The Item 1115 Agreement
EXHIBIT
99.3
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:
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Section
1.
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Definitions
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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. §§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.
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Section
2.
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Information
to be Provided by the Counterparty.
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(a)
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Prior
to printing the related Prospectus
Supplement,
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(i)
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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:
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(A)
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The
Counterparty’s legal name (and any
d/b/a);
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(B)
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the
organizational form of the
Counterparty;
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(C)
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a
description of the general character of the business of the
Counterparty;
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(D)
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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;
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(E)
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a
description of any affiliation or relationship between the Counterparty
and any of the following parties:
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(1)
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CHL
(or any other sponsor identified to the Counterparty by
CHL);
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(2)
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the
related Depositor (as identified to the Counterparty by
CHL);
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(3)
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the
SPV;
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(4)
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Countrywide
Home Loans Servicing LP (or any other servicer or master servicer
identified to the Counterparty by
CHL);
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(5)
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The
Bank of New York (or any other trustee identified to the Counterparty
by
CHL);
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(6)
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any
originator identified to the Counterparty by
CHL;
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(7)
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any
enhancement or support provider identified to the Counterparty by
CHL;
and
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(8)
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any
other material transaction party identified to the Counterparty by
CHL.
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(ii)
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if
requested by the related Depositor for the purpose of compliance
with Item
1115(b) with respect to a Transaction, the Counterparty
shall:
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(A)
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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
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(B)
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if
applicable, cause its accountants to issue their consent to the filing
of
such financial statements in the Registration
Statement.
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(b)
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Following
the Closing Date with respect to a
Transaction,
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(i)
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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
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(ii)
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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,
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;
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(iii)
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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.
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3
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Section
3.
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Representations
and Warranties and Covenants of the
Counterparty.
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(a)
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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:
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(i)
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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.
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(ii)
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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.
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(iii)
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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)
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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.
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Section
4.
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Indemnification;
Remedies
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(a)
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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:
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(i)
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(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
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(ii)
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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
Dae
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(b)
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(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).
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(ii)
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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 determining
the termination payment (notwithstanding anything in the Derivative
Agreement to the contrary).
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(iii)
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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.
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Section
5.
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Miscellaneous.
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(a)
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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.
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(b)
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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.
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(c)
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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.
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(d)
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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.
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(e)
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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.
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(f)
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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)
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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.
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(h)
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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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(i)
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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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(j)
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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. | |||
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By:
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/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| Title: Vice President | |||
| CWMBS, INC. | |||
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By:
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/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| Title: Vice President | |||
| CWALT, INC. | |||
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By:
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/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| Title: Vice President | |||
| CWHEQ, INC. | |||
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By:
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/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| Title: Vice President | |||
| COUNTRYWIDE HOME LOANS, INC. | |||
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By:
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/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| Title: Vice President | |||
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| BEAR XXXXXXX FINANCIAL PRODUCTS INC. | |||
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By:
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/s/ F. Xxxxx Xxxxxx | |
| Name: F. Xxxxx Xxxxxx | |||
| Title: DPC Manager | |||
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