EXHIBIT 99.4
SWAP CONTRACT ADMINISTRATION AGREEMENT
This SWAP CONTRACT ADMINISTRATION AGREEMENT, dated as of June 29,
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 June 21, 2006 and a reference number of FXCWL0611 (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 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 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 or from the Guarantor
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.
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 and Adjustable Rate Credit Comeback Excess Cashflow pursuant
to Section 4.04(c) 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 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., Bear Xxxxxxx Financial Products Inc. and certain
registered
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Holders of CWABS, Inc., Asset-Backed Certificates, Series 2006-11". 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.
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.
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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 or the Guarantor, 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 2006-11 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; 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)).
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
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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 and Loan Group 3,
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, to be allocated between Loan
Group 2 and Loan Group 3 pro rata based on their respective Interest Funds for
that Distribution Date. 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 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.
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(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).
(d) The execution, delivery and performance of this Agreement by BNY
as Swap Contract Administrator will not result in a breach of the
organizational documents of BNY and will not violate any
applicable law, rule or regulation of the United States or the
State of New York.
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 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
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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;
(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; and
(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
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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 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.
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(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.
(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:______________________________________
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:
10
EXHIBIT A
SWAP CONTRACT
A-1
