Exhibit 99.5
SWAP CONTRACT ADMINISTRATION AGREEMENT
This SWAP CONTRACT ADMINISTRATION AGREEMENT, dated as of
February 10, 2006 (this "Agreement"), among THE BANK OF NEW YORK ("BNY"), as
Swap Contract Administrator (in such capacity, the "Swap Contract
Administrator") and not in its individual or corporate capacity but solely as
Trustee under the Pooling and Servicing Agreement referred to below (in such
capacity, the "Trustee"), and COUNTRYWIDE HOME LOANS, INC. ("CHL").
WHEREAS, CHL is a party to an interest rate swap agreement
between CHL and Bear Xxxxxxx Financial Products Inc. (the "Counterparty"),
with a Trade Date of January 27, 2006 and a reference number of FXCWL061 (the
"Swap Contract"), a copy of which is attached to this Agreement at Exhibit A;
WHEREAS, CHL is conveying certain mortgage loans and other
related assets to a trust fund (the "Trust Fund") created pursuant to a
Pooling and Servicing Agreement, dated as of January 1, 2006 (the "Pooling and
Servicing Agreement"), among CWABS Inc., as depositor, CHL, as a seller, Park
Monaco Inc., as a seller, Park Sienna LLC, as a seller, Countrywide Home Loans
Servicing LP, as master servicer (the "Master Servicer"), and the Trustee,
with respect to the CWABS, Inc. Asset-Backed Certificates, Series 2006-1;
WHEREAS, simultaneously with the execution and delivery of
this Agreement, CHL is assigning all of its rights, and delegating all of its
duties and obligations (other than its obligation to pay the Upfront Amount
(as defined in the Swap Contract)), under the Swap Contract to the Swap
Contract Administrator, pursuant to the Assignment Agreement, dated as of the
date hereof (the "Assignment Agreement"), among CHL, as assignor, the Swap
Contract Administrator, as assignee, and the Counterparty;
WHEREAS, the parties hereto desire that the Trustee make
remittances to the Swap Contract Administrator as contemplated by and to the
extent provided in the Pooling and Servicing Agreement to cover payments due
to the Counterparty under the Swap Contract;
WHEREAS, CHL desires that the Net Payments (as defined
below) payable by the Counterparty on the Swap Contract be distributed to the
Trustee under the Pooling and Servicing Agreement to be applied for the
purposes specified in the Pooling and Servicing Agreement and that the Excess
Payments (as defined below) on the Swap Contract be distributed to CHL;
WHEREAS, CHL and the Trustee desire to appoint the Swap
Contract Administrator, and the Swap Contract Administrator desires to accept
such appointment, to distribute funds received under the Swap Contract to the
Trustee and to CHL as provided in this Agreement, and, in the case of a NIM
Issuance, to distribute Excess Payments in accordance with the related Swap
Excess Assignment Agreement (each as defined below).
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties agree
as follows:
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1. Definitions. Capitalized terms used but not otherwise defined in this
Agreement shall have the respective meanings assigned thereto in the Pooling
and Servicing Agreement.
Benefited Certificates: The Class AV Certificates and the
Adjustable Rate Subordinate Certificates.
Excess Payment: For any Distribution Date on or prior to the
Swap Contract Termination Date and as to which the Swap Contract or a
replacement swap contract is in effect, an amount equal to the excess, if any,
of (i) the Net Swap Payment (as defined in the Pooling and Servicing
Agreement) received by the Swap Contract Administrator from the Counterparty
with respect to such Distribution Date over (ii) the Net Payment for such
Distribution Date. For any Distribution Date on or prior to the Swap Contract
Termination Date but only if neither the Swap Contract nor a replacement swap
contract is in effect, zero. For any Distribution Date after the Swap Contract
Termination Date, an amount equal to all remaining funds on deposit in the
Swap Administration Account.
Indenture Trustee: With respect to a NIM Issuance (if any),
the indenture trustee under the indenture pursuant to which the notes related
to such NIM Issuance are issued.
ISDA Credit Support Annex: An ISDA Credit Support Annex
negotiated and established as provided in Section 5.
Net Payment: With respect to any Distribution Date on or
prior to the Swap Contract Termination Date, an amount equal to the sum of (i)
any Current Interest and Interest Carry Forward Amounts in respect of the
Benefited Certificates, (ii) any Net Rate Carryover in respect of the
Benefited Certificates, (iii) any Unpaid Realized Loss Amounts in respect of
the Benefited Certificates and (iv) any Adjustable Rate Overcollateralization
Deficiency Amount, in each case remaining unpaid (or in the case of Adjustable
Rate Overcollateralization Deficiency Amount, remaining) following the
distribution to the Benefited Certificates of Adjustable Rate Loan Group
Excess Cashflow pursuant to Section 4.04(f)(1) through (4) of the Pooling and
Servicing Agreement. With respect to any Distribution Date after the Swap
Contract Termination Date, zero.
NIM Issuance: An issuance by a NIM Trust, on or after the
date hereof, of asset-backed notes secured by the Class C Certificates and/or
Class P Certificates.
NIM Trust: A Delaware statutory trust or other
special-purpose entity that is the issuer of the securities issued in
connection with a NIM Issuance (if any).
Responsible Officer: When used with respect to the Swap
Contract Administrator, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, any Trust Officer or any other officer of
the Swap Contract Administrator customarily performing functions similar to
those performed by any of the above designated officers and also to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
Swap Administration Account: The separate account created
and maintained by the Swap Contract Administrator pursuant to Section 3 with a
depository institution in the name
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of the Swap Contract Administrator for the benefit of the Counterparty, CHL
and the Trustee on behalf of the Holders of the Benefited Certificates and
designated "The Bank of New York for Countrywide Home Loans, Inc., [name of
the Counterparty] and certain registered Holders of CWABS, Inc., Asset-Backed
Certificates, Series 2006-1". Funds in the Swap Administration Account shall
be held for the Counterparty, CHL and the Trustee on behalf of the Holders of
the Benefited Certificates as set forth in this Agreement.
Swap Excess Assignment Agreement: With respect to a NIM
Issuance (if any), an agreement executed on or after the date hereof by CHL,
the related NIM Trust and the Swap Contract Administrator (in form and
substance reasonably satisfactory to the Swap Contract Administrator),
pursuant to which rights to receive certain portions of Excess Payments shall
be assigned to such NIM Trust and pursuant to which the Swap Contract
Administrator shall agree to distribute Excess Payments to the related
Indenture Trustee and CHL (in accordance with the terms of such agreement).
2. Appointment of Swap Contract Administrator.
CHL and the Trustee hereby appoint BNY to serve as Swap Contract
Administrator pursuant to this Agreement and pursuant to the related Swap
Excess Assignment Agreement (if any). The Swap Contract Administrator accepts
such appointment and acknowledges the transfer and assignment to it of CHL's
rights and obligations under the Swap Contract pursuant to the Assignment
Agreement. The Swap Contract Administrator agrees to exercise the rights
referred to above for the benefit of CHL, the Trustee and the Counterparty and
to perform the duties set forth in this Agreement. In the event of a NIM
Issuance, the Swap Contract Administrator further agrees to perform the duties
set forth in the related Swap Excess Assignment Agreement for the benefit of
CHL, the related NIM Trust and the related Indenture Trustee.
3. Receipt of Funds; Swap Administration Account.
The Swap Contract Administrator hereby agrees to receive (i) on
behalf of CHL and the Trustee, all amounts paid by the Counterparty under the
Swap Contract and (ii) on behalf of the Counterparty, all amounts remitted by
the Trustee pursuant to the Pooling and Servicing Agreement for payment to the
Counterparty. The Swap Contract Administrator shall establish and maintain a
Swap Administration Account into which the Swap Contract Administrator shall
deposit or cause to be deposited on the Business Day of receipt, (x) all
amounts remitted by the Trustee for payment to the Counterparty pursuant to
the Swap Contract and (y) all amounts payable by the Counterparty under the
Swap Contract. All funds deposited in the Swap Administration Account shall be
held for the benefit of the Counterparty, CHL and the Trustee on behalf of the
Holders of the Benefited Certificates until withdrawn in accordance with this
Section 3. The Swap Administration Account shall be an "Eligible Account" as
defined in the Pooling and Servicing Agreement.
Funds in the Swap Administration Account shall remain uninvested.
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The Swap Contract Administrator shall give at least 30 days' advance
notice to the Counterparty, CHL and the Trustee of any proposed change of
location of the Swap Administration Account prior to any change thereof.
4. Calculations; Distribution of Payments; Delivery of Notices.
The Swap Contract Administrator hereby agrees to make payments based
on the information provided by the Trustee and the Counterparty, and the Swap
Contract Administrator shall, absent manifest error, be entitled to rely on
information provided by the Trustee and the Counterparty.
On the Business Day of receipt of any payment from the Counterparty,
the Swap Contract Administrator shall withdraw the amount of such payment from
the Swap Administration Account and distribute such amounts sequentially, as
follows:
(a) first, to the Trustee for deposit into the Swap Account, the
applicable Net Payment; and
(b) second, to CHL, the applicable Excess Payment, in accordance
with the following wiring instructions:
Bank: Bank of New York
Account Name: Countrywide Home Loans
Account No: 8900038632
ABA No: 000000000
REF: CWABS 2006-1 X'S SwapPyt
On the Business Day of receipt of any payment from the Trustee for
payment to the Counterparty, the Swap Contract Administrator shall withdraw
the amount of such payment from the Swap Administration Account and distribute
such amounts to the Counterparty in accordance with the wiring instructions
specified in the Swap Contract.
The Swap Contract Administrator shall prepare and deliver any notices
required to be delivered under the Swap Contract.
On the Business Day of receipt of any notices, information or reports
received by the Swap Contract Administrator from the Counterparty, the Swap
Contract Administrator shall provide the same to the Trustee, including
without limitation information regarding any Net Swap Payment or Swap
Termination Payment that will be payable by the Swap Contract Administrator to
the Counterparty with respect to the next Distribution Date.
5. Control Rights; Credit Support Annex; Replacement Swap Contract.
The Trustee shall have the right to direct the Swap Contract
Administrator with respect to the exercise of any right under the Swap
Contract (such as the right to designate an Early Termination Date following
an Event of Default (each such term as defined in the Swap Contract)).
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Upon the Swap Contract Administrator obtaining actual knowledge of
the rating of the Counterparty falling below the Approved Rating Thresholds
(as defined in the Swap Contract), the Swap Contract Administrator, at the
direction of the Trustee, shall negotiate an ISDA Credit Support Annex with
the Counterparty that meets the terms of the Swap Contract. If an ISDA Credit
Support Annex is negotiated, the Swap Contract Administrator, at the direction
of the Trustee, shall demand payment of the Delivery Amount (as defined in the
ISDA Credit Support Annex). In addition, if an ISDA Credit Support Annex is
negotiated, the Swap Contract Administrator shall establish an account to hold
cash or other eligible investments pledged under such ISDA Credit Support
Annex. Any such account shall be an "Eligible Account" as defined in the
Pooling and Servicing Agreement. Any cash or other eligible investments
pledged under an ISDA Credit Support Annex shall not be part of the Swap
Administration Account unless they are applied in accordance with such ISDA
Credit Support Annex to make a payment due to the Swap Contract Administrator
pursuant to the Swap Contract.
In the event that the Swap Contract is terminated, CHL shall assist
the Swap Contract Administrator in procuring a replacement swap contract with
terms approximating those of the original Swap Contract, and the Swap Contract
Administrator shall enter into a replacement swap contract procured by CHL and
continue to serve as Swap Contract Administrator pursuant to the terms hereof.
Any Swap Termination Payment received from the Counterparty shall be used to
pay any upfront amount required under any replacement swap contract, and any
excess shall be distributed to CHL. In the event that a replacement swap
contract cannot be procured, any Swap Termination Payment received from the
Counterparty in respect of the termination of the original Swap Contract shall
be held in the Swap Administration Account and distributed as provided in
Section 4.
In the event that a replacement swap is procured and the replacement
counterparty pays an upfront amount to the Swap Contract Administrator in
connection with the execution of the replacement swap contract, then (i) if
that upfront amount is not received prior to the Distribution Date on which
any Swap Termination Payment was due to the Counterparty under the original
Swap Contract, that upfront amount shall be held in the Swap Administration
Account and distributed as provided in Section 4, and (ii) if that upfront
amount is received prior to the Distribution Date on which any Swap
Termination Payment is due to the Counterparty under the original Swap
Contract, the Swap Contract Administrator shall remit to the Trustee, to be
included in Interest Funds for Loan Group 2, the portion of such upfront
amount equal to the lesser of (x) such upfront amount and (y) the amount of
the Swap Termination Payment due to the Counterparty under the Original Swap
Contract. Any upfront amount paid by a replacement counterparty that is not
remitted by the Swap Contract Administrator to the Trustee pursuant to clause
(ii) of the preceding sentence shall be distributed to CHL.
6. Monitoring of Significance Percentage. With respect to each Distribution
Date, the Swap Contract Administrator shall calculate the "significance
percentage" (as defined in Item 1115 of Subpart 229.1100 - Asset Backed
Securities (Regulation AB), 17 C.F.R. xx.xx. 229.1100-229.1123) of the Swap
Contract based on the aggregate Certificate Principal Balance of the Benefited
Certificates for such Distribution Date (after all distributions to be made
thereon on such Distribution Date) and based on the methodology provided in
writing by or on behalf of CHL no later than the fifth Business Day preceding
such Distribution Date. On each Distribution Date, the Swap Contract
Administrator shall provide to CHL a written report (which written report may
include similar information with respect to other derivative
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instruments relating to securitization transactions sponsored by CHL)
specifying the "significance percentage" of the Swap Contract for that
Distribution Date. If the "significance percentage" of the Swap Contract
exceeds 7.0% with respect to any Distribution Date, the Swap Contract
Administrator shall make a separate notation thereof in the written report
described in the preceding sentence. Such written report may contain such
assumptions and disclaimers as are deemed necessary and appropriate by the
Swap Contract Administrator.
7. Representations and Warranties of the Swap Contract Administrator.
The Swap Contract Administrator represents and warrants as follows:
(a) BNY is duly organized and validly existing as a banking
corporation under the laws of the State of New York and has
all requisite power and authority to execute and deliver
this Agreement and to perform its obligations as Swap
Contract Administrator under this Agreement.
(b) The execution, delivery and performance of this Agreement by
BNY as Swap Contract Administrator has been duly authorized
by BNY.
(c) This Agreement has been duly executed and delivered by BNY
as Swap Contract Administrator and is enforceable against
BNY in accordance with its terms, except as enforceability
may be affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a
proceeding in equity or at law).
8. Certain Matters Concerning the Swap Contract Administrator.
(a) The Swap Contract Administrator shall undertake to perform
such duties and only such duties as are specifically set
forth in this Agreement.
(b) No provision of this Agreement shall be construed to relieve
the Swap Contract Administrator from liability for its own
grossly negligent action, its own gross negligent failure to
act or its own misconduct, its grossly negligent failure to
perform its obligations in compliance with this Agreement,
or any liability that would be imposed by reason of its
willful misfeasance or bad faith; provided that:
(i) the duties and obligations of the Swap Contract
Administrator shall be determined solely by the
express provisions of this Agreement, the Swap
Contract Administrator shall not be liable,
individually or as Swap Contract Administrator,
except for the performance of such duties and
obligations as are specifically set forth in this
Agreement, no implied covenants or obligations
shall be read into this Agreement against the Swap
Contract Administrator and the Swap Contract
Administrator may conclusively rely, as to the
truth of the statements and the correctness of the
opinions expressed therein, upon any certificates
or opinions furnished to the Swap Contract
Administrator and conforming to the requirements of
this Agreement that it reasonably believed in good
faith to be genuine and
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to have been duly executed by the proper
authorities respecting any matters arising
hereunder;
(ii) the Swap Contract Administrator shall not be
liable, individually or as Swap Contract
Administrator, for an error of judgment made in
good faith by a Responsible Officer or Responsible
Officers of the Swap Contract Administrator, unless
the Swap Contract Administrator was grossly
negligent or acted in bad faith or with willful
misfeasance; and
(iii) the Swap Contract Administrator shall not be
liable, individually or as Swap Contract
Administrator, with respect to any action taken,
suffered or omitted to be taken by it in good faith
in accordance with the direction of the Controlling
Party, or exercising any power conferred upon the
Swap Contract Administrator under this Agreement.
(c) Except as otherwise provided in Sections 8(a) and 8(b):
(i) the Swap Contract Administrator may request and
rely upon and shall be protected in acting or
refraining from acting upon any resolution,
officer's certificate, certificate of auditors or
any other certificate, statement, instrument,
opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed
by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) the Swap Contract Administrator may consult with
counsel and any opinion of counsel shall be full
and complete authorization and protection in
respect of any action taken or suffered or omitted
by it hereunder in good faith and in accordance
with such opinion of counsel;
(iii) the Swap Contract Administrator shall not be
liable, individually or as Swap Contract
Administrator, for any action taken, suffered or
omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(iv) the Swap Contract Administrator shall not be bound
to make any investigation into the facts or matters
stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or
document, unless requested in writing so to do by
the Counterparty, CHL or the Trustee; provided,
however, that if the payment within a reasonable
time to the Swap Contract Administrator of the
costs, expenses or liabilities likely to be
incurred by it in the making of such investigation
is, in the opinion of the Swap Contract
Administrator not reasonably assured to the Swap
Contract Administrator by the Counterparty, CHL
and/or the Trustee, the Swap Contract Administrator
may require reasonable indemnity against such
expense, or liability from the Counterparty, CHL
and/or the Trustee, as the case may be, as a
condition to taking any such action; and
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(v) the Swap Contract Administrator shall not be
required to expend its own funds or otherwise incur
any financial liability in the performance of any of
its duties hereunder if it shall have reasonable
grounds for believing that repayment of such funds
or adequate indemnity against such liability is not
assured to it.
(vi) the Swap Contract Administrator shall not be
liable, individually or as Swap Contract
Administrator, with respect to or in connection
with errors or omissions contained in the report to
be provided pursuant to Section 6 hereof, to the
extent such errors or omissions are the result of
inaccuracies in the methodology or other
information provided to the Swap Contract
Administrator by CHL.
(d) CHL covenants and agrees to pay or reimburse the Swap
Contract Administrator, upon its request, for all reasonable
expenses and disbursements incurred or made by the Swap
Contract Administrator in accordance with any of the
provisions of this Agreement except any such expense or
disbursement as may arise from its negligence, bad faith or
willful misconduct. The Swap Contract Administrator and any
director, officer, employee or agent of the Swap Contract
Administrator shall be indemnified by CHL and held harmless
against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement,
the Swap Contract or the Assignment Agreement, or in
connection with the performance of any of the Swap Contract
Administrator's duties hereunder or thereunder, other than
any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of
any of the Swap Contract Administrator's duties hereunder or
thereunder. Such indemnity shall survive the termination of
this Agreement or the resignation of the Swap Contract
Administrator hereunder and under the Swap Contract and the
Assignment Agreement. Notwithstanding anything to the
contrary in this Section 8(d), any expenses, disbursements,
losses or liabilities of the Swap Contract Administrator or
any director, officer, employee or agent thereof that are
made or incurred as a result of any request, order or
direction of any NIM Insurer or any of the
Certificateholders made to the Trustee as contemplated by
Section 8.02(a)(9) of the Pooling and Servicing Agreement
and consequently made to the Swap Contract Administrator by
the Trustee shall be payable by the Trustee out of the
security or indemnity provided by any NIM Insurer or such
Certificateholders pursuant to Section 8.02(a)(9) of the
Pooling and Servicing Agreement.
(e) Upon the resignation of BNY as Trustee in accordance with
the Pooling and Servicing Agreement, (i) BNY shall resign
and be discharged from its duties as Swap Contract
Administrator hereunder and (ii) the Person that succeeds
BNY as Trustee shall be appointed as successor Swap Contract
Administrator hereunder upon its execution, acknowledgement
and delivery of the instrument accepting such appointment in
accordance with Section 8.08 of the Pooling and Servicing
Agreement, whereupon the duties of the Swap Contract
Administrator hereunder shall pass to such Person. In
addition, upon the appointment of a successor
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Trustee under the Pooling and Servicing Agreement, such
successor Trustee shall succeed to the rights of the Trustee
hereunder.
(f) In the event of a NIM Issuance, nothing in this Section 8
shall limit or otherwise modify or affect the rights, duties
or obligations of the Swap Contract Administrator under the
related Swap Excess Assignment Agreement.
9. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(b) Each of BNY and CHL hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceedings arising out
of or relating to this Agreement.
(c) The Counterparty shall be an express third party beneficiary
of this Agreement for the purpose of enforcing the
provisions hereof to the extent of the Counterparty's rights
explicitly specified herein as if a party hereto.
(d) This Agreement shall terminate upon the termination of the
Swap Contract and the disbursement by the Swap Contract
Administrator of all funds received under the Swap Contract
to CHL and the Trustee on behalf of the Holders of the
Benefited Certificates.
(e) This Agreement may be amended, supplemented or modified in
writing by the parties hereto, provided that no amendment
shall adversely affect in any material respect the
Counterparty without the prior written consent of the
Counterparty, which consent shall not be unreasonably
withheld.
(f) This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all such
counterparts taken together shall be deemed to constitute
one and the same instrument.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other
jurisdiction.
(h) The representations and warranties made by the parties to
this Agreement shall survive the execution and delivery of
this Agreement. No act or omission on the part of any party
hereto shall constitute a waiver of any such representation
or warranty.
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(i) The article and section headings in this Agreement are for
convenience of reference only, and shall not limit or
otherwise affect the meaning of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
THE BANK OF NEW YORK,
as Swap Contract Administrator
By:/s/ Xxxxx Xxxxxx
--------------------------------------
Name: XXXXX XXXXXX
Title: ASSISTANT TREASURER
THE BANK OF NEW YORK,
not in its individual or corporate capacity
but solely as Trustee
By:/s/ Xxxxx Xxxxxx
--------------------------------------
Name: XXXXX XXXXXX
Title: ASSISTANT TREASURER
COUNTRYWIDE HOME LOANS, INC.
By:/s/ Xxxx Xxxxxxx, Xx.
--------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Senior Vice President
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EXHIBIT A
SWAP CONTRACT
A-1
