Exhibit 99.1
CORRIDOR CONTRACT ADMINISTRATION AGREEMENT
This CORRIDOR CONTRACT ADMINISTRATION AGREEMENT, dated as of September
8, 2006 (this "Agreement"), among THE BANK OF NEW YORK ("BNY"), as Corridor
Contract Administrator (in such capacity, the "Corridor 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 corridor agreement between
CHL and X.X. Xxxxxx Xxxxx Bank, N.A. (the "Counterparty"), with a Trade Date of
August 28, 2006 and reference numbers of 2000005079722 and 2000005079723 (the
"Corridor 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 August 1, 2006 (the "Pooling and Servicing
Agreement"), among CWHEQ, Inc., as depositor, CHL, as a seller, Park Granada
LLC, 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 CWHEQ, Inc., Home Equity Loan Asset-Backed
Certificates, Series 2006-S4;
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 Fixed Amount and any fees,
if applicable (as defined in the Corridor Contract)), under the Corridor
Contract to the Corridor Contract Administrator, pursuant to the Assignment
Agreement, dated as of the date hereof (the "Assignment Agreement"), among CHL,
as assignor, the Corridor Contract Administrator, as assignee, and the
Counterparty;
WHEREAS, CHL desires that the Net Payments (as defined below) on the
Corridor Contract be distributed to the Trustee on behalf of the Trust Fund to
be applied for the purposes specified in the Pooling and Servicing Agreement and
that the Excess Payments (as defined below) on the Corridor Contract be
distributed to CHL;
WHEREAS, CHL and the Trustee desire to appoint the Corridor Contract
Administrator, and the Corridor Contract Administrator desires to accept such
appointment, to distribute funds received under the Corridor Contract to the
Trustee and to CHL as provided in this Agreement.
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:
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 A-1 Certificates.
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Calculation Period: With respect to the Corridor Contract and any
payment made under or in respect of such Corridor Contract, the related
"Calculation Period" as defined in such Corridor Contract.
Controlling Party: As defined in Section 5.
Corridor Contract Account: The separate account created and maintained
by the Corridor Contract Administrator pursuant to Section 3 with a depository
institution in the name of the Corridor Contract Administrator for the benefit
of 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. and
certain registered Holders of CWHEQ, Inc., Home Equity Loan Asset-Backed
Certificates, Series 2006-S4". Funds in the Corridor Contract Account shall be
held for CHL and the Trustee on behalf of the Holders of the Benefited
Certificates as set forth in this Agreement.
Day Count Fraction: With respect to the Corridor Contract and any
Distribution Date, the "Floating Rate Day Count Fraction" specified for the
Calculation Period related to such Distribution Date in such Corridor Contract.
Excess Payment: For any Distribution Date, (a) with respect to any
payment received by the Corridor Contract Administrator from the Counterparty in
respect of the Corridor Contract for such Distribution Date (other than any
payment in respect of an early termination of the Corridor Contract), an amount
equal to the excess, if any, of such payment over the Net Payment for such
Distribution Date and (b) with respect to any payment received by the Corridor
Contract Administrator from the Counterparty in respect of an early termination
of the Corridor Contract received during the period from and including the
immediately preceding Distribution Date to and excluding the day immediately
preceding the current Distribution Date, an amount equal to the excess, if any,
of such payment over the Net Payment in respect of such payment. Notwithstanding
the foregoing, in the event that the aggregate Certificate Principal Balance of
the Benefited Certificates is reduced to zero prior to the termination of the
Corridor Contract, the Excess Payment for any Distribution Date following the
Distribution Date on which the aggregate Certificate Principal Balance of
Benefited Certificates is reduced to zero shall be the entire payment received
from the Counterparty.
LIBOR: With respect to the Corridor Contract, the "Floating Rate
Option" as defined in the Corridor Contract.
Net Payment: For any Distribution Date, (a) with respect to any payment
received by the Corridor Contract Administrator from the Counterparty in respect
of the Corridor Contract for such Distribution Date (other than any payment in
respect of an early termination of the Corridor Contract), an amount equal to
the product of (i) the excess, if any, of (x) LIBOR over (y) the related Strike
Rate, (ii) the lesser of (x) the related Notional Balance for such Distribution
Date and (y) the aggregate Certificate Principal Balance of the Benefited
Certificates immediately prior to such Distribution Date and (iii) the Day Count
Fraction, and (b) with respect to any payment received by the Corridor Contract
Administrator from the Counterparty in respect of an early termination of the
Corridor Contract received during the period from and including the immediately
preceding Distribution Date to and excluding the day
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immediately preceding the current Distribution Date, an amount equal to the
product of (i) a fraction, the numerator of which is equal to the lesser of (x)
the related Notional Balance for the first Distribution Date on or after the
early termination of the Corridor Contract and (y) the aggregate Certificate
Principal Balance of the Benefited Certificates immediately prior to the first
Distribution Date on or after the early termination of the Corridor Contract,
and the denominator of which is equal to the related Notional Balance for the
first Distribution Date on or after the early termination of the Corridor
Contract and (ii) the amount of such payment received in respect of such early
termination. Notwithstanding the foregoing, in the event that the Benefited
Certificates are retired prior to the termination of the Corridor Contract, the
Net Payment for any Distribution Date following the Distribution Date on which
such Benefited Certificates are retired shall be $0.
Notional Balance: With respect to the Corridor Contract and any
Distribution Date, the "Notional Amount" specified for the Calculation Period
related to such Distribution Date in such Corridor Contract.
Responsible Officer: When used with respect to the Corridor Contract
Administrator, any Vice President, any Assistant Vice President, the Secretary,
any Assistant Secretary, any Trust Officer or any other officer of the Corridor
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.
Strike Rate: With respect to the Corridor Contract and any Distribution
Date, "Cap Rate" specified for the Calculation Period related to such
Distribution Date in such Corridor Contract.
2. Appointment of Corridor Contract Administrator.
CHL and the Trustee hereby appoint BNY to serve as Corridor Contract
Administrator pursuant to this Agreement. The Corridor Contract Administrator
accepts such appointment and acknowledges the transfer and assignment to it of
CHL's rights under the Corridor Contract pursuant to the Assignment Agreement.
The Corridor Contract Administrator agrees to exercise the rights referred to
above for the benefit of CHL and the Trustee on behalf of the Trust Fund and to
perform the duties set forth in this Agreement.
3. Receipt of Funds; Corridor Contract Account.
The Corridor Contract Administrator hereby agrees to receive, on behalf
of CHL and the Trustee on behalf of the Trust Fund, all amounts paid by the
Counterparty under the Corridor Contract. The Corridor Contract Administrator
shall establish and maintain a Corridor Contract Account into which the Corridor
Contract Administrator shall deposit or cause to be deposited on the Business
Day of receipt, all amounts payable by the Counterparty under the Corridor
Contract. All funds deposited in the Corridor Contract Account shall be held for
the benefit of CHL and the Trustee on behalf of the Holders of the Benefited
Certificates until withdrawn in accordance with this Section 3. The Corridor
Contract Account shall be an "Eligible Account" as defined in the Pooling and
Servicing Agreement and, if the Trust Fund is terminated pursuant
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to the Pooling and Servicing Agreement prior to the termination of this
Agreement, the Corridor Contract Account shall be an account that would
otherwise qualify as an "Eligible Account" under the Pooling and Servicing
Agreement had the termination of the Trust Fund not occurred.
Funds in the Corridor Contract Account shall remain uninvested.
The Corridor Contract Administrator shall give at least 30 days'
advance notice to CHL and the Trustee of any proposed change of location of the
Corridor Contract Account prior to any change thereof.
4. Calculations; Distribution of Payments; Delivery of Notices.
The Corridor Contract Administrator hereby agrees to perform the
calculations necessary to distribute payments in accordance with this Section 4.
The Corridor Contract Administrator shall perform such calculations based on (x)
the Certificate Principal Balances of the Benefited Certificates provided by the
Trustee pursuant to the Pooling and Servicing Agreement and (y) the Notional
Balances, Day Count Fractions and values of LIBOR provided by the Counterparty
pursuant to the Corridor Contract. The Corridor 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 Corridor Contract Administrator shall withdraw the amount of such payment
from the Corridor Contract Account and distribute such amounts sequentially, as
follows:
(a) first, to the Trustee for deposit into the Carryover Reserve
Fund, 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: CWHEQ 2006-S4
The Corridor Contract Administrator shall prepare and deliver any
notices required to be delivered under the Corridor Contract.
5. Control Rights.
The Controlling Party shall have the right to direct the Corridor
Contract Administrator with respect to the exercise of any right under the
Corridor Contract (such as the right to designate an Early Termination Date
following an Event of Default (each such term as defined in the Corridor
Contract)). For purposes of this Agreement, the "Controlling Party" shall mean
(i) if the aggregate Certificate Principal Balance of the Benefited Certificates
immediately prior to the most recent Distribution Date (or, prior to the first
Distribution Date, the original aggregate Certificate Principal Balance) is
equal to or greater than 50% of the Notional Balance of the
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Corridor Contract as of such Distribution Date (or, prior to the first
Distribution Date, the original Notional Balance of the Corridor Contract), the
Trustee, and (ii) if the aggregate Certificate Principal Balance of the
Benefited Certificates immediately prior to the most recent Distribution Date
(or, prior to the first Distribution Date, the original aggregate Certificate
Principal Balance) is less than 50% of the Notional Balance of the Corridor
Contract as of such Distribution Date (or, prior to the first Distribution Date,
the original Notional Balance of the Corridor Contract), CHL.
6. Monitoring of Significance Percentage. With respect to each
Distribution Date, the Corridor 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
Corridor Contract based on the 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 Corridor Contract
Administrator shall provide to CHL a written report (which written report may
include similar information with respect to other derivative instruments
relating to securitization transactions sponsored by CHL) specifying the
"significance percentage" of the Corridor Contract for that Distribution Date.
If the "significance percentage" of the Corridor Contract exceeds 7.0% with
respect to any Distribution Date, the Corridor 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 Corridor Contract Administrator.
7. Representations and Warranties of the Corridor Contract Administrator.
The Corridor 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 Corridor Contract
Administrator under this Agreement.
(b) The execution, delivery and performance of this Agreement by
BNY as Corridor Contract Administrator has been duly
authorized by BNY.
(c) This Agreement has been duly executed and delivered by BNY as
Corridor 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 Corridor Contract Administrator.
(a) The Corridor Contract Administrator shall undertake to perform
such duties and only such duties as are specifically set forth
in this Agreement.
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(b) No provision of this Agreement shall be construed to relieve
the Corridor 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 Corridor Contract
Administrator shall be determined solely by the express
provisions of this Agreement, the Corridor Contract
Administrator shall not be liable, individually or as
Corridor 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 Corridor Contract Administrator
and the Corridor 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 Corridor
Contract Administrator and conforming to the
requirements of this Agreement that it reasonably
believed in good faith to be genuine and to have been
duly executed by the proper authorities respecting any
matters arising hereunder;
(ii) the Corridor Contract Administrator shall not be liable,
individually or as Corridor Contract Administrator, for
an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Corridor Contract
Administrator, unless the Corridor Contract
Administrator was grossly negligent or acted in bad
faith or with willful misfeasance; and
(iii) the Corridor Contract Administrator shall not be liable,
individually or as Corridor 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 Corridor Contract Administrator
under this Agreement.
(c) Except as otherwise provided in Sections 8(a) and 8(b):
(i) the Corridor 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 Corridor 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 Corridor Contract Administrator shall not be liable,
individually or as Corridor Contract Administrator, for
any action taken, suffered or omitted
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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 Corridor 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 CHL or the Trustee;
provided, however, that if the payment within a
reasonable time to the Corridor 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 Corridor Contract Administrator
not reasonably assured to the Corridor Contract
Administrator by CHL and/or the Trustee, the Corridor
Contract Administrator may require reasonable indemnity
against such expense, or liability from CHL and/or the
Trustee, as the case may be, as a condition to taking
any such action;
(v) the Corridor 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;
and
(vi) the Corridor Contract Administrator shall not be liable,
individually or as Corridor 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 Corridor Contract
Administrator by CHL.
(d) CHL covenants and agrees to pay or reimburse the Corridor
Contract Administrator, upon its request, for all reasonable
expenses and disbursements incurred or made by the Corridor
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 Corridor Contract Administrator and
any director, officer, employee or agent of the Corridor
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 Corridor Contract and the Assignment Agreement, or in
connection with the performance of any of the Corridor
Contract Administrator's duties hereunder, other than any
loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of any
of the Corridor Contract Administrator's duties hereunder or
thereunder. Such indemnity shall survive the termination of
this Agreement or the resignation of the Corridor Contract
Administrator hereunder or thereunder. Notwithstanding
anything to the contrary in this Section 8(d), any expenses,
disbursements, losses or liabilities of the Corridor Contract
Administrator or any director, officer,
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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 Corridor
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 Corridor Contract Administrator
hereunder and (ii) the Person that succeeds BNY as Trustee
shall be appointed as successor Corridor 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 Corridor Contract
Administrator hereunder shall pass to such Person. In
addition, upon the appointment of a successor Trustee under
the Pooling and Servicing Agreement, such successor Trustee
shall succeed to the rights of the Trustee hereunder.
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) This Agreement shall terminate upon the termination of the
Corridor Contract and the disbursement by the Corridor
Contract Administrator of all funds received under the
Corridor Contract to CHL and the Trustee on behalf of the
Holders of the Benefited Certificates.
(d) This Agreement may be amended, supplemented or modified in
writing by the parties hereto.
(e) 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.
(f) 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.
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(g) 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.
(h) 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 Corridor Contract Administrator
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
THE BANK OF NEW YORK, not in its
individual or corporate capacity but
solely as Trustee
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: Executive Vice President
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EXHIBIT A
CORRIDOR CONTRACT
A-1
