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
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.
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(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 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
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(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 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.
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(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 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).
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(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 information of such permitted entity provided the
Counterparty has received written confirmation from CHL that such
amendment or interpretive guidance can be relied upon.
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(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.
(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 X. Xxxxxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxxx
Title: Managing Director
CWMBS, INC
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxxx
Title: Managing Director
CWALT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxxx
Title: Managing Director
CWHEQ, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxxx
Title: Managing Director
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxxx
Title: Managing Director
BANK OF AMERICA, N.A.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
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