EXHIBIT 99.5
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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 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
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Name: Xxxxx Xxxxxx
Title: Vice President
CWMBS, INC.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Vice President
CWALT, INC.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Vice President
CWHEQ, INC.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Vice President
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BEAR XXXXXXX FINANCIAL PRODUCTS INC.
By: /s/ F. Xxxxx Xxxxxx
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Name: F. Xxxxx Xxxxxx
Title: DPC Manager
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