Exhibit 99.1
[Corridor Contract Administration Agreement]
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Exhibit 99.1
CORRIDOR CONTRACT ADMINISTRATION AGREEMENT
This CORRIDOR CONTRACT ADMINISTRATION AGREEMENT, dated as of December 29,
2006 (this "Agreement"), among THE BANK OF NEW YORK ("BNY"), as corridor
contract administrator (in such capacity, the "Corridor Contract Administrator")
and 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 Deutsche Bank AG, New York Branch (the "Counterparty"), with respect to the
Class A-1 Certificates, with a Trade Date of December [__], 2006 and reference
number of [______] (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 December 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-S9;
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.
Calculation Period: With respect to the Corridor Contract and any payment
made under the Corridor Contract, the related "Calculation Period" as defined in
the 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-S9". 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 the 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 the
Benefited Certificates is reduced to zero shall be the entire payment received
from the Counterparty.
LIBOR: 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 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
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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 aggregate Certificate Principal Balance of the
Benefited Certificates is reduced to zero prior to the termination of the
Corridor Contract, the Net Payment for any Distribution Date following the
Distribution Date on which the aggregate Certificate Principal Balance of the
Benefited Certificates is reduced to zero 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 the 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, the "Cap Rate" specified for the Calculation Period related to such
Distribution Date in the 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 the 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 Section 4. 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 to
the Pooling and Servicing Agreement prior to the termination of this Agreement,
the
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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 aggregate Certificate Principal Balance 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-S9
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
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Certificate Principal Balance) is equal to or greater 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), 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 grossly negligent failure to act or its
own willful 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;
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(iii) the Corridor Contract Administrator shall not be liable,
individually or as Corridor 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 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 to do so
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 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 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.
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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, 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/ Xxxxxxxx Xxxxxx
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Name: Xxxxxxxx Xxxxxx
Title: Vice President
THE BANK OF NEW YORK, not in its individual or
corporate capacity but solely as Trustee
By: /s/ Xxxxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Xxxxxx Xxxxx
----------------------------------------
Name: Xxxxxx Xxxxx
Title: Executive Vice President
EXHIBIT A
CORRIDOR CONTRACT
A-1
