EXHIBIT 99.7
CORRIDOR CONTRACT ADMINISTRATION AGREEMENT
This CORRIDOR CONTRACT ADMINISTRATION AGREEMENT, dated as of June
29, 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 Bear Xxxxxxx Financial Products Inc. (the "Counterparty"),
with a Trade Date of June 22, 2006 and a reference number of FXNEC8436 (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 June 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"), the Trustee, and The
Bank of New York Trust Company, N.A., as co-trustee, with respect to the
CWABS, Inc. Asset-Backed Certificates, Series 2006-11;
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 1-AF-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 CWABS, Inc., Asset-Backed Certificates,
Series 2006-11". 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
immediately preceding the current Distribution Date, an amount equal to the
product of (i) a
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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 to the Pooling and Servicing Agreement
prior to the termination of this Agreement, the Corridor
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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: CWABS 2006-11
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
Corridor Contract as of such Distribution Date (or, prior to the first
Distribution Date, the
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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.
(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
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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 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;
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(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, 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
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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.
(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.
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(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:______________________________________
Name:
Title:
THE BANK OF NEW YORK, not in its individual
or corporate capacity but solely as Trustee
By:______________________________________
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.
By:______________________________________
Name:
Title:
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EXHIBIT A
CORRIDOR CONTRACT
A-1
