Dealer obtaining the same and CWABS.]
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ARTICLE III
Indemnification
3.1 Indemnification.
(a) CWABS agrees to indemnify and hold harmless each Broker
Dealer and each person who controls a Broker Dealer within the meaning of either
the Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the Act,
the Exchange Act, or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the [CWABS
Memorandum Information,] the CWABS Prospectus Information or the CWABS
Registration Information or in any revision or amendment thereof or supplement
thereto or arise out of or are based upon the omission or alleged omission to
state in the CWABS Registration Information, the CWABS Prospectus Information[,
the CWABS Memorandum Information] or in any revision or amendment thereof or
supplement thereto a material fact required to be stated therein or the omission
or alleged omission to state a material fact in [the CWABS Memorandum
Information,] the CWABS Prospectus Information or the CWABS Registration
Information or in any revision or amendment thereof or supplement thereto
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by it or
him in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that CWABS shall not be liable to a
particular Broker Dealer or any person who controls such Broker Dealer to the
extent that any misstatement or alleged misstatement or omission or alleged
omission was (i) made in reliance upon and in conformity with the Underwriter
Information [or the Purchaser Information, as applicable,] furnished by such
Broker Dealer, and (ii) in the case of the CWABS Prospectus Information, to the
extent that such misstatement or omission was corrected and such Broker Dealer
did not deliver, at or prior to the written confirmation of such sale, a copy of
the Prospectus as then revised, amended or supplemented in any case where such
delivery is required by the Act or the Exchange Act, if CWABS has previously
furnished copies thereof to the Broker Dealers in accordance with the terms of
the Underwriting Agreement [or the Purchase Agreement, as applicable]. This
indemnity agreement will be in addition to any liability which CWABS may
otherwise have.
(b) Each Broker Dealer severally agrees to indemnify and hold
harmless CWABS, its officers who signed the Registration Statement or any
amendment thereof, its directors, and each person who controls CWABS within the
meaning of either
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the Act or the Exchange Act, to the same extent as the foregoing indemnities
from CWABS to each Broker Dealer; provided, however, that a Broker Dealer will
be liable in any such case only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with (i) the Underwriter Information furnished by such
Broker Dealer, in the case of an Underwriter [and (ii) the Purchaser
Information, in the case of the Purchaser]; and provided, further, that any such
omission or alleged omission relating to the Computational Materials included in
any Underwriter Information pursuant to the definitions thereof shall be
determined by reading such Computational Materials in conjunction with the
Prospectus as an integral document and in light of the circumstances under which
such statements in the Computational Materials and Prospectus were made. This
indemnity agreement will be in addition to any liability which any Broker Dealer
may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 3.1 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 3.1, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Section 3.1. In case any such action
is brought against any indemnified party and it notifies the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party or parties shall have reasonably
concluded that there may be legal defenses available to it or them and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
elect separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall have
employed separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel for
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each of, and approved by, the applicable Underwriter [or the Purchaser, as
applicable,] in the case of paragraph (a) of this Section 3.1, representing the
related indemnified parties under such paragraph (a) who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall only be in respect of the counsel
referred to in such clause (i) or (iii). No indemnifying party shall, without
the consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
3.2 Contribution.
If the indemnification provided for in Section 3.1 is unavailable or
insufficient to hold harmless an indemnified party under Section 3.1(a)-(b),
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of the losses, claims, damages or liabilities
referred to in Section 3.1 above in such proportion as is appropriate to reflect
the following: (A) in the case of any Broker Dealer which did not furnish
Computational Materials as provided in Section 2.3 hereof (i) in such proportion
as is appropriate to reflect the relative benefits received by CWABS on the one
hand and the Broker Dealers on the other from the offering of the Offered
Certificates or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of CWABS on the one hand and the Broker Dealers on the other in connection
with the statements or omissions or alleged statements or alleged omissions
which resulted in such losses, claims, damages or liabilities as well as any
other relevant equitable considerations; or (B) in the case of any Broker Dealer
which did so furnish Computational Materials, (i) the relative benefits received
by CWABS on the one hand and the Broker Dealers on the other from the offering
of the Offered Certificates and (ii) the relative fault of CWABS on the one hand
and the Broker Dealers on the other in connection with the statements or
omissions or alleged statements or alleged omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by CWABS on the one hand and the
Broker Dealers on the other shall be in such proportion so that the Broker
Dealers are responsible for an
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amount equal to the sum of [each of] the Spread [and the Purchase Spread] and
CWABS is responsible for the balance. The relative benefits received by a
Underwriter [and the Purchaser] shall be the Spread of such Underwriter, in the
case of each Underwriter [and the Purchase Spread, in the case of the
Purchaser]. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omissions or alleged omission to state a material fact relates to information
supplied by CWABS or by the Broker Dealers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this Section 3.2 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
Section 3.2. A Broker Dealer shall not be required to contribute any amount in
excess of (x) the applicable Spread, in the case of each Underwriter, [or the
Purchase Spread, in the case of the Purchaser] over (y) the amount of any
damages which the applicable Broker Dealer has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission; provided, however, that if the statements or omissions or alleged
statements or alleged omissions which resulted in contribution were contained in
or omitted from Computational Materials filed on the Form 8-K, the preceding
limitation on contribution shall be inapplicable to the Broker Dealer which
furnished such Computational Materials. The obligation of any Broker Dealer to
contribute under this Section 3.2 is several in proportion to each Spread [and
the Purchase Spread, respectively]. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
3.3 Benefits.
The obligations of CWABS under this Article III shall be in
addition to any liability which CWABS may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls a Broker
Dealer within the meaning of the Act; and the obligations of each Broker Dealer
under this Article III shall be in addition to any liability which such Broker
Dealer may otherwise have and shall have extended upon the same terms and
conditions, to the officers of CWABS who signed the Registration Statement or
any amendment thereof, to its directors, and to each person who controls CWABS
within the meaning of either the Act or the Exchange Act.
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3.4 Seller Obligation.
The Seller agrees with each Broker Dealer, for the sole and
exclusive benefit of such Broker Dealer and each person who controls a Broker
Dealer within the meaning of either the Act or the Exchange Act and not for the
benefit of any assignee thereof or any other person or persons dealing with such
Broker Dealer, to indemnify and hold harmless each Broker Dealer and each person
who controls a Broker Dealer within the meaning of either the Act or the
Exchange Act against any failure by CWABS to perform any of its obligations
under this Agreement. The Seller agrees that there are no conditions precedent
to the obligations of the Seller hereunder other than written demand to CWABS to
perform its obligations under this Agreement.
ARTICLE IV
Expenses
4.1 Other Expenses.
Any costs and expenses incurred in connection with the
qualification of any of the Offered Certificates under the "blue sky" or
securities laws of any state shall be paid by the Broker Dealer requesting such
action. Unless otherwise agreed to among the Broker Dealers, any advertising or
"tombstone" expenses shall be paid by the Broker Dealer incurring the same. Each
Broker Dealer shall be responsible for all other costs and expenses incurred by
it in connection with the purchase and sale of the Offered Certificates.
4.2 OID Calculations.
If a Broker Dealer fails to provide CWABS with original issue
discount ("OID") calculations within five business days after the Closing Date
for any Certificates purchased by such Broker Dealer, such Broker Dealer agrees
to reimburse the Trust Fund for any penalties actually incurred by the Trust
Fund resulting from the failure of the Trust Fund to legend the Certificates
with OID information or for any delay in legending, as well as for any other
penalties actually imposed on the Trust Fund resulting from not having the OID
information or for having such information late.
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ARTICLE V
General
5.1 Survival.
This Agreement and the obligations of the parties hereunder shall
survive the purchase and sale of the Offered Certificates and any termination of
the Underwriting Agreement [and/or the Purchase Agreement].
5.2 Successors.
This Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective successors and the officers, directors
and controlling persons referred to in Article III hereof and their respective
successors and assigns, and no other person will have any right or obligation
hereunder.
5.3 Applicable Law.
This Agreement will be governed by and construed in accordance
with the laws of the State of New York disregarding principles of conflict of
laws.
5.4 Miscellaneous.
Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated except by a writing signed by the party against
whom enforcement of such change, waiver, discharge or termination is sought.
This Agreement may be signed in any number of counterparts, each of which shall
be deemed an original, which taken together shall constitute one and the same
instrument.
5.5 Notices.
All communications hereunder shall be in writing and effective
only on receipt and, if sent to a Broker Dealer, shall be delivered to the
address specified on the signature page hereof; or if sent to CWABS, shall be
delivered to 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000-0000, attention
of General Counsel.
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IN WITNESS WHEREOF, the parties have executed this Agreement by
their duly authorized officers on the date first above written.
CWABS, INC.
By:_____________________________
Name:
Title:
[BROKER/DEALER]
By:______________________________
Name:
Title:
Address:
