INDEX OF DEFINED TERMS - Banca di Legnano

Level: 2 – From: 2 – Wednesday, July 21, 2010 – 13:20 – eprint6 – 4247 Section 10
This amount was fully accrued as of March 31, 2010. The proposed settlement, which would settle claims
against CFC and all other defendants (except for defendant KPMG LLP), is subject to negotiation and
execution of a mutually acceptable settlement agreement and court approval.
The other case, entitled Argent Classic Convertible Arbitrage Fund L.P. v. Countrywide Financial
Corp. et al., was filed in the U.S. District Court for the Central District of California on October 5, 2007
against CFC on behalf of purchasers of certain Series A and B debentures issued in various private
placements pursuant to a May 16, 2007 CFC offering memorandum. This matter involves allegations
similar to those in the In re Countrywide Financial Corporation Securities Litigation case, asserts claims
under the antifraud provisions of the Exchange Act and California state law, and seeks unspecified
damages. Plaintiff filed an amended complaint that added the Issuer as a defendant. On March 9, 2009, the
District Court dismissed the Issuer from the case; CFC remained as a named defendant. On December 9,
2009, the District Court denied plaintiff’s motion for class certification. CFC and Argent Classic, on its
own behalf, have reached a settlement in principle to dismiss the case with prejudice subject to execution
of a definitive settlement agreement. In Argent Classic Convertible Arbitrage Fund L.P. v. Countrywide
Financial Corp. et al., CFC and Argent Classic, on its own behalf, have agreed to settle the matter in an
amount that is not material to the Issuer’s earnings and on May 4, 2010, filed with the U.S. District Court
for the Central District of California a stipulation to dismiss the case with prejudice as to all parties.
CFC has also responded to subpoenas from the SEC and the U.S. Department of Justice (the “DOJ”).
Countrywide FTC Investigation
On June 20, 2008, the Federal Trade Commission (“FTC”) issued Civil Investigative Demands to
CFC regarding Countrywide’s mortgage servicing practices. On January 6, 2010, FTC Staff sent a letter to
the Issuer offering an opportunity to discuss settlement and enclosing a proposed consent order and draft
complaint that reflects FTC Staff’s views that certain servicing practices of CHL and Countrywide Home
Loans Servicing, LP, which is now known as BAC Home Loans Servicing, LP, violate Section 5 of the
Federal Trade Commission Act (the “FTC Act”) and the Fair Debt Collection Practices Act. FTC Staff
also advised that if consent negotiations are not successful, it will recommend that an enforcement action
seeking injunctive relief and consumer redress be filed against CHL and BAC Home Loans Servicing, LP
for violations of Section 5 of the FTC Act and the Fair Debt Collections Practices Act. The Issuer believes
that the servicing practices of Countrywide Home Loans, Inc. and BAC Home Loans Servicing, LP did not
and do not violate Section 5 of the FTC Act and the Fair Debt Collections Practices Act. The Issuer is
currently involved in discussions with FTC Staff concerning the Staff’s views.
Countrywide Mortgage-Backed Securities Litigation
General Information
CFC, certain other Countrywide entities, certain former CFC officers and directors, as well as BAS
and MLPF&S, are named as defendants in a consolidated putative class action, entitled Luther v.
Countrywide Home Loans Servicing LP, et al., filed on November 14, 2007 in the Superior Court of the
State of California, County of Los Angeles, that relates to public offerings of various mortgage-backed
securities (“MBS”). The consolidated complaint alleges, among other things, that the mortgage loans
underlying these securities were improperly underwritten and failed to comply with the guidelines and
processes described in the applicable registration statements and prospectus supplements, in violation of
Sections 11 and 12 of the Securities Act, and seeks unspecified compensatory damages, among other
relief. In March 2009, defendants moved to dismiss the case in the Superior Court. On June 15, 2009, the
Superior Court entered an order staying the state court proceeding and directing the plaintiffs to file suit in
Federal Court. On August 24, 2009, the plaintiffs filed a complaint in the U.S. District Court for the
Central District of California seeking a declaratory judgment that the Superior Court had subject matter
jurisdiction over their claims. The District Court dismissed the declaratory judgment action. On January 6,
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