EXHIBIT 99.3
The Item 1115 Agreement
Item 1115 Agreement dated as of January 30, 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 BEAR XXXXXXX FINANCIAL PRODUCTS INC., 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 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).
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.
Master Agreement: The ISDA Master Agreement between the Counterparty
and CHL, or if no such Master Agreement exists, the ISDA Master Agreement
assumed to apply to the Derivative Agreement pursuant to its terms.
Prospectus Supplement: The prospectus supplement prepared in
connection with the public offering and sale of the related Securities.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have been
provided by the Commission in the adopting release (Asset-Backed Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or
by the staff of the Commission, or as may be provided by the Commission or its
staff from time to time.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Section 2. Information to be Provided by the Counterparty.
(a) Prior to printing the related Prospectus Supplement,
(i) the Counterparty shall provide to the related Depositor such
information regarding the Counterparty, as a derivative
instrument counterparty, as is reasonably requested by the
related Depositor for the purpose of compliance with Item
1115(a)(1) of Regulation AB. Such information shall include,
at a minimum:
(A) The Counterparty's legal name (and any d/b/a);
(B) the organizational form of the Counterparty;
(C) a description of the general character of the business
of the Counterparty;
(D) a description of any material legal or governmental
proceedings pending (or known to be contemplated)
against the Counterparty which may have a material
impact on the Counterparty's ability to perform under
the related Derivative Agreement;
(E) a description of any affiliation or relationship between
the Counterparty and any of the following parties:
(1) CHL (or any other sponsor identified to the
Counterparty by CHL);
(2) the related Depositor (as identified to the
Counterparty by CHL);
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(3) the SPV;
(4) Countrywide Home Loans Servicing LP (or any other
servicer or master servicer identified to the
Counterparty by CHL);
(5) The Bank of New York (or any other trustee
identified to the Counterparty by CHL);
(6) any originator identified to the Counterparty by
CHL;
(7) any enhancement or support provider identified to
the Counterparty by CHL; and
(8) any other material transaction party identified to
the Counterparty by CHL.
(ii) if requested by the related Depositor for the purpose of o
compliance with Item 1115(b) with respect to a Transaction,
the Counterparty shall:
(A) provide the financial data required by Item 1115(b)(1)
or (b)(2) of Regulation AB (as specified by the related
Depositor to the Counterparty) with respect to the
Counterparty (or any entity that consolidates the
Counterparty) and any affiliated entities providing
derivative instruments to the SPV (the "Company
Financial Information"), in a form appropriate for use
in the Prospectus Supplement and in an XXXXX-compatible
form; and
(B) if applicable, cause its accountants to issue their
consent to the filing of such financial statements in
the Registration Statement.
(b) Following the Closing Date with respect to a Transaction,
(i) no later than the 25th calendar day of each month, the
Counterparty shall (i) notify the related Depositor in writing
of (A) any material litigation or governmental proceedings
pending against the Counterparty which may have a material
impact on the Counterparty's ability to perform under the
related Derivative Agreement or (B) any affiliations or
relationships that develop following the Closing Date between
the Counterparty and any of the parties specified in Section
2(a)(i)(E) (and any other parties identified in writing by the
related Depositor) and (ii) provide to the related Depositor a
description of such proceedings, affiliations or relationships
as described in Section 2(b)(i)(I)(i); and
(ii) if the Counterparty provided Company Financial Information to
the related Depositor for the Prospectus Supplement, within 5
Business Days of the release of any updated financial data,
the Counterparty shall (1) provide current Company Financial
Information as required under Item
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1115(b) of Regulation AB to the related Depositor in an
XXXXX-compatible form, 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;
(iii) if the related Depositor requests Company Financial
Information from the Counterparty, for the purpose of
compliance with Item 1115(b) of Regulation AB following the
Closing Date, the Counterparty shall upon five Business Days
written notice either (A), (1) provide current Company
Financial Information as required under Item 1115(b) of
Regulation AB to the related Depositor in an XXXXX-compatible
form, (2) if applicable, cause its accountants to issue their
consent to filing or incorporation by reference of such
financial statements in the Exchange Act Reports of the SPV
and (3) within 5 Business Days of the release of any updated
financial data, provide current Company Financial Information
as required under Item 1115(b) of Regulation AB to the related
Depositor in an XXXXX-compatible form and if applicable, cause
its accountants to issue their consent to filing or
incorporation by reference of such financial statements in the
Exchange Act Reports of the SPV or (B) assign the Derivative
Agreement as provided below.
Section 3. Representations and Warranties and Covenants of the Counterparty.
(a) The Counterparty represents and warrants to the related Depositor,
as of the date on which information is first provided to the related
Depositor under Section 2(a)(ii), Section 2(b)(ii) or Section
2(b)(iii)(A), that, except as disclosed in writing the related
Depositor prior to such date:
(i) The 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.
(ii) 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
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consistent with that of the audited financial statements of
the Counterparty.
(iii) The Company Financial Information and other Company
Information included or incorporated by reference in the
Registration Statement (including through filing on an
Exchange Act Report), at the time they were or hereafter are
filed with the Commission, complied in all material respects
with the requirements of Item 1115(b) of Regulation AB (in the
case of the Company Financial Information) and, did not and
will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(b) 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 broker dealer acting
as underwriter, each person who controls any of such parties (within
the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act); and the respective present and former directors,
officers, employees and agents of each of the foregoing, 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,
certification, 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
(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.
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(b) (i) Any failure by the Counterparty to deliver any information,
report, certification, accountants' consent or other material
when and as required under Section 2 or any breach by the
Counterparty of a representation or warranty set forth in
Section 3 and made as of a date prior to the Closing Date, to
the extent that such breach is not cured by the Closing Date
(or in the case of information needed for purposes of printing
the Prospectus Supplement, the date of printing of the
Prospectus Supplement), or any breach by the Counterparty of a
representation or warranty pursuant to Section 3 to the extent
made as of a date subsequent to such closing date, shall,
except as provided in clause (ii) of this paragraph,
immediately and automatically, without notice or grace period,
constitute an Additional Termination Event (as defined in the
Master Agreement) with the Counterparty as the sole Affected
Party (as defined in the Master Agreement) under the
Derivative Agreement. Following such termination, a
termination payment (if any) shall be payable by the
applicable party as determined by the application of Section
6(e)(ii) of the Master Agreement, with Market Quotation and
Second Method being the applicable method for determining the
termination payment (notwithstanding anything in the
Derivative Agreement to the contrary).
(ii) If the Counterparty has failed to deliver any information,
report, certification 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, certification or accountants' consent was
required to be delivered or such period in which the
applicable Exchange Act Report for which such information is
required can be timely filed (without taking into account any
extensions permitted to be filed), and the Counterparty has
not, at its own cost, within the period in which the
applicable Exchange Act Report for which such information is
required can be timely filed caused another entity (which
meets any ratings related requirement of the applicable rating
agencies at such time) 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 which
approval is not needed if such assignment is to a subsidiary
of The Bear Xxxxxxx Companies, Inc., provided the Depositor is
given notice) and any rating agency, if applicable, on terms
substantially similar to the Derivative Agreement, then an
Additional Termination Event (as defined in the Master
Agreement) shall have occurred with the Counterparty as the
sole Affected Party. Following such termination, a termination
payment (if any) shall be payable by the applicable party as
determined by the application of Section 6(e)(ii) of the
Master Agreement, with Market Quotation and Second Method
being the applicable method for
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determining the termination payment (notwithstanding anything
in the Derivative Agreement to the contrary).
(iii) In the event that the Counterparty or the SPV has found a
replacement entity in accordance with Section 2(b)(ii), the
Counterparty shall promptly reimburse the SPV for all
reasonable incidental expenses incurred by the SPV, as such
are incurred, in connection with the termination of the
Counterparty as counterparty and the entry into a new
Derivative Instrument. The provisions of this paragraph shall
not limit whatever rights the SPV may have under other
provisions of this Agreement or otherwise, whether in equity
or at law, such as an action for damages, specific performance
or injunctive relief.
Section 5. Miscellaneous.
(a) Construction. Throughout this Agreement, as the context requires,
(a) the singular tense and number includes the plural, and the
plural tense and number includes the singular; (b) the past tense
includes the present, and the present tense includes the past; and
(c) references to parties, sections, schedules, and exhibits mean
the parties, sections, schedules, and exhibits of and to this
Agreement. The section headings in this Agreement are inserted only
as a matter of convenience, and in no way define, limit, extend, or
interpret the scope of this Agreement or of any particular section.
(b) Assignment. None of the parties may assign their rights under this
Agreement without the prior written consent of the other parties.
Subject to the foregoing, this Agreement shall be binding on and
inure to the benefit of the parties and their respective successors
and permitted assigns.
(c) No Third-Party Benefits Except as Specified. None of the provisions
of this Agreement are intended to benefit, or to be enforceable by,
any third-party beneficiaries except the related SPV and any trustee
of an SPV or any Administrator.
(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without
regard to the conflict of laws principles thereof.
(e) Amendment and Waiver. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto. No
waiver of any provision of this Agreement or of any rights or
obligations of any party under this Agreement shall be effective
unless in writing and signed by the party or parties waiving
compliance, and shall be effective only in the specific instance and
for the specific purpose stated in that writing.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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(g) Additional Documents. Each party hereto agrees to execute any and
all further documents and writings and to perform such other actions
which may be or become necessary or expedient to effectuate and
carry out this Agreement.
(h) Severability. Any provision hereof which is prohibited or
unenforceable shall be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof.
(i) Integration. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof. There are no
restrictions, agreements, promises, representations, warranties,
covenants or undertakings with respect to the subject matter hereof
other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between
the parties with respect to its subject matter.
(j) CHL agrees to provide to the Counterparty prior to January 30, 2006
the methodology for its estimate of maximum probable exposure
represented by the Derivative Agreements and then to provide notice
of any changes to the methodology.
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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/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
CWMBS, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
CWALT, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
CWHEQ, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
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By: /s/ F. Xxxxx Xxxxxx
------------------------------------
Name: F. Xxxxx Xxxxxx
Title: DPC Manager
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