Exhibit 99.4
MORGAN STANLEY
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Date:
March 31, 2006
To: Morgan
Stanley Mortgage Loan Trust 2006-5AR
From:
Morgan Stanley Capital Services Inc.
Attn:
Wells Fargo Bank, National Association
Contact:
Kelvin Borre
9062 Old Annapolis Road
Columbia, MD 21045
Attention: Client Manager, MSM 2006-5AR
Fax:
(410) 715-4513
Fax:
(212) 507-3837
Tel:
(410) 884-2000
Tel:
(212) 761-1426
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Re: Cap Ref. No. KQBD9, Class A
The
purpose of this letter agreement is to confirm the terms and
conditions of the Swap Transaction entered into between Morgan
Stanley Capital
Services Inc. and Wells Fargo Bank, National Association, solely in
its
capacity as securities administrator (the "Securities
Administrator") on
behalf of the Morgan Stanley Mortgage Loan Trust 2006-5AR pursuant
to the
Pooling and Servicing Agreement (the "PSA"), dated as of March 1,
2006, among
Morgan Stanley Capital I Inc. (the "Depositor"), the Securities
Administrator
as master servicer and securities administrator and LaSalle Bank
National
Association as trustee (the "Trustee"), on the Trade Date specified
below (the
"Transaction"). This letter agreement constitutes a "Confirmation"
as referred
to in the ISDA Master Agreement below.
The
definitions and provisions contained in the 2000 ISDA Definitions
(as
published by the International Swaps and Derivatives Association,
Inc.) are
incorporated into this Confirmation. In the event of any
inconsistency between
those definitions and this Confirmation, this Confirmation will
govern.
1.
This Confirmation evidences a complete, binding agreement between
you
and us as to the terms of the Transaction to which this
Confirmation relates.
In addition, this Confirmation supplements, forms a part of, and is
subject to
an agreement in the form of the ISDA Master Agreement
(Multicurrency-Cross
Border), with such modifications as are specified herein, as if we
had
executed an Agreement in such form on the Trade Date of the first
such
Transaction between us (the "Agreement"). All provisions contained
or
incorporated by reference in the Agreement shall govern this
Confirmation
except as expressly modified below. In the event of any
inconsistency between
the provisions of that Agreement and this Confirmation, this
Confirmation will
prevail for the purpose of this Transaction.
2.
The terms of the particular Transaction to which this
Confirmation
relates are as follows:
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Party A:
Morgan Stanley Capital Services Inc.
Party A Credit Support:
Payments guaranteed by Morgan Stanley
Party B:
Morgan Stanley Mortgage Loan Trust 2006-5AR
Trade Date:
March 27, 2006
Notional Amount:
See Schedule A attached hereto
Effective Date:
April 25, 2006
Termination Date:
November 25, 2014
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MORGAN STANLEY
Fixed Amounts:
-------------
Fixed Amount
Payer:
Party B
Fixed Amount
Payer Payment Date:
March 31, 2006
Fixed Amount:
USD $1,050,000 (Party A hereby acknowledges receipt of payment
in full of this amount)
Floating Amounts:
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Floating Amount:
The product of (a) the Floating Rate, (b) the Floating Rate Day
Count Fraction, (c) the "Notional Amount" (as set forth in
Schedule A hereto for the related Floating Rate Payer Payment
Date) and (d) the "Multiplier" (as set forth in Schedule A
hereto for the related Floating Rate Payer Period End Date).
Floating Rate
Payer:
Party A
Strike Rate:
For the Calculation Period related to a Floating Rate Payer
Payment Date, the "Strike Rate" (as set forth in Schedule A
hereto for such Floating Rate Payer Period End Date).
Floating Rate
Payer Payment Dates:
Early Payment -- For each Calculation Period, the first
Business Day prior to each Floating Rate Payer Period End Date.
Floating Rate
Payer Period End Date(s):
The 25th of each month in each year from (and including) May
25, 2006 to (and including) the Termination Date with no
adjustment to Period End Dates.
For the avoidance of doubt, the initial Calculation Period will
accrue from and including the Effective Date to but excluding
May 25, 2006 and that the final Calculation Period will accrue
from and including October 25, 2014 to but excluding the
Termination Date.
Floating Rate:
For the Calculation Period related to a Floating Rate Payer
Payment Date, the excess, if any, of (x) the lesser of (a)
USD-LIBOR-BBA with a Designated Maturity of 1 month and (b) the
"Ceiling Rate" (as set forth in Schedule A hereto for the
related Floating Rate Payer Period End Date) over (y) the
Strike Rate.
Floating Rate
Day Count Fraction:
30/360
Reset Dates:
The first day of Each Calculation Period.
Compounding:
Inapplicable
Business Days:
New York
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MORGAN STANLEY
Calculation
Agent:
Party A; provided, however, that if an Event of Default occurs
with respect to Party A, then Party B shall be entitled to
appoint a financial institution which would qualify as a
Reference Market-maker to act as Calculation Agent.
3.
Account Details:
Payments to Party A:
Citibank, New York
ABA No. 021 000 089
For: Morgan Stanley Capital Services Inc.
Account No. 4072 4601
Operations Contact:
Jean Barnum
Tel 212 761-2630
Fax 410 534-1431
Payments to Party B:
Wells Fargo Bank, National Association
ABA No. 121-000-248
Account Name: Corporate Trust Clearing
Account No. 3970771416 for further credit to 50909001,
MSM 2006-5AR
Ref: MSM 2006-5AR, Class A
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4.
Modifications to the Agreement:
The parties hereby agree to amend the Agreement referenced in
paragraph 1
above as follows:
(a) "Cross Default"
applies to Party A but not to Party B.
(b) Fully-Paid
Transactions. Notwithstanding the terms of Sections 5 and 6 of
the
Agreement if Party B has satisfied in full all of its payment
obligations under Section 2(a)(i) of the Agreement, then unless
Party A
is
required pursuant to appropriate proceedings to return to Party B
or
otherwise returns to Party B upon demand of Party B any portion of
such
payment, (a) the occurrence of an event described in Section 5(a)
of the
Agreement with respect to Party B shall not constitute an Event
of
Default or Potential Event of Default with respect to Party B as
the
Defaulting Party and (b) Party A shall be entitled to designate an
Early
Termination Event pursuant to Section 6 of the Agreement only as a
result
of a
Termination Event set forth in either Section 5(b)(i) or
Section
5(b)(ii) of the Agreement with respect to Party A as the Affected
Party
or
Section 5(b)(iii) of the Agreement with respect to Party A as
the
Burdened Party. For purposes of the Transaction to which this
Confirmation relates, Party B's only obligation under Section
2(a)(i) of
the
Agreement is to pay the Fixed Amount on the Fixed Rate Payer
Payment
Date.
(c) "Threshold Amount"
means, with respect to a party, U.S. $10,000,000 (or
the
equivalent in another currency, currency unit or combination
thereof).
(d) Payments on Early
Termination. "Market Quotation" and "Second Method"
will
apply for the purpose of Section 6(e) of this Agreement.
(e) "Termination
Currency" means United States Dollars.
(f) Party A and Party
B Payer Tax Representations. For the purpose of Section
3(e), each of Party A and Party B makes the following
representation:
It
is not required by any applicable law, as modified by the practice
of
any
relevant governmental revenue authority, of any Relevant
Jurisdiction
to
make any deduction or withholding for or on account of any Tax
from
any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e))
to
be
made by it to the other
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MORGAN STANLEY
party under this Agreement. In making this representation, it may
rely on
(i)
the accuracy of any representation made by the other party
pursuant
to
Section 3(f); (ii) the satisfaction of the agreement of the
other
party contained in Section 4(a)(i) or 4(a)(iii) and the accuracy
and
effectiveness of any document provided by the other party pursuant
to
Section 4(a)(i) or 4(a)(iii); and (iii) the satisfaction of the
agreement
of
the other party contained in Section 4(d), provided that it shall
not
be a
breach of this representation where reliance is placed on
clause
(ii)
and the other party does not deliver a form or document under
Section 4(a)(iii) by reason of material prejudice to its legal
or
commercial position.
(g) Payee Tax
Representations
(i)
For the purpose of
Section 3(f), Party A makes the following
representation:
It is a corporation duly organized and incorporated under the
laws
of the State of Delaware and is not a foreign corporation for
United
States tax purposes.
(ii)
For the purpose of Section 3(f), Party B makes the following
representation:
It is a trust duly formed under the laws of the State of New
York
and is not a foreign corporation for United States tax
purposes.
(h) Governing Law;
Jurisdiction. This Agreement, each Credit Support Document
and
each Confirmation will be governed by and construed in
accordance
with
the laws of the State of New York, without reference to choice
of
law
doctrine. Section 13(b) is amended by: (1) deleting "non-" from
the
second line of clause (i); and (2) deleting the final
paragraph.
(i) Waiver of Jury
Trial. Each party waives, to the fullest extent permitted
by
applicable law, any right it may have to a trial by jury in respect
of
any
Proceedings relating to this Agreement or any Credit Support
Document.
(j) "Affiliate" has
the meaning specified in Section 14, but excludes Morgan
Stanley Derivative Products Inc.
(k) Additional
Representations. Section 3 is hereby amended by adding at the
end
thereof the following Subparagraphs:
(i)
It is an "eligible
contract participant" within the meaning of
Section 1a(12) of the Commodity Exchange Act (7 U.S.C. 1a), as
amended by the Commodity Futures Modernization Act of 2000.
(ii)
It has entered into this Agreement (including each Transaction
evidenced hereby) in conjunction with its line of business
(including financial intermediation services) or the financing
of
its business.
(iii) It
is entering into this Agreement, any Credit Support Document to
which it is a party, each Transaction and any other
documentation
relating to this Agreement or any Transaction as principal (and
not
as agent or in any other capacity, fiduciary or otherwise).
(iv)
ERISA Representation. It continuously represents that it is not
(i)
an employee benefit plan (hereinafter an "ERISA Plan"), as
defined
in Section 3(3) of the Employee Retirement Income Security Act
of
1974, as amended ("ERISA"), subject to Title I of ERISA or a
plan
subject to Section 4975 of the Internal Revenue Code of 1986,
as
amended, or subject to any other statute, regulation, procedure
or
restriction that is materially similar to Section 406 of ERISA
or
Section 4975 of the
Code (together with ERISA Plans, "Plans"), (ii)
a person acting on behalf of a Plan or (iii) a person any of
the
assets of whom constitute assets of a Plan, unless its entry
into
and performance under this agreement satisfy the requirements
for
exemptive relief under Prohibited Transactions Exemption 90-24,
as
amended. It will provide notice to the other party in the event
that
it is aware that it is in breach of any aspect of this
representation or is aware that with the
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MORGAN STANLEY
passing of time, giving of notice or expiry of any applicable
grace
period it will breach this representation.
(l) Relationship
Between Parties. Each party will be deemed to represent to
the
other party on the date on which it enters into a Transaction
that
(absent a written agreement between the parties that expressly
imposes
affirmative obligations to the contrary for that Transaction):
(i)
Non-Reliance. In the
case of Party A, it is acting for its own
account, and in the case of Party B, it is acting as Trustee.
Party
A has made its own independent decisions to enter into that
Transaction and as to whether that Transaction is appropriate
or
proper for it based upon its own judgment and upon advice from
such
advisers as it has deemed necessary and, with respect to Party B,
as
directed under the PSA. It is not relying on any communication
(written or oral) of the other party as investment advice or as
a
recommendation to enter into that Transaction; it being
understood
that information and explanations related to the terms and
conditions of a Transaction shall not be considered investment
advice or a recommendation to enter into that Transaction. No
communication (written or oral) received from the other party
shall
be deemed to be an assurance or guarantee as to the expected
results
of that Transaction.
(ii)
Assessment and Understanding. It is capable of assessing the
merits
of and understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms,
conditions and risks of that Transaction. It is also capable of
assuming, and assumes, the risks of that Transaction.
(iii)
Status of Parties. Party A and Party B are not acting as a
fiduciary for or an adviser to each other in respect