EXHIBIT 99.5
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The Item 1115 Agreement.
Item 1115 Agreement dated as of February 24, 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 UBS AG, 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, on the closing date (the "Closing Date") of each
transaction referenced in Exhibit A hereto (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).
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(a).
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.
Significance percentage: The "significance percentage", as
the term is defined and used in Regulation AB.
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:
(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 (after the
aggregate "significance percentage", determined
absent manifest error, of all derivative
instruments provided by Counterparty and any of its
affiliates to the SPV is 8.00% or more in respect
of Item 1115(b)(1), or 18.00% or more in respect of
Item 1115(b)(2)) for the purpose of compliance with
Item 1115(b) with respect to a Transaction, the
Counterparty shall:
(A) provide the relevant financial data
required by Item 1115(b)(1) or (b)(2) of
Regulation AB, as applicable (as specified
by the related Depositor to the
Counterparty) with respect to the
Counterparty (or any entity that
consolidates the Counterparty) and any
affiliated
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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, unless otherwise
instructed in writing by the Counterparty,
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 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, unless otherwise instructed in
writing by the Counterparty, 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 (after the
aggregate "significance percentage", determined
absent manifest error, of all derivative
instruments provided by Counterparty and any of its
affiliates to the SPV is 8.00% or more in respect
of Item 1115(b)(1), or 18.00% or more in respect of
Item 1115(b)(2)), 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) comply with
Regulation AB by, (1) providing 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), with the understanding that, unless
otherwise instructed in writing by the
Counterparty, the Counterparty hereby authorizes
the related Depositor to incorporate by reference
the financial data required by Item 1115(b)(2) of
Regulation AB, (2) if applicable, causing 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 (in such a manner as
complies with Regulation AB) to the related
Depositor in an XXXXX-compatible form and if
applicable, cause its
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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 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 reconciled (in a manner
consistent with Regulation S-X) 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
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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) 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
within a reasonable time prior to any Company Financial
Information being required to be included in the
Registration Statement, or the Exchange Act Reports of the
SPV.
(c) 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 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 (each, a "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;
(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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provided, however that the foregoing shall not apply to any
losses, damages, penalties, fines, forfeitures, legal fees
and expenses and related costs, judgments, and any other
costs, fees and expenses caused by the negligence or any
willful action of an Indemnified Party, including without
limitation any failure to make any filings as and when
required under Regulation AB.
(b) (i) If the Counterparty is required to provide Company
Information under the terms of Item 1115 of
Regulation AB as of the Closing Date and the
Counterparty fails to take such actions as are
necessary to comply with the requirements of Item
1115 of Regulation AB as and when required, 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 prior to the Closing Date, then
such failure shall, except as provided in clause
(ii) or (iii) of this Section 4, 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. 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 as
of the Early Termination Date 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 received written notice
from the Depositor that the Counterparty is
required to provide Company Financial Information
under the terms of Item 1115 of Regulation AB as of
a specified date and the Counterparty fails to take
such actions as are necessary to comply with the
requirements of Item 1115 of Regulation AB as and
when required, and if such failure 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), 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) meets the rating
conditions applicable to a derivative counterparty
for the relevant asset-backed securities of each
applicable rating agency, if applicable,
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then (unless the Counterparty has taken the actions
in clause (iii) of this Section), 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).
(iii) At any time that the Counterparty has failed to
meet its obligations under Item 1115 and has failed
to transfer any applicable Transaction pursuant to
clause (ii) of this Section, then on or prior to
any Early Termination Date, the Counterparty may
elect to designate a date as an Early Termination
Date (an "Elective Termination Date"), and the
termination payment referenced in clause (i) or
(ii) above, as applicable, shall be calculated and
paid as provided in such applicable clause.
(iv) In the event that the Counterparty or the SPV has
found a replacement entity in accordance with
Section 4(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 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) 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
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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.
(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 reasonably
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.
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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/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Senior Vice President
CWMBS, INC.
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Senior Vice President
Title: Senior Vice President
CWALT, INC.
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Senior Vice President
CWHEQ, INC.
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Senior Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Senior Vice President
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UBS AG
By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
Title: Director and Counsel
Legal Americas Region
Fixed Income Section
UBS AG
By: /s/ Xxxxxxxxx X. Xxxxxx
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Name: Xxxxxxxxx X. Xxxxxx
Title: Director
Region Americas Legal
Fixed Income Section
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EXHIBIT A
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Transaction covered by this Agreement
1. CWMBS, Inc. CHL Mortgage Pass-Through Trust 2006-OA5
2. CWALT, Inc. Alternative Loan Trust 2006-4CB
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