EXHIBIT 99.5
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The Item 1115 Agreement
Item 1115 Agreement dated as of May 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 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).
Counterparty Guarantor: Any entity guaranteeing the obligations of
the SPV or any affiliate providing derivative instruments to the SPV.
Counterparty Guarantor Condition: Any Counterparty Guarantor or
S-X Counterparty Guarantor shall, upon providing any guarantee have executed
and delivered the joinder agreement referred to in Section 5(d).
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 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.
Significance percentage: The "significance percentage", as the
term is defined and used in Regulation AB.
S-X Counterparty Guarantor: Any Counterparty Guarantor with
respect to which each of the requirements set forth in Rule 3-10(b) or 3-10(c)
of Regulation S-X, as applicable shall be satisfied, including with respect to
the such Counterparty Guarantor and the Counterparty and the financial
statements of the Counterparty Guarantor (as though the Counterparty was the
issuer of registered securities).
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 (or any Counterparty
Guarantor), 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;
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(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) either, in the Counterparty's discretion
(I) with respect to the Counterparty (which may
comprise all branches of the Counterparty as a
consolidated entity), any affiliated entities
providing derivative instruments to the SPV and any
Counterparty Guarantor (other than an S-X Counterparty
Guarantor) (provided the Counterparty Guarantor
Condition has been satisfied) or (II) with respect to
an S-X Counterparty Guarantor (provided the
Counterparty Guarantor Condition has been satisfied)
(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 (including Company Financial
Information of any Counterparty Guarantor) 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 (and, if applicable, the accountants of any
Counterparty Guarantor) to issue their consent to filing or
incorporation by reference of such financial statements in
the Exchange Act Reports of the SPV; and
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(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 (including Company
Financial Information of any Counterparty Guarantor) 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
(and, if applicable, the accountants of any Counterparty
Guarantor) 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 (including Company Financial
Information of any Counterparty Guarantor) 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
accountants (and, if applicable, the accountants of any
Counterparty Guarantor) 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 is required to file reports with the
Commission pursuant to section 13(a) or 15(d) of the
Exchange Act.
(ii) 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, include (or
incorporate by reference in conformity with Regulation AB)
the financial statements of the Counterparty.
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(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, with respect to the Counterparty, the
financial statements included in the Company Financial
Information present fairly the consolidated financial
position of 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 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) If the Counterparty has elected to provide the Company Financial
Information with respect to an S-X Counterparty Guarantor, the
requirements set forth in Rule 3-10(b) or 3-10(c) of Regulation
S-X, as applicable, shall be satisfied, including with respect to
such Counterparty Guarantor and the Counterparty, and the
financial statements of the Counterparty Guarantor (as though the
Counterparty was the issuer of registered securities).
(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
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a Derivative Agreement shall be an express third party beneficiary
of this Agreement; provided, however, that the representations
made in Section 3 of this Agreement shall not be deemed to be
representations under Section 3 of the Master 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, an "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) if any representation or warranty set forth in Section 3(a)
is made as of a date prior to the Closing Date, any breach
by the Counterparty of such representation or warranty, to
the extent that such breach is not cured by the Closing
Date, or if any representation or warranty pursuant to
Section 3 is required to be made as of a date subsequent to
the Closing Date, any breach by the Counterparty of such
representation or warranty, to the extent that such breach
is not cured by the date required hereunder;
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 or any Counterparty
Guarantor 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
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the Prospectus Supplement, the date of printing of the
Prospectus Supplement), or any breach by the Counterparty or
any Counterparty Guarantor 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 or any Counterparty Guarantor has
received written notice from the Depositor that the
Counterparty or any Counterparty Guarantor is required to
provide Company Financial Information under the terms of
Item 1115 of Regulation AB as of a specified date and the
Counterparty or any Counterparty Guarantor 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, in each case to or from, as applicable, an entity
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,
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
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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) 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 no amendment to this Agreement is necessary. The
parties shall reasonably cooperate with respect to any amendments
to this Agreement to reflect such amendment or interpretation.
(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
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Agreement shall be binding on and inure to the benefit of the
parties and their respective successors and permitted assigns.
(d) Counterparty Guarantor. The Counterparty shall cause any
Counterparty Guarantor to execute a joinder agreement in the form
attached hereto as Exhibit B acknowledging its rights and
obligations under this Agreement and setting forth certain
additional obligations with respect to such Counterparty
Guarantor.
(e) 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 and any
Counterparty Guarantor.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) 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: Vice President
CWMBS, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
CWALT, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
CWHEQ, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
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UBS AG
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Director and Counsel, Region
Americas Legal, Fixed Income Section
UBS AG
By: /s/ Xxxx Xxxxxxxxx
---------------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Director, Region Americas Legal, Fixed
Income Section
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EXHIBIT A
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Transaction(s) covered by this Agreement
1. CWALT, Inc. Alternative Loan Trust 2006-OA8
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EXHIBIT B
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Form of Joinder
The undersigned Counterparty Guarantor as defined in that certain 1115
Agreement COUNTRYWIDE HOME LOANS, INC., a New York corporation, CWABS, INC., a
Delaware corporation, CWMBS, Inc., a Delaware corporation, CWALT, Inc., a
Delaware corporation, CWHEQ, Inc., a Delaware corporation and [o], as
counterparty (the "Counterparty"), dated as of [ ], 2006 (the "1115
Agreement"), has reviewed the 1115 Agreement and acknowledges and agrees to
the terms and conditions of such 1115 Agreement with respect to its rights and
obligations as a Counterparty Guarantor thereunder.
The undersigned Counterparty Guarantor further acknowledges and agrees that as
of the date hereof, (1) the representations and warranties set forth in
Section 3 of the 1115 Agreement are true and correct as of the date hereof
with respect to the Counterparty Guarantor and (2) that the terms of Section
3(b) and Section 4 of the 1115 Agreement shall apply to such Counterparty
Guarantor as if it were named in such section in each instance where the
"Counterparty" is named.
[ ]
By:
Name:
Title:
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