Exhibit 99.4
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CWHEQ, INC.
Depositor
WILMINGTON TRUST COMPANY
Owner Trustee
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TRUST AGREEMENT
Dated as of August 25, 2006
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CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2006-G
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Table of Contents
Page
ARTICLE 1 DEFINITIONS AND CONSTRUCTION 4
Section 1.01 Definitions................................................................4
Section 1.02 Rules of Construction......................................................4
ARTICLE 2 ORGANIZATION 6
Section 2.01 Name.......................................................................6
Section 2.02 Office.....................................................................6
Section 2.03 Purposes and Powers........................................................6
Section 2.04 Appointment of Owner Trustee...............................................7
Section 2.05 Initial Capital Contribution of Assets.....................................7
Section 2.06 Declaration of Trust.......................................................7
Section 2.07 Liability of a Certificateholder...........................................7
Section 2.08 Title to Trust Property....................................................8
Section 2.09 Location of Trust..........................................................8
Section 2.10 Representations and Warranties of Depositor................................8
ARTICLE 3 THE CERTIFICATES 9
Section 3.01 Initial Beneficiary of Trust...............................................9
Section 3.02 Issuance of the Certificates...............................................9
Section 3.03 Authentication of Certificates............................................10
Section 3.04 Registration of and Transfer and Exchange of Certificates.................10
Section 3.05 Mutilated, Destroyed, Lost, or Stolen Certificate.........................11
Section 3.06 Maintenance of Office or Agency...........................................11
Section 3.07 Persons Considered Certificateholders.....................................12
Section 3.08 Access to List of Certificateholders' Names and Addresses.................12
Section 3.09 Appointment of Certificate Paying Agent...................................12
Section 3.10 Restrictions on Transfer; Legends.........................................13
Section 3.11 REMIC Provisions..........................................................17
Section 3.12 Tax Matters...............................................................22
ARTICLE 4 ACTIONS BY OWNER TRUSTEE 25
Section 4.01 Prior Notice to Certificateholders Regarding Certain Matters..............25
Section 4.02 Action by Certificateholders Regarding Certain Matters....................26
Section 4.03 Action by Certificateholders Regarding Bankruptcy.........................26
Section 4.04 Restrictions on Certificateholder's Power.................................26
Section 4.05 Majority Interest.........................................................26
ARTICLE 5 APPLICATION OF TRUST FUNDS; CERTAIN DUTIES 26
Section 5.01 Application of Trust Funds................................................26
Section 5.02 Method of Payment.........................................................28
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ARTICLE 6 AUTHORITY AND DUTIES OF OWNER TRUSTEE 28
Section 6.01 General Authority.........................................................28
Section 6.02 General Duties............................................................28
Section 6.03 Action on Instruction.....................................................28
Section 6.04 No Duties Except as Specified in the Agreement or in Instructions.........29
Section 6.05 No Action Except Under Specified Documents or Instructions................30
Section 6.06 Restrictions..............................................................30
ARTICLE 7 CONCERNING OWNER TRUSTEE 30
Section 7.01 Acceptance of Trusts and Duties...........................................30
Section 7.02 Furnishing Documents......................................................31
Section 7.03 Representations and Warranties............................................31
Section 7.04 Reliance; Advice of Counsel...............................................32
Section 7.05 Not Acting in Individual Capacity.........................................32
Section 7.06 Owner Trustee Not Liable for Certificates or Payment Obligations..........33
Section 7.07 Owner Trustee May Own Notes...............................................33
ARTICLE 8 COMPENSATION OF OWNER TRUSTEE 33
Section 8.01 Owner Trustee's Fees......................................................33
Section 8.02 Reimbursement and Indemnification.........................................33
Section 8.03 Payments to Owner Trustee.................................................35
ARTICLE 9 TERMINATION OF AGREEMENT 35
Section 9.01 Termination of Agreement..................................................35
Section 9.02 Credit Enhancer's Rights Regarding Actions, Proceedings, or
Investigations............................................................35
Section 9.03 Rights of the Credit Enhancer.............................................37
ARTICLE 10 SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES 37
Section 10.01 Resignation or Removal of Owner Trustee..................................37
Section 10.02 Successor Owner Trustee..................................................38
Section 10.03 Merger or Consolidation of Owner Trustee.................................39
Section 10.04 Appointment of Co-Trustee or Separate Trustee............................39
ARTICLE 11 MISCELLANEOUS 40
Section 11.01 Supplements and Amendments...............................................40
Section 11.02 Limitations on Rights of Others..........................................41
Section 11.03 Notices..................................................................41
Section 11.04 Severability.............................................................42
Section 11.05 Separate Counterparts....................................................42
Section 11.06 Successors and Assigns...................................................42
Section 11.07 Nonpetition Covenant.....................................................42
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Section 11.08 No Recourse..............................................................43
Section 11.09 Headings.................................................................43
Section 11.10 Governing Law............................................................43
Section 11.11 Rule 144A Information....................................................43
Section 11.12 Third-Party Beneficiary..................................................43
EXHIBITS
EXHIBIT A Form of Certificate of Trust of Revolving Home Equity Loan Trust,
Series 2006-G......................................................................A-1
EXHIBIT B-1 Form of Class C Certificates.......................................................B-1
EXHIBIT B-2 Form of Residual Certificates......................................................B-2
EXHIBIT C-1 Form of Representation Letter......................................................C-1
EXHIBIT C-2 Form of Transfer Affidavit.........................................................C-2
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This Trust Agreement (the "Agreement") dated as of August 25, 2006,
between CWHEQ, Inc., a Delaware corporation, as Depositor, and Wilmington Trust
Company, a Delaware banking corporation, as Owner Trustee,
WITNESSETH:
Whereas, the parties to this Agreement will create the CWHEQ Revolving
Home Equity Loan Trust, Series 2006-G and provide for, among other things, the
issuance of the Class C Certificates, the Class R-1 Certificates, and the Class
R-2 Certificates;
Now, Therefore, the parties to this Agreement agree as follows.
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
Section 1.01 Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Agreement have the meanings given to them in the Master Glossary of
Defined Terms attached hereto as Annex 1.
Section 1.02 Rules of Construction.
Except as otherwise expressly provided in this Agreement or unless the
context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural as
well as the singular.
(b) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Agreement, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Agreement as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Agreement are a part of this Agreement. The words "herein,"
"hereof," "hereto," "hereunder," and other words of similar import refer to this
Agreement as a whole and not to any particular article, section, exhibit, or
other subdivision of this Agreement.
(c) The recitals located before Article I are not a part of the agreement
of the parties. Whether or not they are correct, the recitals shall not affect
the agreement of the parties or the interpretation of this Agreement, and they
shall not be interpreted as representations, warranties, covenants, or any other
matter of substance. The headings of the various Articles and Sections in this
Agreement are for convenience of reference only and shall not define or limit
any of the provisions of this Agreement.
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(d) Any term that relates to a document or a statute, rule, or regulation
includes any amendments, modifications, supplements, or any other changes that
may have occurred since the document, statute, rule, or regulation came into
being, including changes that occur after the date of this Agreement. References
to law are not limited to statutes. References to statutes include any rules or
regulations promulgated under them by a governmental authority charged with the
administration of the statute. Any reference to any person includes references
to its successors and assigns.
(e) Any party may execute any of the requirements under this Agreement
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under this
Agreement. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Agreement are implicitly available from
time to time.
(f) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or B
or both," not "either A or B but not both").
(g) A reference to "a [thing]" or "any [of a thing]" does not imply the
existence or occurrence of the thing referred to even though not followed by "if
any," and "any [of a thing]" is any and all of it. A reference to the plural of
anything as to which there could be either one or more than one does not imply
the existence of more than one (for instance, the phrase "the obligors on a
note" means "the obligor or obligors on a note"). "Until [something occurs]"
does not imply that it must occur, and will not be modified by the word
"unless." The word "due" and the word "payable" are each used in the sense that
the stated time for payment has passed. The word "accrued" is used in its
accounting sense, i.e., an amount paid is no longer accrued. In the calculation
of amounts of things, differences and sums may generally result in negative
numbers, but when the calculation of the excess of one thing over another
results in zero or a negative number, the calculation is disregarded and an
"excess" does not exist. Portions of things may be expressed as fractions or
percentages interchangeably. The word "shall" is used in its imperative sense,
as for instance meaning a party agrees to something or something must occur or
exist.
(h) All accounting terms used in an accounting context and not otherwise
defined, and accounting terms partly defined in this Agreement, to the extent
not completely defined, shall be construed in accordance with generally accepted
accounting principles in the United States. To the extent that the definitions
of accounting terms in this Agreement are inconsistent with their meanings under
generally accepted accounting principles, the definitions in this Agreement
shall control. Capitalized terms used in this Agreement without definition that
are defined in the Uniform Commercial Code of the relevant jurisdiction are used
in this Agreement as defined in that Uniform Commercial Code.
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(i) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means "to
and including." Likewise, in setting deadlines or other periods, "by" means "on
or before." The words "preceding," "following," and words of similar import,
mean immediately preceding or following. References to a month or a year refer
to calendar months and calendar years.
(j) Any reference to the enforceability of any agreement against a party
means that it is enforceable against the party in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, and other similar
laws of general applicability relating to or affecting creditors' rights and to
general equity principles.
(k) Generally only the registered holder of a Security is recognized, such
as in Section 3.07. Persons Considered Owner and payment provisions. However,
for the purposes of the transfer restrictions and related provisions, such as
agreements, representations, and warranties by holders of Securities, references
to Securityholders, holders, and the like refer equally to beneficial owners who
have an interest in a Security but are not reflected in the applicable register
as the owner and references to transfers of Securities include transfers of
interests in a Security.
ARTICLE 2
ORGANIZATION
Section 2.01 Name.
This Trust shall be known as "CWHEQ Revolving Home Equity Loan Trust,
Series 2006-G," in which name the Owner Trustee may issue Notes and otherwise
conduct the business of the Trust.
Section 2.02 Office.
The office of the Trust shall be in care of the Owner Trustee at "Xxxxxx
Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000, Attention:
Corporate Trust Administration" or at any other address in the State of Delaware
that the Owner Trustee may designate by notice to the Depositor.
Section 2.03 Purposes and Powers.
(a) The Trust is authorized to engage in the following activities:
(1) to issue the Notes pursuant to the Indenture;
(2) to issue the Certificates pursuant to this Agreement;
(3) to Grant the Assets to the Indenture Trustee pursuant to the
Indenture;
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(4) to distribute to the Holders of the Certificates pursuant to
this Agreement and the Transaction Documents distributions to the Issuer
under the Indenture and any portion of the Assets released from the Lien
of the Indenture and any other amounts provided for in the Sale and
Servicing Agreement;
(5) to enter into and perform its obligations under the Transaction
Documents to which it becomes a party;
(6) to engage in those activities, including entering into
agreements, that are appropriate to accomplish any of the foregoing or are
incidental to them; and
(7) subject to compliance with the Transaction Documents, to engage
in any other activities appropriate to conserve the Assets and make
distributions to any Certificateholder and the holders of Notes.
The Trust shall not engage in any activity other than in connection with
the foregoing activities or other than as required or authorized by this
Agreement or the other Transaction Documents.
Section 2.04 Appointment of Owner Trustee.
The Depositor appoints the Owner Trustee as trustee of the Trust effective
as of the date of this Agreement to have all the rights and obligations in this
Agreement.
Section 2.05 Initial Capital Contribution of Assets.
The Depositor hereby remits to the Owner Trustee the sum of $1. The Owner
Trustee hereby acknowledges receipt in trust from the Depositor of the foregoing
contribution. The Depositor shall pay organizational expenses of the Trust as
they may arise or shall promptly reimburse the Owner Trustee on request for any
such expenses paid by the Owner Trustee.
Section 2.06 Declaration of Trust.
The Owner Trustee hereby declares that it will hold the Assets on the
terms of this Agreement, for the benefit of the Certificateholders, subject to
the obligations of the Trust under the Transaction Documents. The Trust is a
statutory trust under the Statutory Trust Statute and this Agreement is the
governing instrument of the statutory trust. The Owner Trustee shall have all
rights and obligations in this Agreement and in the Statutory Trust Statute for
accomplishing the purposes of the Trust. The Owner Trustee shall file with the
Secretary of State of the State of Delaware a Certificate of Trust of the Trust.
Section 2.07 Liability of a Certificateholder.
Except to the extent otherwise provided in this Agreement or in the other
Transaction Documents, the Certificateholders shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the general corporation law of the State
of Delaware.
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Section 2.08 Title to Trust Property.
Legal title to all the Assets shall be vested in the Trust as a separate
legal entity except where applicable law in any jurisdiction requires title to
any part of the Assets to be vested in a trustee, in which case title shall be
vested in the Owner Trustee or any co-trustee or separate trustee, as the case
may be.
Section 2.09 Location of Trust.
The Trust will be located in Delaware and administered in Delaware. Any
bank accounts maintained by the Owner Trustee on behalf of the Trust shall be
located in Delaware or Illinois. The Trust shall not have any employees in any
State other than Delaware. Nothing in this Agreement shall restrict the Owner
Trustee from having employees within or without Delaware. Payments will be
received by the Trust only in Delaware, Illinois, or California, and payments
will be made by the Trust only from Delaware or Illinois.
Section 2.10 Representations and Warranties of Depositor.
The Depositor represents and warrants to the Owner Trustee as of the date
of this Agreement, and as to any Transaction Document, as of its date that:
(a) Organization and Good Standing. The Depositor is a corporation duly
organized and validly existing under the laws of Delaware, with full power and
authority to own its properties and to conduct its business as presently owned
or conducted and to execute, deliver, and perform this Agreement and any other
document related to this Agreement to which it is a party and to perform its
obligations as contemplated by them.
(b) Due Qualification. The Depositor is duly qualified to do business as a
Delaware corporation in good standing and has obtained all necessary licenses
and approvals in each jurisdiction in which failure to so qualify or to obtain
required licenses or approvals would have a material adverse effect on its
ability to perform its obligations under this Agreement and the Transaction
Documents to which the Depositor is a party.
(c) Due Authorization; Enforceability. The Depositor has full power and
authority to execute, deliver, and perform this Agreement and the Transaction
Documents to which it is a party and to carry out their respective terms. The
Depositor has full power and authority to sell and assign the Assets. The
execution, delivery, and performance by the Depositor of this Agreement and the
Transaction Documents to which the Depositor is a party have been duly
authorized by the Depositor by all necessary action. This Agreement and the
Transaction Documents executed by the Depositor have been duly executed and
delivered and constitute the valid and legally binding obligations of the
Depositor enforceable against the Depositor in accordance with their terms.
(d) No Conflict. The Depositor's execution and delivery of this Agreement
and the Transaction Documents to which the Depositor is a party, performance of
the transactions contemplated by them, and fulfillment of their terms applicable
to the Depositor do not conflict with any requirements of law applicable to the
Depositor or conflict with, result in any breach
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of any of the provisions of, or with or without notice or lapse of time
constitute a default under, any indenture, contract, or other instrument to
which the Depositor is a party or by which it or its properties are bound.
(e) Consents. No authorization, consent, license, order, or approval of or
registration or declaration with, any governmental authority is required to be
obtained, effected, or given by the Depositor in connection with the execution
and delivery of this Agreement or the Transaction Documents by the Depositor or
its performance of its obligations under any of them or the transactions
contemplated by any of them, or the transfer of the Assets to the Trust.
(f) Litigation. No actions, proceedings, or investigations are pending or,
to the best of the Depositor's knowledge, threatened against the Depositor
before any governmental authority having jurisdiction over the Depositor
(1) asserting the invalidity of this Agreement or any other
Transaction Documents to which the Depositor is a party,
(2) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any other Transaction Documents to which
the Depositor is a party,
(3) seeking any determination that might materially and adversely
affect the performance by the Depositor of its obligations under, or the
validity or enforceability of, this Agreement or any other Transaction
Documents to which the Depositor is a party, or
(4) seeking to affect adversely the income tax attributes of the
Trust under the United States federal or New York State or Delaware income
tax law.
ARTICLE 3
THE CERTIFICATES
Section 3.01 Initial Beneficiary of Trust.
Upon the formation of the Trust by the contribution by the Depositor
pursuant to Section 2.05 and until the issuance of the Certificates, the
Depositor shall be the sole beneficiary of the Trust.
Section 3.02 Issuance of the Certificates.
(a) On the Closing Date, the Trust will issue three classes of
Certificates designated as the "Revolving Home Equity Loan Asset Backed
Certificates, Series 2006-G, Class R-1," "Revolving Home Equity Loan Asset
Backed Certificates, Series 2006-G, Class R-2," and "Revolving Home Equity Loan
Asset Backed Certificates, Series 2006-G, Class C" pursuant to this Agreement
and deliver them to the order of the Depositor when authenticated.
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(b) The Certificates will be issued in definitive, fully registered form
and will be substantially in the form of Exhibit B-1 and B-2. The Certificates
will, on the Closing Date, be executed, authenticated, and delivered by the
Owner Trustee to the order of the Depositor concurrently with the transfer of
the Mortgage Loans to the Trust.
(c) The Certificates will be executed by manual or facsimile signature on
behalf of the Owner Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time their
signatures were affixed, authorized to sign on behalf of the Owner Trustee shall
bind the Trust, notwithstanding that any of them have ceased to be so authorized
before the authentication and delivery of the Certificates or did not hold such
offices at the date of the Certificate. The Certificates will not be book-entry
certificates.
Section 3.03 Authentication of Certificates.
No Certificate shall be entitled to any benefit under this Agreement, or
be valid for any purpose, unless the Certificate is manually authenticated by
the Owner Trustee substantially in the form provided in this Agreement, and the
authentication on any Certificate will be conclusive evidence, and the only
evidence, that the Certificate has been duly authenticated and delivered. All
Certificates shall be dated the date of their authentication.
The Trust initially appoints the Indenture Trustee to act as the
authentication agent of the Owner Trustee. All references to the authentication
of the Certificates shall be considered to include the authentication agent.
Section 3.04 Registration of and Transfer and Exchange of Certificates.
The Trust shall keep a certificate register (the "Certificate Register")
in which, subject to any reasonable regulations it may prescribe, the Trust
shall provide for the registration of the Certificates and, to the extent
permitted by this Agreement, of transfers and exchanges of the Certificates. The
certificate registrar (the "Certificate Registrar") is initially the Indenture
Trustee.
Whenever any Certificate is surrendered for registration of transfer at
the office or agency of the Certificate Registrar maintained for that purpose
and the conditions of this Section have been satisfied, the Owner Trustee, on
behalf of the Trust, shall execute, authenticate, and deliver in the name of the
designated transferees, one or more new Certificates in authorized denominations
of a like aggregate amount dated the date of authentication by the Owner Trustee
or any authenticating agent.
At the option of its Holder, each Certificate may be exchanged for other
Certificates, in authorized denominations of a like aggregate amount, by
surrendering the Certificate to be exchanged at the office or agency of the
Certificate Registrar maintained for that purpose.
Every Class C Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a fully completed representation
letter, substantially in the
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form of Exhibit C-1, and every Residual Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by fully completed
representation letter and transfer affidavit, substantially in the forms of
Exhibit C-1 and Exhibit C-2, respectively, each delivered at the expense of the
Certificateholder, and duly executed by the Certificateholder or an
attorney-in-fact for the Certificateholder duly authorized in writing. Each
Holder of a Certificate must satisfy the transfer restrictions in the
representation letter. Each Certificate surrendered for registration of transfer
or exchange shall be cancelled and subsequently disposed of by the Owner Trustee
in accordance with its customary practice.
No service charge shall be made for the registration of transfer or
exchange of any Certificate, but the Owner Trustee or the Certificate Registrar
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of the
Certificate.
The preceding provisions of this Section notwithstanding, the Owner
Trustee need not transfer or exchange, and the Certificate Registrar need not
register transfers or exchanges, of Certificates during the fifteen days
preceding the due date for any payment on the Certificates.
The Certificate Registrar shall at all times maintain an office or agency
where Certificates may be surrendered for registration of transfer or exchange.
Section 3.05 Mutilated, Destroyed, Lost, or Stolen Certificate.
If any mutilated Certificate is surrendered to the Certificate Registrar,
then the Owner Trustee shall execute and the Certificate Registrar shall
authenticate and deliver, in exchange for or in lieu of the mutilated
Certificate, a new Certificate of like tenor and denomination.
If the Certificate Registrar receives evidence to its satisfaction of the
destruction, loss, or theft of a Certificate and the Certificate Registrar
receives the security or indemnity it requires to hold it harmless, then in the
absence of notice to the Issuer, the Certificate Registrar, or the Certificate
Registrar that the Certificate has been acquired by a Protected Purchaser, and
if the requirements of Section 8-406 of the UCC are met and subject to Section
8-405 of the UCC, then the Owner Trustee shall execute and the Certificate
Registrar shall authenticate and deliver, in exchange for or in lieu of the
destroyed, lost, or stolen Certificate, a new Certificate of like tenor and
denomination. Any duplicate Certificate issued pursuant to this Section shall
constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen, or destroyed Certificate is found.
The Certificate Registrar may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed on the issuance
of the new Certificate under this Section.
Section 3.06 Maintenance of Office or Agency.
The Trust shall maintain an office or agency where notices and demands on
the Trust regarding the Certificates and the Transaction Documents may be
served. The Trust initially
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designates Indenture Trustee as its office for those purposes. The Owner Trustee
shall give prompt written notice to the Certificateholders of the location, and
any change in the location, of this office or agency. If the Trust ever fails to
maintain this office or agency, then presentations, surrenders, notices, and
demands may be made or served at the Corporate Trust Office of the Owner
Trustee.
Section 3.07 Persons Considered Certificateholders.
Before due presentation of a Certificate for registration of transfer, the
Owner Trustee, the Certificate Registrar, and any paying agent for the
Certificates shall treat the person in whose name any Certificate is registered
in the Certificate Register as the owner of the Certificate for the purpose of
receiving distributions pursuant to Section 5.02 and for all other purposes
whatsoever, and none of the Owner Trustee, the Certificate Registrar, and any
paying agent for the Certificates shall be bound by any notice to the contrary.
Section 3.08 Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar shall furnish to the Depositor or the Owner
Trustee a list of the names and addresses of the Certificateholders as of the
most recent Record Date within fifteen days after receipt by the Certificate
Registrar of a written request for it from the Depositor or the Owner Trustee.
Section 3.09 Appointment of Certificate Paying Agent.
The paying agent for the Certificates shall make distributions to the
Holder of each Certificate pursuant to this Agreement and shall report the
amounts of those distributions to the Owner Trustee. The Administrator, on
behalf of the Trust, may remove the Certificate Paying Agent if the
Administrator determines in its sole discretion that the Certificate Paying
Agent has failed to perform its obligations under this Agreement in any material
respect. The Certificate Paying Agent initially shall be the Indenture Trustee.
The Certificate Paying Agent shall be permitted to resign as Certificate Paying
Agent on thirty days' written notice to the Owner Trustee. If the Indenture
Trustee is no longer the Certificate Paying Agent, the Administrator shall
appoint a bank or trust company as successor to act as Certificate Paying Agent.
The Administrator shall cause the successor Certificate Paying Agent or any
additional Certificate Paying Agent appointed by the Administrator to execute
and deliver to the Trust an instrument in which the successor Certificate Paying
Agent or additional Certificate Paying Agent agrees with the Trust that, as
Certificate Paying Agent, the successor Certificate Paying Agent or additional
Certificate Paying Agent will hold any sums held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholders entitled
to them until those sums are paid to the appropriate Certificateholders. The
Certificate Paying Agent shall return all unclaimed funds to the Trust, and upon
removal of a Certificate Paying Agent, the Certificate Paying Agent shall also
return all funds in its possession to the Trust. Any reference in this Agreement
to the Certificate Paying Agent shall include any co-Certificate Paying Agent
unless the context requires otherwise.
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Section 3.10 Restrictions on Transfer; Legends.
(a) The Certificates shall be assigned, transferred, exchanged, pledged,
financed, hypothecated, or otherwise conveyed (collectively, for purposes of
this Section and any other Section referring to the Certificates, "transferred"
or a "transfer") only in accordance with this Section.
(b) No transfer of a Certificate will be made unless the transfer is
exempt from the registration requirements of the Securities Act of 1933 (the
"Act") and any applicable state securities laws or is made in accordance with
the Act and those laws. Except for the initial issuance of a Certificate to the
Master Servicer or the Depositor (or an affiliate of any of them) (and any
subsequent transfer by any of them to one of its Affiliates), the Owner Trustee
will require either:
(1) the transferee to execute an investment letter acceptable to and
in form and substance satisfactory to the Owner Trustee certifying to the
Owner Trustee the facts surrounding the transfer, which investment letter
shall not be an expense of the Owner Trustee or
(2) an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Owner Trustee and the Depositor that the transfer may
be made pursuant to an exemption from the Act, describing the applicable
exemption and its basis, or is being made pursuant to the Act, which
Opinion of Counsel shall not be an expense of the Owner Trustee or the
Depositor.
The Holder of a Certificate desiring to effect a transfer shall indemnify
the Trust against any liability that may result if the transfer is not so exempt
or is not made in accordance with any federal and state laws.
(c) No transfer of an interest in a Certificate will be made unless the
Owner Trustee has received either:
(1) a representation letter from the proposed transferee, acceptable
to and in form and substance satisfactory to the Owner Trustee, to the
effect that the proposed transferee is not an employee benefit plan
subject to Section 406 of ERISA or a plan subject to Section 4975 of the
Code, or a person acting on behalf of, or investing plan assets of, any
such plan, which representation letter shall not be an expense of the
Owner Trustee; or
(2) an Opinion of Counsel acceptable to the Owner Trustee to the
effect that the purchase or holding of the Certificate will not result in
a non-exempt prohibited transaction under ERISA or Section 4975 of the
Code and will not subject the Owner Trustee to any obligation in addition
to those undertaken in this Agreement, which Opinion of Counsel shall not
be an expense of the Owner Trustee or the Depositor;
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except that, in the case of the initial issuance of a Certificate to the Master
Servicer or the Depositor (or an affiliate of any of them) (and any subsequent
transfer by any of them to one of its Affiliates), the representation in clause
(i) shall be deemed to have been made.
(d) No transfer of an interest in a Class R-1 Certificate after its
initial issuance will be made unless:
(1) the proposed Holder expressly assumes the performance of every
obligation of the existing Holder under this Agreement and the other
Transaction Documents pursuant to an agreement acceptable to the Owner
Trustee, including the obligation to advance funds to the Trust as
necessary so that the Trust is able to pay the purchase price for
Additional Home Equity Loans;
(2) the existing Holder delivers to the Owner Trustee an Officer's
Certificate stating that the transfer complies with this Section 3.10 and
that all the conditions in this Section 3.10 have been complied with, and
an Opinion of Counsel stating that all the conditions in this Section 3.10
have been complied with; and
(3) the Rating Agency Condition is satisfied with respect to the
transfer.
(e) Each person who has or who acquires any ownership interest in a
Residual Certificate by accepting its ownership interest agrees to the following
provisions, and the rights of each person acquiring any ownership interest in a
Residual Certificate are subject to the following provisions:
(1) Only Permitted Transferee may hold an ownership interest in a
Residual Certificate and each person holding or acquiring any ownership
interest in a Residual Certificate shall promptly notify the Indenture
Trustee of any change or impending change in its status as a Permitted
Transferee.
(2) No ownership interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the
Indenture Trustee shall not register the transfer of any Residual
Certificate unless the Indenture Trustee has received a Transfer Affidavit
from the initial owner or the proposed transferee, except in connection
with the registration of the Tax Matters Person Certificate in the name of
the Indenture Trustee or any registration in the name of, or transfer of a
Residual Certificate to, an Affiliate of the Depositor (either directly or
through a nominee).
(3) Each person holding or acquiring any ownership interest in a
Residual Certificate shall
(A) obtain a Transfer Affidavit from any other person it
attempts to transfer its ownership interest in a Residual
Certificate to,
(B) obtain a Transfer Affidavit from any person for whom it is
acting as nominee, trustee, or agent in connection with any transfer
of any ownership interest in a Residual Certificate, and
14
(C) not transfer its ownership interest in a Residual
Certificate to any other person if it has actual knowledge that such
person is not a Permitted Transferee.
(4) Any attempted transfer of any ownership interest in a Residual
Certificate in violation of this Section 3.10(e) shall be void ab initio
and shall vest no rights in the purported transferee. If any purported
transferee becomes a Holder of a Residual Certificate in violation of this
Section 3.10(e), then the last preceding Permitted Transferee shall be
restored to all rights as Holder of the Residual Certificate retroactive
to the date of registration of transfer of the Residual Certificate. The
Indenture Trustee shall be under no liability to any person for any
registration of transfer of a Residual Certificate that is in fact not
permitted by this Section 3.10(e) or for making any payments due on the
Residual Certificate to its Holder or taking any other action with respect
to the Holder under this Agreement so long as the transfer was registered
after receipt of the related Transfer Affidavit and any other required
documents. The Indenture Trustee shall be entitled but not obligated to
recover from any Holder of a Residual Certificate that was in fact not a
Permitted Transferee at the time it became a Holder or, at such subsequent
time as it became other than a Permitted Transferee, all payments made on
the Residual Certificate at and after either such time. Any such payments
so recovered by the Indenture Trustee shall be paid and delivered by the
Indenture Trustee to the last preceding Permitted Transferee of the
Residual Certificate.
(5) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Indenture Trustee, all information
necessary to compute any tax imposed under Section 860E(e) of the Code as
a result of a transfer of an ownership interest in a Residual Certificate
to any Holder who is not a Permitted Transferee.
(f) Each Certificate shall bear a legend substantially in the following
form:
This certificate has not been and will not be registered under the Securities
Act of 1933, as amended, or the securities laws of any state and may not be
resold or transferred unless it is registered pursuant to the Securities Act of
1933 and the securities laws of any state or is sold or transferred in
transactions that are exempt from registration under the Securities Act of 1933
and under applicable state law and is transferred in accordance with Section
3.10 of the Trust Agreement related to CWHEQ Revolving Home Equity Loan Trust,
Series 2006-G. Neither this certificate nor any interest in it may be
transferred unless the transferee delivers to the trustee either a
representation letter to the effect that the transferee is not an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974, as
amended, a plan subject to Section 4975 of the Code, as amended, or a person
acting on behalf of or using the assets of any such plan; or an opinion of
counsel in accordance with Section 3.10(c) of the Trust Agreement related to
CWHEQ Revolving Home Equity Loan Trust, Series 2006-G. Notwithstanding anything
else to the contrary herein, any purported transfer of this certificate to or on
behalf of an employee
15
benefit plan subject to ERISA or to Section 4975 of the Code without the opinion
of counsel satisfactory to the trustee as described above shall be void.
(g) No Certificate shall be transferred except to (i) the Master Servicer,
the Depositor, or the Trust (or an affiliate of any of them) or (ii) a qualified
institutional buyer (as defined in Rule 144A under the Securities Act). Each
person (other than the Master Servicer, or the Trust (or an affiliate of them))
to whom a Certificate is proposed to be transferred will be required to certify
to the holder of the R-1 Certificates, the Trust, and the Certificate Registrar
that it is a qualified institutional buyer.
The Class R-1 Certificates may not be transferred except to the Master
Servicer, the Depositor, or the Trust (or an affiliate of any of them).
(h) Notwithstanding anything in this Agreement to the contrary, the
Depositor, without the consent of any Noteholder or Certificateholder, may amend
this Section 3.10 with the consent of the Credit Enhancer if it receives an
Opinion of Counsel to the effect that the amendment will not cause the
imposition of any tax on any REMIC or the Certificateholders or Noteholders, or
cause any REMIC to fail to qualify as a REMIC at any time that any Certificates
or Notes are outstanding.
(i) The restrictions on transfers of a Residual Certificate in this
Section 3.10 shall cease to apply (and the applicable portions of the legend on
a Residual Certificate may be deleted) with respect to transfers occurring after
delivery to the Owner Trustee of an Opinion of Counsel to the effect that the
elimination of the restrictions will not cause any REMIC to fail to qualify as a
REMIC at any time that the Certificates are outstanding or result in the
imposition of any tax on the Trust, a Certificateholder, Noteholder, or another
person. Each person holding or acquiring any ownership interest in a Residual
Certificate consents to any amendment of this Agreement that, based on an
Opinion of Counsel furnished to the Owner Trustee, is reasonably necessary
(1) to ensure that the record ownership of, or any beneficial
interest in, a Residual Certificate is not transferred, directly or
indirectly, to a person that is not a Permitted Transferee or
(2) to provide for a means to compel the transfer of a Residual
Certificate that is held by a person that is not a Permitted Transferee to
a Holder that is a Permitted Transferee.
(j) Pursuant to the Sale and Servicing Agreement, Principal Collections
may be applied to purchase Additional Balances for the Trust during a Collection
Period. If on any Collection Period Principal Collections are insufficient to
purchase all Additional Balances, the Holder of the Class R-1 Certificates will
advance funds to the Trust to purchase the Additional Balances that were not
funded by Principal Collections. The Class R-1 Balance will be repaid to the
Class R-1 Certificates from Principal Collections on the Mortgage Loans
allocated to the
16
Certificates on future Payment Dates and will be entitled to allocation of
Interest Collections on the Mortgage Loans.
If the Holder of the Class R-1 Certificates fails to advance to the Trust
amounts specified in the previous paragraph, the Sponsor will be required to
purchase, and the Holder of the Class R-1 Certificates will be required to sell,
the Class R-1 Certificates and the Sponsor will assume all of the obligations of
the Holder of the R-1 Certificates, including the obligation to make advances as
provided in the preceding paragraph.
Section 3.11 REMIC Provisions.
The Owner Trustee will elect as provided in this Section that the Trust,
other than the Basis Risk Carryforward Reserve Fund and the Additional Loan
Accounts, be treated for federal income tax purposes as comprising three real
estate mortgage investment conduits (each a "REMIC" or, in the alternative, the
"Lower Tier REMIC," the "Middle Tier REMIC" and the "Master REMIC"). The Lower
Tier REMIC will hold as assets all property of the Trust, other than the Basis
Risk Carryforward Reserve Fund and the Additional Loan Accounts, and will be
evidenced by (i) the Lower Tier REMIC Regular Interests, which will be
uncertificated and will represent the "REMIC regular interests" in the Lower
Tier REMIC, and (ii) the Class LT-R Interest, which will represent the "REMIC
residual interest" in the Lower Tier REMIC. The Middle Tier REMIC will hold as
assets the Lower Tier REMIC Regular Interests and will be evidenced by Middle
Tier REMIC Regular Interests, which will be uncertificated and will represent
the REMIC regular interests in the Middle Tier REMIC, and the Class MT-R
Interest, which will represent the REMIC residual interest in the Middle Tier
REMIC. The Master REMIC will hold as assets the Middle Tier REMIC Regular
Interests and will be evidenced by the Notes and the Certificates, each of which
(other than the Class R-2 Certificates) will represent ownership of one or more
REMIC regular interests in the Master REMIC. The Class R-1 Certificates will
represent ownership of the sole Class of the REMIC residual interest in each of
the Lower Tier REMIC and the Middle Tier REMIC. The Class R-2 Certificates will
represent ownership of the sole Class of the REMIC residual interest in the
Master REMIC. The latest possible maturity date, for federal income tax
purposes, of all REMIC regular interests created herein shall be the Latest
Possible Maturity Date.
The Lower Tier REMIC
The Lower Tier REMIC Regular Interests will have the principal balances
and pass-through rates as set forth in the following table:
----------------------------------------- ---------------------------------------- -----------------------------------
Lower Tier REMIC Interests Initial Principal Balance Pass-Through Rate
----------------------------------------- ---------------------------------------- -----------------------------------
LT-1-1............................... (1) (2)
----------------------------------------- ---------------------------------------- -----------------------------------
LT-1-2............................... (3) (4)
----------------------------------------- ---------------------------------------- -----------------------------------
LT-IO-1.............................. (5) (5)
----------------------------------------- ---------------------------------------- -----------------------------------
LT-2-1............................... (1) (2)
----------------------------------------- ---------------------------------------- -----------------------------------
LT-2-2............................... (3) (4)
----------------------------------------- ---------------------------------------- -----------------------------------
LT-IO-2.............................. (5) (5)
----------------------------------------- ---------------------------------------- -----------------------------------
17
----------------------------------------- ---------------------------------------- -----------------------------------
R-1.................................. (6) (6)
----------------------------------------- ---------------------------------------- -----------------------------------
(1) The LT-1-1 Interest and LT-2-1 Interest shall have principal balances
equal to the initial Loan Group 1 Balance and Loan Group 2 Balance,
respectively, as of the Cut-off Date.
(2) Interest shall accrue on the LT-1-1 Interest equal to a per annum rate
equal to the weighted average of the Loan Rates of the Mortgage Loans in
Loan Group 1 (weighted on the basis of the daily average Asset Balance of
each Mortgage Loan in that Loan Group during the related billing cycle
before the Collection Period relating to the Payment Date) net of (i) the
Servicing Fee Rate and (ii) the rate at which the premium payable to the
Note Insurer is calculated (adjusted to reflect the difference between the
Loan Group 1 Balance as of the beginning of the Collection Period and the
Note Principal Balance of the Class 1-A Notes). Interest shall accrue on
the LT-2-1 Interest equal to a per annum rate equal to the weighted
average of the Loan Rates of the Mortgage Loans in Loan Group 2 (weighted
on the basis of the daily average Asset Balance of each Mortgage Loan in
that Loan Group during the related billing cycle before the Collection
Period relating to the Payment Date) net of (i) the Servicing Fee Rate and
(ii) the rate at which the premium payable to the Note Insurer is
calculated (adjusted to reflect the difference between the Loan Group 2
Balance as of the beginning of the Collection Period and the Note
Principal Balance of the Class 2-A Notes).
(3) The LT-1-2 Interest shall have a principal balance equal to the amount
deposited in the Trust Fund on the Closing Date to purchase Additional
Home Equity Loans for Loan Group 1. The LT-2-2 Interest shall have a
principal balance equal to the amount deposited in the Trust Fund on the
Closing Date to purchase Additional Home Equity Loans for Loan Group 2.
(4) During the first Collection Period, the LT-1-2 Interest shall not accrue
any interest. Thereafter, interest shall accrue on the LT-1-2 Interest
equal to a per annum rate equal to the weighted average of the Loan Rates
of the Mortgage Loans in Loan Group 1 (weighted on the basis of the daily
average Asset Balance of each Mortgage Loan in that Loan Group during the
related billing cycle before the Collection Period relating to the Payment
Date) net of (i) the Servicing Fee Rate and (ii) the rate at which the
premium payable to the Note Insurer is calculated (adjusted to reflect the
difference between the Loan Group 1 Balance as of the beginning of the
Collection Period and the Note Principal Balance of the Class 1-A Notes).
During the first Collection Period, the LT-2-2 Interest shall not accrue
any interest. Thereafter, interest shall accrue on the LT-2-2 Interest
equal to a per annum rate equal to the weighted average of the Loan Rates
of the Mortgage Loans in Loan Group 2 (weighted on the basis of the daily
average Asset Balance of each Mortgage Loan in that Loan Group during the
related billing cycle before the Collection Period relating to the Payment
Date) net of (i) the Servicing Fee Rate and (ii) the rate at which the
premium payable to the Note Insurer is calculated (adjusted to reflect the
difference between the Loan Group 2 Balance as of
18
the beginning of the Collection Period and the Note Principal Balance of
the Class 2-A Notes).
(5) The LT-IO-1 Interest shall have a notional principal balance equal to the
Additional Home Equity Loans related to Loan Group 1. The pass-through
rate on the LT-IO-1 Interest shall equal the weighted average of the Loan
Rates of the Additional Home Equity Loans related to Loan Group 1 acquired
from the date after the Closing Date through September 30, 2006, and
nothing thereafter. The LT-IO-2 Interest shall have a notional principal
balance equal to the Additional Home Equity Loans related to Loan Group 2.
The pass-through rate on the LT-IO-2 Interest shall equal the weighted
average of the Loan Rates of the Additional Home Equity Loans related to
Loan Group 2 acquired from the date after the Closing Date through
September 30, 2006, and nothing thereafter.
(6) The Class R-1 Certificates shall not have any initial principal balance.
If there are any Net Draws, the Class R-1 Certificates shall contribute an
amount equal to such Net Draws to a reserve fund in the Lower Tier REMIC
established to acquire such Net Draws. After the first Collection Period
the Class R-1 Certificates shall be entitled to its proportionate amount
of interest accruing based on the outstanding Net Draws. For the first
Collection Period, if there are any Net Draws, the Class R-1 Certificates
shall be entitled to the excess of the interest accruing on the Mortgage
Loans over the interest that accrues on the Lower Tier REMIC regular
interests.
The Middle Tier REMIC
The Middle Tier REMIC Regular Interests will have the principal balances,
pass-through rates and Corresponding Classes of Certificates as set forth in the
following table:
---------------------------------------------------------------------------------------------------------------------
Middle Tier REMIC Initial Principal Pass-Through Corresponding
Regular Interests Balance Rate Class of Notes
---------------------------------------------------------------------------------------------------------------------
MT-1-A.......................... $38,000,000(1) (2) 1-A
---------------------------------------------------------------------------------------------------------------------
MT-1-Accrual.................... (3) (2) N/A
---------------------------------------------------------------------------------------------------------------------
MT-2-A.......................... $462,000,000(1) (4) 2-A
---------------------------------------------------------------------------------------------------------------------
MT-2-Accrual.................... (3) (4) N/A
---------------------------------------------------------------------------------------------------------------------
MT-IO........................... (5) (5) N/A
---------------------------------------------------------------------------------------------------------------------
MT-R............................ (6) (6) N/A
---------------------------------------------------------------------------------------------------------------------
(1) The MT-1-A Interests (the "Group 1 Accretion Directed Class") and Class
MT-2-A Interests (the "Group 2 Accretion Directed Class," and together
with the Group 1 Accretion Directed Class, the "Accretion Directed
Classes") shall have an initial balance equal to 50% of its Corresponding
Class of Notes and on each Payment Date, interest, principal payments and
Realized Losses shall be allocated so as to cause each of the MT-1-A
Interests and MT-2-A Interests to continue to equal 50% of its
Corresponding Class of Notes.
19
(2) Each MT-1 Interest shall have an interest rate equal to the weighted
average of the LT-1-1 Interest and LT-1-2 Interest for such Payment Date
(the "LT REMIC Group 1 WAC").
(3) The MT-1-Accrual Interest (the "Group 1 Accrual Class") shall have a
principal balance equal to the sum of (a) 50% of the Loan Group 1 Balance
as of the Cut-off Date (b) 50% of the amount contributed to the Trust on
the Closing Date to acquire Additional Home Equity Loans for Loan Group 1,
and (c) 50% of initial Loan Group 1 overcollateralization. The initial
Loan Group 1 overcollateralization is the excess of the sum of the Loan
Group 1 Balance plus the amount contributed to the Trust to acquire
Additional Home Equity Loans for Loan Group 1 over the Note Principal
Balance of the Class 1-A Notes. On each Payment Date, interest, principal
and Realized Losses shall be allocated so as to cause the MT-1-Accrual
Interest to equal the excess of the Loan Group 1 Balance (less Net Draws)
as of the end of the Collection Period over the principal balance of the
Group 1 Accretion Directed Class (after taking into account distributions
for such Payment Date). The MT-2-Accrual Interest (the "Group 2 Accrual
Class," and together with the Group 1 Accrual Class, the "Accrual
Classes") shall have a principal balance equal to the sum of (a) 50% of
the Loan Group 2 Balance as of the Cut-off Date (b) 50% of the amount
contributed to the Trust on the Closing Date to acquire Additional Home
Equity Loans for Loan Group 2, and (c) 50% of initial Loan Group 2
overcollateralization. The initial Loan Group 2 overcollateralization is
the excess of the sum of the initial Loan Group 2 Balance plus the amount
contributed to the Trust to acquire Additional Home Equity Loans for Loan
Group 2 over the Note Principal Balance of the Class 2-A Notes. On each
Payment Date, interest, principal and Realized Losses shall be allocated
so as to cause the MT-2-Accrual Interest to equal the excess of the Loan
Group 2 Balance (less Net Draws) as of the end of the Collection Period
over the principal balance of the Group 2 Accretion Directed Class (after
taking into account distributions for such Payment Date).
(4) Each MT-2 Interest shall have an interest rate equal to the weighted
average of the LT-2-1 Interest and LT-2-2 Interest for such Payment Date
(the "LT REMIC Group 2 WAC").
(5) The MT-IO Interest shall not have a principal balance. The MT-IO Interest
shall be entitled to receive the amounts due the LT-IO-1 Interest and
LT-IO-2 Interest.
(6) The MT-R Interest shall not have any initial principal balance and shall
not have a pass-through rate.
The Master REMIC
The following table specifies the class designation, pass through rate,
and principal amount for each class of Master REMIC Interest:
20
Master REMIC Regular Initial Principal Balance Pass Through-Through
Interests Rate
Class 1-A Notes...................... $ 76,000,000 (1)
Class 2-A Notes...................... $ 924,000,000 (1)
Class R-2........................... (2) (2)
Class C Certificates................. (3) (4)
(1) The pass-through rate on the Class 1-A Notes is equal to the least of (i)
its LIBOR rate plus its margin, (ii) a rate equal to the weighted average
interest rate of the Group 1 Accretion Directed and Group 1 Accrual
Classes (the "MT-1 Interests") and (iii) a fixed rate of 16.00%. The
pass-through rate on the Class 2-A Notes is equal to the lesser of (i) its
LIBOR rate plus its margin and (ii) a rate equal to the weighted average
interest rate of the Group 2 Accretion Directed and Group 2 Accrual
Classes (the "MT-2 Interests").
(2) The R-2 Certificates shall not have any initial principal balance and
shall not have a pass-through rate.
(3) The Class C Interest will be comprised of two components. Component 1
shall have a principal balance equal to the sum of initial
overcollateralization in Loan Group 1 that will not accrue interest on
such balance and a notional balance equal to the Loan Group 1 Balance as
of the beginning of a Collection Period less Net Draws. Component 2 shall
have a principal balance equal to the sum of initial overcollateralization
in Loan Group 2 that will not accrue interest on such balance and a
notional balance equal to the Loan Group 2 Balance as of the beginning of
a Collection Period less Net Draws.
(4) For each Interest Accrual Period the Class C Certificates are entitled to
an amount (the "Class C Distributable Amount") equal to the sum of (a) the
interest payable on the MT-IO Interest, (b) with respect to Component 1, a
specified portion of the interest on the MT-1 Interests equal to the
excess of the LT REMIC Group 1 WAC over the product of two and the
weighted average of the rate on the Group 1 Accretion Directed Class
(capped at the rate on its Corresponding Class of Notes) and MT-1-Accrual
Interest (subject to a cap of 0.00%), and (c) with respect to Component 2,
a specified portion of the interest on the MT-2 Interests equal to the
excess of the LT REMIC Group 2 WAC over the product of two and the
weighted average of the rate on the Group 2 Accretion Directed Class
(capped at the rate on its Corresponding Class of Notes) and MT-2-Accrual
Interest (subject to a cap of 0.00%). The Pass-Through Rate of the Class C
Certificates shall be a rate sufficient to entitle it to all interest
accrued on home equity loans less the interest accrued on the other
interests issued by the Master REMIC. The Class C Distributable Amount for
any Payment Date is payable from current interest on the Mortgage Loans to
the extent not used to increase overcollateralization and any related
amount of overcollateralization released for that Payment Date.
21
The foregoing REMIC structure is intended to cause all of the cash from
the Mortgage Loans to flow through to the Master REMIC as cash flow on a REMIC
regular interest, without creating any shortfall--actual or potential (other
than for credit losses) to any REMIC regular interest.
For any purpose for which the interest rate in respect of any Lower Tier
REMIC regular interest created hereunder is calculated, the interest rate on the
Mortgage Loans shall be appropriately adjusted to account for the difference
between the monthly day count convention of the Mortgage Loans and the monthly
day count convention of the regular interests issued by each of the REMICs. For
purposes of calculating the interest rates for each of the interests issued by
REMIC, such rates shall be adjusted to equal a monthly day count convention
based on a 30 day month for each Interest Period and a 360-day year so that the
Mortgage Loans and all regular interests will be using the same monthly day
count convention.
Section 3.12 Tax Matters.
(a) The assets of the Trust with respect to which a REMIC election is to
be made as provided in Section 3.11 are intended to be a real estate mortgage
investment conduit as defined in and in accordance with the REMIC Provisions,
and the affairs of the Trust shall be conducted so that each REMIC created
pursuant to Section 3.11 qualifies as a real estate mortgage investment conduit
as defined in the REMIC Provisions.
(b) The Trust shall require that the Indenture provide that the Indenture
Trustee act as agent on behalf of the Trust and as such agent it shall:
(1) prepare and file in a timely manner a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066 or any successor form
adopted by the Internal Revenue Service) and prepare and file with the
Internal Revenue Service and applicable state or local tax authorities
income tax or information returns for each taxable year for each REMIC as
required by the Code or state or local tax laws, regulations, or rules,
and furnish to the Holders of the Notes and the Certificates any
schedules, statements, or information required by the Code or state or
local tax laws, regulations, or rules;
(2) within thirty days of the Closing Date, furnish to the Internal
Revenue Service, on Forms 8811 or as otherwise may be required by the
Code, the name, title, address, and telephone number of the person that
the Holders of the Notes and the Certificates may contact for tax
information relating to the Notes and the Certificates, together with such
additional information as may be required by Form 8811, and update such
information as required by the Code for the Trust;
(3) make elections on behalf of each REMIC to be treated as a REMIC
on the federal tax return of each REMIC for its first taxable year (and,
if necessary, under applicable state law);
(4) prepare and forward to the Holders of the Notes and the
Certificates and to the Internal Revenue Service and, if necessary, state
tax authorities, all
22
information returns and reports as and when required to be provided to
them in accordance with the REMIC Provisions, including the calculation of
any original issue discount;
(5) provide any information necessary for the computation of any tax
imposed on any transfer of a Residual Certificate (the reasonable cost of
computing and furnishing such information may be charged to the person
liable for the tax);
(6) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC tax status of any
REMIC;
(7) pay, from the sources specified in Section 3.12(c) of this Trust
Agreement, any federal or state tax, including prohibited transaction
taxes as described below, imposed on any REMIC before its termination when
and as they become payable (but the Indenture Trustee or any other
appropriate person may contest any such tax in appropriate proceedings and
the Indenture Trustee may withhold payment of the tax, if permitted by
law, pending the outcome of such proceedings);
(8) ensure that federal, state, or local income tax or information
returns are signed as required by the Code or state or local laws;
(9) maintain records relating to each REMIC necessary to prepare the
foregoing returns, schedules, statements, or information, including the
income, expenses, assets, and liabilities of each REMIC, and the fair
market value and adjusted basis of the assets determined as required by
the Code; and
(10) subject to the succeeding sentence, represent, at the expense
of the Sponsor, any REMIC in any administrative or judicial proceedings
relating to an examination or audit by any governmental taxing authority,
request an administrative adjustment as to any taxable year of any REMIC,
enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations relating to any tax item of any REMIC,
and otherwise act on behalf of any REMIC regarding any tax matter
involving it. The Indenture Trustee, as and when necessary and
appropriate, may agree to represent the trust in any administrative or
judicial proceedings relating to an examination or audit by any
governmental taxing authority, request an administrative adjustment as to
any taxable year of the trust provided for herein, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitation relating to any tax matter of the trust provided for herein,
and otherwise act on behalf of the trust provided for herein in relation
to any tax matter involving the trust. The fees for any representation or
other assistance rendered by the Indenture Trustee in connection with the
tax-related services described in the preceding sentence will be set forth
in a separate agreement and payable by the Sponsor, if necessary.
To enable the Indenture Trustee to perform its duties, the Issuer shall
provide to the Indenture Trustee within ten days after the Closing Date any
information that the Indenture Trustee requests in writing and determines to be
relevant for tax purposes to the valuations and offering prices of the Notes and
the Certificates, including the price, yield, prepayment
23
assumption, and projected cash flows of the Notes and the Certificates and the
Mortgage Loans. Thereafter, the Issuer shall provide to the Indenture Trustee
promptly upon written request therefor, any additional information that the
Indenture Trustee requests to enable it to perform these duties.
(c) The Trust shall require that the Transaction Documents provide that if
any tax is imposed on "prohibited transactions" of any REMIC as defined in
Section 860F(a)(2) of the Code, on the "net income from foreclosure property" of
a REMIC as defined in section 860G(c) of the Code, on any contribution to a
REMIC after the Startup Day pursuant to Section 860G(d) of the Code, or any
other tax is imposed on any REMIC (including any federal, state, or local tax),
the tax shall be paid by
o the Indenture Trustee, if the tax arises out of a breach by
the Indenture Trustee of any of its obligations described in Section
3.12(b) and included in the Indenture,
o the Master Servicer, in the case of any minimum tax imposed
on any REMIC pursuant to Sections 23153 and 24874 of the California
Revenue and Taxation Code, or if the tax arises out of a breach by
the Master Servicer or a Seller of any of their obligations under
any Transaction Document,
o the Seller, if the tax arises out of the Seller's obligation
to repurchase a Mortgage Loan pursuant to Section 2.02(b) or 2.04(d)
of the Sale and Servicing Agreement, or
o in all other cases, or if any liable party fails to honor
its obligations to pay the tax as provided above, the tax will be
paid
First, from amounts otherwise to be distributed on the Class C
Certificates,
Second, from amounts otherwise to be distributed on the Class R-1
Certificates, and
Third, from amounts otherwise to be distributed on the Notes as
provided in the Indenture.
(d) The Indenture shall provide that the Indenture Trustee shall treat the
rights of the holders of Principal Amount Notes to receive payments from the
Basis Risk Carryforward Reserve Fund as rights in a notional principal contract
written by the Holders of the Class C Certificates in respect of any Basis Risk
Carryforward distributed in favor of the holders of the Principal Amount Notes.
Thus, the Principal Amount Notes and the Class C Certificates shall be treated
as representing ownership of not only Master REMIC regular interests, but also
ownership of an interest in an interest rate cap contract.
(e) The Indenture shall provide that the Indenture Trustee shall treat the
Basis Risk Carryforward Reserve Fund as an outside reserve fund within the
meaning of Treasury
24
Regulation 1.860G-2(h) that is owned by the Holders of the Class C Certificates,
and that is not an asset of any REMIC.
ARTICLE 4
ACTIONS BY OWNER TRUSTEE
Section 4.01 Prior Notice to Certificateholders Regarding Certain Matters.
(a) The Owner Trustee shall give the Certificateholders thirty days'
written notice before taking any of the following actions on behalf of the
Trust. Within thirty days of the date of the notice the Certificateholders may
instruct the Owner Trustee in writing not to take the proposed action or may
provide alternative direction. Thirty days after giving the notice, if the Owner
Trustee has not been instructed otherwise by a majority in interest of the
Holders of the Certificates, then the Owner Trustee may:
(1) initiate any claim or lawsuit by the Trust, or compromise any
action, claim, or lawsuit brought by or against the Trust;
(2) file an amendment to the Certificate of Trust;
(3) amend the Indenture by a supplemental indenture in circumstances
where the consent of any Noteholder is required;
(4) amend the Indenture by a supplemental indenture in circumstances
where the consent of any Noteholder is not required, but the amendment
materially adversely affects the interests of the Certificateholders;
(5) amend the Administration Agreement; and
(6) appoint a successor Certificate Paying Agent, Certificate
Registrar, Administrator, or Indenture Trustee under the Indenture, or
consent to the assignment by the Transfer Agent and Registrar,
Administrator, or Indenture Trustee of its obligations under the
Indenture.
If the Trust has more than one holder of its Certificates, then the
Holders may only give instructions that are agreed to by the majority of the
Holders (based on the Holders' percentage ownership of the entire Certificate
Interest).
(b) Notwithstanding Section 4.01(a), without prior notice to the
Certificateholders the Owner Trustee may, on behalf of the Trust:
(1) initiate a claim or lawsuit by the Trust for collection of
Assets;
(2) file an amendment to the Certificate of Trust whenever the
amendment is required by the Statutory Trust Statute; or
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(3) amend the Administration Agreement to cure any ambiguity or
mistake or effect any other amendment that would not materially adversely
affect the interests of the Certificateholders.
The foregoing provisions of this Section 4.01 do not create a duty on the
part of the Owner Trustee to take any of the actions described above.
Section 4.02 Action by Certificateholders Regarding Certain Matters.
Except when directed by the Certificateholders and with the prior written
consent of the Credit Enhancer in the case of (a), (b), or (c) below, the Owner
Trustee may not (a) remove the Administrator pursuant to Section 7(c) of the
Administration Agreement, (b) appoint a successor Administrator pursuant to
Section 7(e) of the Administration Agreement, (c) remove the Master Servicer
under the Sale and Servicing Agreement, or (d) except as expressly provided in
the Indenture, sell Assets after the termination of the Indenture.
Section 4.03 Action by Certificateholders Regarding Bankruptcy.
Except upon delivery to the Owner Trustee by each Certificateholder of a
certificate certifying that the Certificateholder reasonably believes that the
Trust is insolvent, the Owner Trustee may not commence a voluntary proceeding in
bankruptcy relating to the Trust.
Section 4.04 Restrictions on Certificateholder's Power.
A Certificateholder shall not direct the Owner Trustee to take or to
refrain from taking any action if that action or inaction would be contrary to
any obligation of the Trust, or the Owner Trustee under this Agreement or any of
the other Transaction Documents or would be contrary to Section 2.03. The Owner
Trustee shall not be obligated to follow that direction if given.
Section 4.05 Majority Interest.
Except as expressly provided in this Agreement, any action that may be
taken by the Certificateholders under this Agreement shall be taken by
Certificateholders by a majority of the holders voting per capita.
ARTICLE 5
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01 Application of Trust Funds.
(a) On each Distribution Date, the Certificate Paying Agent shall
distribute to the Certificateholders any funds made available to it under
Section 8.01 or 8.03 of the Indenture
(1) on the first Distribution Date, to the Holders of the Class R-2
Certificates in reduction of their certificate principal balance any funds
distributed to the Issuer pursuant to Section 8.01(d) of the Indenture;
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(2) if the funds are for Net Draw Principal Payments pursuant to
Section 8.03(e)(i) of the Indenture, to the Holders of the Class R-1
Certificate until the Class R-1 Balance is reduced to zero,
(3) if the funds are distributed pursuant to Section 8.03(e)(iii) of
the Indenture, to the Holders of the Class C Certificate until the Class C
Balance is reduced to zero, and any remaining amount to the Holders of the
Class C Certificate;
(4) to the Holders of the Class C Certificate in an amount equal to
the Class C Share of the funds that are distributed to the Issuer pursuant
to Section 8.03(a)(xiii) of the Indenture;
(5) to the Holders of the Class R-1 Certificate in an amount equal
to the Class R-1 Share of the distribution if the funds are distributed to
the Issuer pursuant to Section 8.03(a)(xiii) of the Indenture;
(6) to the Holders of the Class C Certificate in an amount equal to
the excess of
o the Class C Share of the distribution if the funds are
distributed to the Issuer pursuant to Section 8.03(e)(ii), over
o the Subordinated Transferor Collections for that Payment
Date; and
(7) to the Holders of the Class R-1 Certificate the excess of any
amount distributed to the Issuer pursuant to Section 8.03(e)(ii) over the
amount to be distributed to the Holder of the Class C Certificate in
Subsection (6) above.
(b) If any withholding tax is imposed on the Trust's payment (or
allocations of income) to the Certificateholders, the withholding tax shall
reduce the amount otherwise distributable to the Certificateholders in
accordance with this Section. The Certificate Paying Agent is authorized and
directed to retain from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is legally
owed by the Trust. This authorization shall not prevent the Certificate Paying
Agent from contesting any tax in appropriate proceedings and withholding payment
of the tax pending the outcome of the proceedings if permitted by law. The
amount of any withholding tax imposed on any distributions shall be treated as
cash distributed to the Certificateholder at the time it is withheld by the
Trust and remitted to the appropriate taxing authority. If withholding tax might
be payable on a distribution to a non-U.S. Certificateholder, the Certificate
Paying Agent may in its sole discretion withhold an appropriate amount to cover
that possibility.
(c) Any Liquidation Loss Amount which is not Investor Loss Amount
allocated to the Certificates will be first allocated to the Class C Balance
until it is reduced to zero and then to the Class R-1 Balance until it is
reduced to zero.
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Section 5.02 Method of Payment.
Distributions required to be made to a Certificateholder on any Payment
Date shall be made by wire transfer of immediately available funds to the
account of the Certificateholder at a bank or other entity having appropriate
facilities if the Certificateholder so notifies the Certificate Registrar in
writing at least five Business Days before the Payment Date. If appropriate
notice is not given by a Certificateholder, then distributions to that
Certificateholder shall be by check mailed to it at its address in the
Certificate Register.
ARTICLE 6
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01 General Authority.
The Owner Trustee is authorized and directed to execute and deliver the
Transaction Documents to which the Trust is to be a party and each other
document contemplated by the Transaction Documents in such form as the Depositor
shall approve, as evidenced conclusively by the Owner Trustee's execution of it.
In addition to the foregoing, the Owner Trustee is authorized, but shall not be
obligated, to take all actions permitted or required of the Trust pursuant to
the Transaction Documents. The Owner Trustee is further authorized to take any
action the Administrator recommends regarding the Transaction Documents.
Section 6.02 General Duties.
The Owner Trustee shall discharge all of its responsibilities pursuant to
this Agreement and the other Transaction Documents to which the Trust is a party
and administer the Trust in the interest of the Certificateholders, subject to
this Agreement and the other Transaction Documents. The Owner Trustee shall be
considered to have discharged its obligations under this Agreement and the other
Transaction Documents to the extent the Administrator has agreed in the
Administration Agreement to perform any act or to discharge any duty of the
Owner Trustee or the Trust under this Agreement or any other Transaction
Document. The Owner Trustee shall not be liable for the failure of the
Administrator to carry out its obligations under the Administration Agreement or
the other Transaction Documents.
Section 6.03 Action on Instruction.
(a) Subject to Article IV and in accordance with the Transaction
Documents, the Certificateholders may by written instruction direct the Owner
Trustee in the management of the Trust. Such direction may be exercised at any
time by written instruction of the Certificateholders pursuant to Article IV.
(b) The Owner Trustee is not required to take any action under this
Agreement or any other Transaction Document if the Owner Trustee reasonably
determines, or is advised by counsel, that the action
(1) is likely to result in liability on the part of the Owner
Trustee,
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(2) is contrary to the terms of this Agreement or of any other
Transaction Document, or
(3) is contrary to law.
(c) Whenever the Owner Trustee is
(1) unable to decide between alternative courses of action under
this Agreement or any other Transaction Document,
(2) unsure about the application of any provision of this Agreement
or any other Transaction Document or it appears to be in conflict with any
other applicable provision, or
(3) if this Agreement permits any determination by the Owner Trustee
or is silent or is incomplete about the course of action that the Owner
Trustee is required to take regarding a particular set of facts,
the Owner Trustee may give appropriate notice to the Certificateholders
requesting instruction and, if the Owner Trustee in good faith follows any
instructions it receives, the Owner Trustee shall not be liable to the
Certificateholders on account of its action or inaction. If the Owner Trustee
has not received appropriate instruction within ten days of the notice (or
within any shorter period necessary under the circumstances) it may, but shall
be under no duty to, take or refrain from taking any action not inconsistent
with this Agreement or the other Transaction Documents that it deems to be in
the best interests of the Certificateholders, and shall have no liability to the
Certificateholders for its action or inaction.
(d) The Owner Trustee may enter into any amendment of any Transaction
Document as to which the Rating Agency Condition is satisfied (without regard to
the Policy, as defined in the Indenture), and when so requested by the
Certificateholders, the Owner Trustee shall enter into any amendment of any
Transaction Documents:
(1) that does not impose further obligations or liabilities on the
Owner Trustee,
(2) that the Credit Enhancer has consented to, and
(3) as to which either the Rating Agency Condition is satisfied or
Holders of not less than 66?% of the aggregate Outstanding Amount of the
Notes have consented.
Section 6.04 No Duties Except as Specified in the Agreement or in
Instructions.
The Owner Trustee shall not have any duty to manage, make any payment on,
register, record, sell, dispose of, or otherwise deal with any Assets, or to
otherwise take or refrain from taking any action under any document contemplated
by this Agreement or any other Transaction Document to which the Trust is a
party, except as expressly provided by this Agreement or in any written
instruction received by the Owner Trustee under Section 6.03. No implied duties
or obligations shall be read into this Agreement or any other Transaction
29
Document against the Owner Trustee. The Owner Trustee shall have no
responsibility for filing any Financing or Continuation Statement in any public
office at any time or otherwise to perfect or maintain the perfection of any
security interest or lien granted to it under the Sale and Servicing Agreement
or to prepare or file any filing with the Securities and Exchange Commission for
the Trust or to record this Agreement or any other Transaction Document.
Wilmington Trust Company, in its individual capacity, shall, at its own cost and
expense, promptly take all action necessary to discharge any liens on any part
of any Assets resulting from actions by, or claims against, Wilmington Trust
Company, in its individual capacity, that are not related to the ownership or
the administration of the Assets.
Section 6.05 No Action Except Under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of, or
otherwise deal with any part of any Assets, except as provided in this
Agreement, pursuant to the other relevant Transaction Documents, and in
accordance with any instruction delivered to the Owner Trustee pursuant to
Section 6.03.
Section 6.06 Restrictions.
The Owner Trustee shall not take any action that is inconsistent with the
stated purposes of the Trust in Section 2.03. The Certificateholders, by their
acceptance of their Certificates, agree not to direct the Owner Trustee to take
action that would violate the Agreement or any other Transaction Document.
ARTICLE 7
CONCERNING OWNER TRUSTEE
Section 7.01 Acceptance of Trusts and Duties.
The Owner Trustee accepts the trusts created by this Agreement and agrees
to perform its duties under it. The Owner Trustee also agrees to disburse all
moneys actually received by it constituting part of any Assets on the terms of
the Transaction Documents. The Owner Trustee shall not be accountable under this
Agreement or any other Transaction Document under any circumstances except (1)
for its own willful misconduct or gross negligence or (2) for the inaccuracy of
any representation or warranty in Section 7.03. In particular, but not in
limitation (and subject to the exceptions in the preceding sentence):
(a) The Owner Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Owner Trustee.
(b) The Owner Trustee shall not be liable regarding any action taken or
omitted to be taken by it in accordance with instructions from the Administrator
or the Certificateholders.
(c) No provision of this Agreement or any other Transaction Document shall
require the Owner Trustee to expend or risk its funds or otherwise incur any
financial liability in the performance of any of its rights under this Agreement
or any other Transaction Document if
30
the Owner Trustee has reasonable grounds for believing that repayment of those
funds or adequate indemnity against the risk or liability is not reasonably
assured to it.
(d) Under no circumstances shall the Owner Trustee be liable for
indebtedness under any of the Transaction Documents, including the principal and
interest on any of Notes.
(e) The Owner Trustee shall not be responsible for the validity or
sufficiency of this Agreement or for its due execution by the Depositor or for
the form, character, genuineness, sufficiency, value, or validity of any of the
Assets, or for the validity or sufficiency of the Transaction Documents, other
than the certificate of authentication on the Certificates.
(f) The Owner Trustee shall not be liable to any Noteholder or
Certificateholder, other than as expressly provided for in this Agreement or
expressly agreed to in the other Transaction Documents.
(g) The Owner Trustee shall not be liable for the default or misconduct of
the Depositor, the Indenture Trustee, the Administrator, or the Master Servicer
under any of the Transaction Documents or otherwise. The Owner Trustee shall
have no duty to perform the obligations of the Trust or the Owner Trustee or any
other person under this Agreement or the other Transaction Documents that are
required to be performed by the Administrator under the Administration
Agreement, the Indenture Trustee under the Indenture, the Master Servicer under
the Sale and Servicing Agreement, or the Depositor under the Sale and Servicing
Agreement, or any other person under any other Transaction Document.
(h) The Owner Trustee need not exercise any of the rights or powers vested
in it by this Agreement, or to institute, conduct, or defend any litigation
under this Agreement or any other Transaction Document or otherwise, at the
request, order, or direction of the Certificateholders, unless one or more
Certificateholders have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs and liabilities that may be incurred by the
Owner Trustee thereby.
(i) The right of the Owner Trustee to perform any discretionary act in
this Agreement or in any other Transaction Document shall not be construed as a
duty, and the Owner Trustee shall not be answerable other than for its gross
negligence or willful misconduct in the performance of any discretionary act.
Section 7.02 Furnishing Documents.
The Owner Trustee shall furnish to the Certificateholders, promptly on
written request, copies of all reports, notices, requests, demands,
certificates, financial statements, and any other instruments furnished to the
Owner Trustee under the Transaction Documents.
Section 7.03 Representations and Warranties.
Wilmington Trust Company hereby represents and warrants to the Depositor
that:
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(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver, and perform its obligations
under this Agreement.
(b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to execute and deliver
this Agreement on its behalf.
(c) Neither the execution and delivery by it of this Agreement, nor the
consummation by it of the transactions contemplated by this Agreement, nor
compliance by it with any of the provisions of this Agreement will contravene
any federal or Delaware law, governmental rule, or regulation governing the
banking or trust powers of the Owner Trustee, or any judgment or order binding
on it, or constitute a default under its charter documents or bylaws.
Section 7.04 Reliance; Advice of Counsel.
(a) The Owner Trustee shall not be liable to anyone in acting under this
Agreement on any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond, or other document or paper believed
by it to be genuine or believed by it to be signed by the proper parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that the resolution has been duly adopted and that it is in full force and
effect. As to any fact or matter the method of determination of which is not
specifically prescribed in this Agreement, the Owner Trustee may for all
purposes of this Agreement conclusively rely on a certificate, signed by a
Responsible Officer of the relevant party, as to the fact or matter, and that
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance on it.
(b) In the exercise or administration of the trusts under this Agreement
and in the performance of its obligations under this Agreement or the other
Transaction Documents, the Owner Trustee (1) may act directly or through its
agents or attorneys under agreements entered into with any of them, and the
Owner Trustee shall not be liable for the conduct or misconduct of those agents
or attorneys if they were selected by the Owner Trustee with reasonable care and
(2) may consult with counsel, accountants, and other skilled persons it selects
with reasonable care. The Owner Trustee shall not be liable for anything done,
suffered, or omitted in good faith by it in accordance with the written opinion
or advice of any such counsel, accountants, or other persons.
Section 7.05 Not Acting in Individual Capacity.
Except as provided in this Article, (1) in acting in the capacity of Owner
Trustee pursuant to the trusts created by this Agreement, Wilmington Trust
Company acts solely as Owner Trustee under this Agreement and not in its
individual capacity, and (2) all persons having any claim against the Owner
Trustee under this Agreement or any other Transaction Document shall look only
to the Assets for payment or satisfaction of that claim.
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Section 7.06 Owner Trustee Not Liable for Certificates or Payment
Obligations.
The recitals in this Agreement and in the Certificates (other than the
signature and authentication of the Owner Trustee on the Certificates) shall be
taken as the statements of the Depositor, and the Owner Trustee assumes no
responsibility for their correctness. The Owner Trustee makes no representations
as to the validity or sufficiency of this Agreement, of any other Transaction
Document, of the Certificates (other than the signature and authentication of
the Owner Trustee on the Certificates), of any Mortgage Loan or related
documents. The Owner Trustee shall not have any responsibility for
(1) the legality, validity, and enforceability of any Mortgage Loan,
or
(2) the perfection and priority of any security interest created in
any Mortgage Loan or the maintenance of that perfection and priority, or
(3) the sufficiency of the Assets or their ability to generate the
payments to be distributed under this Agreement or the Noteholders under
the Indenture, or
(4) the performance or enforcement of any Mortgage Loan, or
(5) the compliance by the Depositor or the Master Servicer with any
warranty or representation made under any Transaction Document or in any
related document, or
(6) any action of the Administrator, the Indenture Trustee, or the
Master Servicer or any subservicer taken in the name of the Owner Trustee.
Section 7.07 Owner Trustee May Own Notes.
Wilmington Trust Company in its individual or any other capacity may
become the owner or pledgee of the Notes and may deal with the Depositor, the
Administrator, the Indenture Trustee, and the Master Servicer in banking
transactions with the same rights as it would have if it were not Owner Trustee.
ARTICLE 8
COMPENSATION OF OWNER TRUSTEE
Section 8.01 Owner Trustee's Fees.
The Owner Trustee shall receive, as compensation from the Sponsor for its
services under this Agreement, fees that have been separately agreed on in a fee
agreement between the Sponsor and the Owner Trustee.
Section 8.02 Reimbursement and Indemnification.
(a) The Owner Trustee shall be entitled to be reimbursed for its
reasonable expenses (including reasonable attorneys' fees) incurred in the
performance of its duties as Owner Trustee under this Agreement, except to the
extent that such expenses arise out of or result from
33
o the Owner Trustee's own willful misconduct, bad faith, or
gross negligence,
o the inaccuracy of any of the Owner Trustee's representations
or warranties in Section 7.03,
o taxes based on or measured by any fees, commissions, or
compensation received by the Owner Trustee for acting as such in
connection with any of the transactions contemplated by this
Agreement or any other Transaction Document, or
o the Owner Trustee's failure to use reasonable care to
receive, manage, and disburse moneys actually received by it in
accordance with this Agreement.
(b) The Owner Trustee is hereby indemnified against any liabilities,
obligations, indemnity obligations, losses (excluding loss of anticipated
profits), damages, claims, actions, suits, judgments, out-of-pocket costs,
expenses, and disbursements (including legal and consultants' fees and expenses)
and taxes of any kind whatsoever (collectively, the "Liabilities") that may be
imposed on, incurred by, or asserted at any time against it in any way relating
to or arising out of the Trust Estate, any of the properties included in the
Trust Estate, the administration of the Trust Estate, or any action or inaction
of the Owner Trustee under this Agreement or under the Transaction Documents,
except to the extent that such Liabilities arise out of or result from
o the Owner Trustee's own willful misconduct, bad faith, or
gross negligence,
o the inaccuracy of any of the Owner Trustee's representations
or warranties in Section 7.03,
o taxes based on or measured by any fees, commissions, or
compensation received by the Owner Trustee for acting as such in
connection with any of the transactions contemplated by this
Agreement or any other Transaction Document, or
o the Owner Trustee's failure to use reasonable care to
receive, manage, and disburse moneys actually received by it in
accordance with this Agreement.
(c) Any amounts payable to the Owner Trustee under this Section 8.02 shall
be payable, first, out of amounts on deposit in the Collection Account before
payments on the Certificates, second, to the extent not paid pursuant to clause
first within 60 days of first being incurred, by the Holder of the R-1
Certificates, and third, to the extent not paid pursuant to clause first and
second within 60 days of first being incurred, by Countrywide Home Loans, Inc.
(d) The indemnities in this Section 8.02 shall survive the termination of
this Agreement and the removal or resignation of the Owner Trustee under this
Agreement.
34
(e) Losses, claims, damages, liabilities, and expenses in any way
attributable to defaults on the Mortgage Loans are excluded from the coverage of
the provisions of this Section.
Section 8.03 Payments to Owner Trustee.
Any amounts paid to the Owner Trustee pursuant to this Article shall not
be a part of the Assets immediately after their payment. All amounts then due to
the Owner Trustee from the Trust, the Depositor, or the Master Servicer under
any Transaction Document shall be paid in full before any payments to the
Depositor or any holder of a Certificate.
ARTICLE 9
TERMINATION OF AGREEMENT
Section 9.01 Termination of Agreement.
(a) The Trust shall dissolve when the Trust has made the final
distribution of all moneys or other property or proceeds of all Assets in
accordance with the Transaction Documents, and Article V. The bankruptcy,
liquidation, or dissolution of any Certificateholder shall not (x) terminate
this Agreement or the Trust, (y) entitle that Certificateholder's legal
representatives to obtain an accounting or to take any action in any court for a
partition or winding up of any part of the Trust or the Assets, or (z) otherwise
affect the rights and obligations of the parties to this Agreement.
(b) Except as provided in Section 9.01(a), neither the Depositor nor the
Certificateholders may dissolve, revoke, or terminate the Trust.
(c) On the winding up of the Trust and payment of all liabilities of the
Trust in accordance with Section 3808 of the Statutory Trust Statute, the Owner
Trustee shall cancel the Certificate of Trust by filing a certificate of
cancellation with the Secretary of State of the State of Delaware in accordance
with the provisions of the Statutory Trust Statute. The Owner Trustee may rely
on the directions of the Administrator with respect to winding up the Trust.
Thereupon, this Agreement (other than Article VIII) and the Trust shall
terminate.
Section 9.02 Credit Enhancer's Rights Regarding Actions, Proceedings, or
Investigations.
Until the Notes have been paid in full, all amounts owed to the Credit
Enhancer have been paid in full, the Insurance Agreement has terminated and the
Policy has been returned to the Credit Enhancer for cancellation, the following
provisions shall apply:
(a) Notwithstanding anything in this Agreement or in the other Transaction
Documents to the contrary, the Credit Enhancer shall have the right to
participate in, to direct the enforcement or defense of, and, at the Credit
Enhancer's sole option, to institute or assume the defense of, any action,
proceeding, or investigation (other than foreclosure proceedings involving the
Mortgage Loans and other actions constituting ordinary servicing activities)
that
35
could adversely affect the Trust or the rights or obligations of the Credit
Enhancer under this Agreement or under the Policy, including any insolvency or
bankruptcy proceeding in respect of the Trust. Following notice to the Owner
Trustee and the Indenture Trustee, the Credit Enhancer shall have exclusive
right to determine, in its sole discretion, the actions necessary to preserve
and protect the Collateral, the Issuer, and the Trust. All costs and expenses of
the Credit Enhancer in connection with such action, proceeding, or
investigation, including any judgment or settlement entered into affecting the
Credit Enhancer or the Credit Enhancer's interests, shall be included in
reimbursement amount owed to the Credit Enhancer under Section 8.03(a)(ix) and
Section 8.03(a)(xi) of the Indenture.
(b) In connection with any action, proceeding, or investigation (other
than foreclosure proceedings involving the Mortgage Loans and other actions
constituting ordinary servicing activities) that could reasonably be expected to
adversely affect the Collateral, the Issuer, the Trust, or the rights or
obligations of the Credit Enhancer under this Agreement or under the Policy or
the Transaction Documents, including any insolvency or bankruptcy proceeding in
respect of the Master Servicer, the Sponsor, the Depositor, the Issuer, the
Trust, or any affiliate of any of them, the Owner Trustee agrees to cooperate
with, and to take any action directed by, the Credit Enhancer, including
entering into agreements and settlements as directed the Credit Enhancer, in its
sole discretion, without the consent of any Certificateholder or any Noteholder.
(c) The Owner Trustee agrees to provide to the Credit Enhancer prompt
written notice of any action, proceeding, or investigation (other than
foreclosure proceedings involving the Mortgage Loans and other actions
constituting ordinary servicing activities) that names the Issuer, the Trust, or
the Owner Trustee as a party or that could adversely affect the Collateral, the
Issuer, the Trust, or the rights or obligations of the Credit Enhancer under
this Agreement or under the Policy or the Transaction Documents, including any
insolvency or bankruptcy proceeding in respect of the Master Servicer, the
Sponsor, the Depositor, the Issuer, the Trust, or any affiliate of any of them.
(d) Notwithstanding anything in this Agreement or in any of the other
Transaction Documents to the contrary, the Owner Trustee shall not, without the
Credit Enhancer's prior consent or unless directed by the Credit Enhancer,
undertake or join any litigation or agree to any settlement of any action,
proceeding, or investigation affecting the Collateral, the Issuer, the Trust, or
the rights or obligations of the Credit Enhancer under this Agreement or under
the Policy or the Transaction Documents (other than foreclosure proceedings
involving the Mortgage Loans and other actions constituting ordinary servicing
activities).
(e) Each Certificateholder, by acceptance of its Certificate, and the
Owner Trustee agree that Credit Enhancer shall have the rights provided in this
Section, which are in addition to any rights of the Credit Enhancer pursuant to
the other provisions of the Transaction Documents, that the rights provided in
this Section may be exercised by the Credit Enhancer, in its sole discretion,
without the need for the consent or approval of any Certificateholder or the
Owner Trustee, notwithstanding any other provision in this Agreement or in any
of the other
36
Transaction Documents, and that nothing in this Section shall be deemed to be an
obligation of the Credit Enhancer to exercise any of the rights provided for in
this Agreement.
(f) The Owner Trustee undertakes to perform or observe only such of the
covenants and obligations of the Owner Trustee as are expressly set forth in
this Agreement, and no implied covenants or obligations with respect to the
Credit Enhancer shall be read into this Agreement or the other Transaction
Documents against the Owner Trustee. The Owner Trustee shall not be deemed to
owe any fiduciary duty to the Credit Enhancer, and shall not be liable in any
event to the Credit Enhancer as a result of the performance of its express
obligations under this Agreement. The Owner Trustee shall not be obligated to
take any action at the request or direction of the Credit Enhancer unless the
Owner Trustee is furnished with security or indemnification satisfactory to it
against any loss, liability, or expense in connection with the action.
Section 9.03 Rights of the Credit Enhancer.
(a) Before taking any of the actions specified in Section 4.01(a), the
Owner Trustee shall give the Credit Enhancer written notice at the same time
that notice is given to the Certificateholders.
(b) Before taking any of the actions specified in Section 4.01(b), the
Owner Trustee shall give the Credit Enhancer written notice of the proposed
action.
(c) Upon the occurrence of an event described in Section 6.03(c), the
Owner Trustee shall give the Credit Enhancer written notice at the same time
that notice is given to the Certificateholders.
(d) Any successor Owner Trustee appointed by the Administrator pursuant to
Section 10.01 shall be appointed only with the prior written consent of the
Credit Enhancer.
(e) The Owner Trustee shall mail notice of any merger or consolidation or
other action described in Section 10.03 to the Credit Enhancer.
(f) Any co-trustee or separate trustee appointed pursuant to Section 10.04
shall be appointed only with the prior written consent of the Credit Enhancer.
Promptly after the execution of any amendment or consent, the Owner Trustee
shall furnish a copy of the amendment or consent to the Credit Enhancer.
ARTICLE 10
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01 Resignation or Removal of Owner Trustee.
The Owner Trustee may at any time resign and be discharged from the trusts
created by this Agreement by giving written notice of resignation to the
Administrator, and the Depositor.
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When it receives a notice of resignation, the Administrator shall promptly
appoint a successor Owner Trustee in writing delivered to the resigning Owner
Trustee and to the successor Owner Trustee. If no successor Owner Trustee has
been so appointed and assumed trusteeship within thirty days after the notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
The Administrator may remove the Owner Trustee if at any time the Owner
Trustee is legally unable to act, or an Insolvency Event occurs with respect to
the Owner Trustee. If the Administrator removes the Owner Trustee under the
authority of the preceding sentence, the Administrator shall promptly appoint a
successor Owner Trustee in writing delivered to the outgoing Owner Trustee and
to the successor Owner Trustee, and shall pay all fees and expenses owed to the
outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee shall not become effective until acceptance of the
appointment by the successor Owner Trustee pursuant to Section 10.02 and payment
of all fees and expenses of the outgoing Owner Trustee. The Administrator shall
provide notice of any resignation or removal of the Owner Trustee to each of the
Rating Agencies, the Depositor, and the Credit Enhancer.
Section 10.02 Successor Owner Trustee.
Any successor Owner Trustee appointed pursuant to Section 10.01 shall
execute and deliver to the Administrator, the Depositor, and to the predecessor
Owner Trustee an instrument accepting appointment as trustee under this
Agreement, and thereupon the resignation or removal of the predecessor Owner
Trustee shall become effective. The successor Owner Trustee shall become fully
vested with all the rights and obligations of its predecessor under this
Agreement, with like effect as if originally named as Owner Trustee without any
further act, deed, or conveyance. The predecessor Owner Trustee shall promptly
deliver to the successor Owner Trustee all documents, statements, and monies
held by it under this Agreement. The Administrator and the predecessor Owner
Trustee shall execute and deliver any instruments and do anything else for fully
and certainly vesting and confirming in the successor Owner Trustee all rights
and obligations under this Agreement.
When a successor Owner Trustee accepts its appointment pursuant to this
Section, the Administrator shall mail notice of the change in trustee to the
Certificateholders, the Depositor, the Indenture Trustee, the Noteholders, the
Credit Enhancer, and the Rating Agencies. If the Administrator fails to mail
that notice within ten days after acceptance of appointment by the successor
Owner Trustee, the successor Owner Trustee shall mail that notice at the expense
of the Administrator.
The successor Owner Trustee shall file an amendment to the Certificate of
Trust with the Secretary of State of the State of Delaware identifying the name
and principal place of business in the State of Delaware of the successor Owner
Trustee.
38
Section 10.03 Merger or Consolidation of Owner Trustee.
Any person into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any person resulting from any merger,
conversion, or consolidation to which the Owner Trustee is a party, or any
person succeeding to all or substantially all of the corporate trust business of
the Owner Trustee, shall be the successor of the Owner Trustee under this
Agreement without the execution or filing of any instrument or any further act
on the part of any of the parties to this Agreement, anything to the contrary
notwithstanding. The Owner Trustee shall mail notice of the merger or
consolidation or other action to each Rating Agency and the Credit Enhancer.
Section 10.04 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Assets may at any time be located, the Administrator and the Owner
Trustee acting jointly shall execute and deliver all instruments to appoint
persons approved by the Administrator, and Owner Trustee to act as co-trustee,
jointly with the Owner Trustee, or as separate trustee, of all or any part of
the Assets, and to vest in that person, in that capacity, such title to the
Assets or any part thereof and, subject to the other provisions of this Section,
such rights and obligations as the Administrator and the Owner Trustee consider
appropriate. If the Administrator has not joined in the appointment within
fifteen days after the receipt by it of a request so to do, the Owner Trustee
alone may make the appointment. No notice of the appointment of any co-trustee
or separate trustee shall be required pursuant to Section 10.02.
Each separate trustee and co-trustee shall be appointed and act subject to
the following provisions and conditions:
(a) All rights and obligations conferred or imposed on the Owner Trustee
shall be conferred on and exercised or performed by the Owner Trustee and the
separate trustee or co-trustee jointly (the separate trustee or co-trustee is
not authorized to act separately without the Owner Trustee joining in the act),
except to the extent that under applicable law the Owner Trustee is incompetent
or unqualified to perform the acts, in which case those rights and obligations
(including the holding of title to the Assets or any portion of them in that
jurisdiction) shall be exercised and performed singly by the separate trustee or
co-trustee, but solely at the direction of the Owner Trustee;
(b) No trustee under this Agreement shall be personally liable for any act
or omission of any other trustee under this Agreement; and
(c) The Administrator and the Owner Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request, or other writing given to the Owner Trustee shall be
considered to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to the
39
conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided in the instrument of appointment. Each
instrument of appointment shall be filed with the Owner Trustee and a copy of it
given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act with respect to this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign, or be removed, all of its
estates, properties, rights, and obligations shall vest in and be exercised by
the Owner Trustee, to the extent permitted by law, without the appointment of a
new or successor co-trustee or separate trustee.
ARTICLE 11
MISCELLANEOUS
Section 11.01 Supplements and Amendments.
(a) This Agreement may be amended in any way by the Depositor and the
Owner Trustee, with the consent of any affected Certificateholder and the Credit
Enhancer, but only if the Rating Agency Condition is satisfied and the amendment
would not cause any adverse tax event for any Noteholder. In addition, if the
Owner Indenture Trustee has been provided an Opinion of Counsel to the effect
that such action is necessary or helpful to, as applicable, maintain such
qualification, avoid or minimize the risk of the imposition of such a tax, or
comply with any such requirements of the Code, then this Agreement may be
amended by the Depositor and the Owner Trustee, with the consent of the Credit
Enhancer but without the consent of any Certificateholder,
(1) to modify, eliminate, or add to the provisions of this Agreement
to the extent appropriate to maintain the qualification of the Trust as a
REMIC under the Code,
(2) to avoid or minimize the risk of the imposition of any tax on
the Trust pursuant to the Code that would be a claim against the Trust at
any time before the final redemption of the Certificates, or
(3) to comply with any other requirements of the Code.
Promptly after the execution of any amendment or consent, the Owner
Trustee shall furnish a copy of the amendment or consent to the
Certificateholders, the Credit Enhancer, the Indenture Trustee, and each Rating
Agency.
Promptly after the execution of any amendment to the Certificate of Trust,
the Owner Trustee shall cause its filing with the Secretary of State of the
State of Delaware.
40
The Owner Trustee may, but shall not be obligated to, enter into any
amendment that affects the Owner Trustee's own rights or obligations under this
Agreement or otherwise.
Notwithstanding any contrary provision of this Agreement, the Owner
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that the amendment will
not cause the imposition of any tax on any REMIC or the Certificateholders or
cause any REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding. In connection with the execution of any amendment to this
Agreement, the Certificate of Trust, or any amendment of any other agreement to
which the Trust is a party, the Owner Trustee shall be entitled to receive and
conclusively rely upon an Opinion of Counsel to the effect that the amendment is
authorized or permitted by this Agreement and the Transaction Documents.
(b) Notwithstanding anything to the contrary in this Agreement, before the
issuance of the Notes the Certificateholders may amend this Agreement without
the consent of any other party. Promptly after the execution of any amendment
pursuant to this paragraph, the Certificateholders shall furnish a copy of the
amendment to the Owner Trustee and the Credit Enhancer.
Section 11.02 Limitations on Rights of Others.
The provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Certificateholders, the Administrator, and, to the
extent expressly provided in this Agreement, the Indenture Trustee, the Credit
Enhancer, and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other person any legal or equitable
interest in the Assets or under this Agreement.
Section 11.03 Notices.
(a) Except where telephonic instructions or notices are specifically
authorized, all notices, demands, instructions, consents, and other
communications required or permitted under this Agreement shall be in writing
and shall be personally delivered or sent by first class or express mail
(postage prepaid), national overnight courier service, or by facsimile
transmission or other electronic communication device capable of transmitting or
creating a written record (confirmed by first class mail) and shall be
considered to be given for purposes of this Agreement on the day that the
writing is delivered to its intended recipient. Unless otherwise specified in a
notice sent or delivered in accordance with this Section, notices, demands,
instructions, and other communications in writing shall be given to or made on
the respective parties at their respective addresses indicated below, and, in
the case of telephonic instructions or notices, by calling the telephone number
indicated for the party below:
if to the Owner Trustee, addressed to the Corporate Trust Office;
if to the Depositor, addressed to
41
CWHEQ, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
if to the Credit Enhancer, addressed to
MBIA Insurance Corporation,
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Insured Portfolio Management-Structured
Finance ("IPM-SF") (CWHEQ Revolving Home
Equity Loan Trust, Series 2006-G)
telephone number (000) 000-0000
facsimile number (000) 000-0000.
(b) Any notice required or permitted to be given to the Certificateholders
shall be given by first-class mail, postage prepaid, at the addresses of the
Certificateholders. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder receives the notice.
Section 11.04 Severability.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement, and that prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable the provision in any other
jurisdiction.
Section 11.05 Separate Counterparts.
This Agreement may be executed by the parties to this Agreement in
separate counterparts, each of which when so executed and delivered shall be an
original, but all the counterparts shall together constitute but one instrument.
Section 11.06 Successors and Assigns.
All covenants and agreements in this Agreement shall be binding on, and
inure to the benefit of, each of the Depositor and its permitted assignees, the
Owner Trustee and its successors, and each Certificateholder and any of its
successors, all as provided in this Agreement. Any request, notice, direction,
consent, waiver or other instrument or action by any Certificateholder shall
bind its successors.
Section 11.07 Nonpetition Covenant.
Notwithstanding any prior termination of this Agreement, the Depositor and
the Owner Trustee, by entering into this Agreement, and each Certificateholder,
by accepting a Certificate, agree that they shall not, before the date that is
one year and one day after the termination of the Agreement, file or participate
in the filing of any petition against the Trust that could cause the
42
Trust to incur an Insolvency Event. Nothing in this Agreement shall prohibit the
Owner Trustee from participating in or filing proofs of claim in any such
proceeding instituted by any other person.
Section 11.08 No Recourse.
Each Certificateholder by accepting a Certificate acknowledges that the
Certificate represents the beneficial interest in the Trust only and does not
represent interests in or obligations of the Depositor, the Servicer, the
Administrator, the Owner Trustee, the Indenture Trustee, or any Affiliate of any
of them and no recourse may be had against those parties or their assets, except
as may be expressly stated or contemplated in this Agreement, the other
Transaction Documents, or the Certificates.
Section 11.09 Headings.
The headings of the various Articles and Sections in this Agreement are
for convenience of reference only and shall not define or limit any of the
provisions of this Agreement.
Section 11.10 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
Section 11.11 Rule 144A Information.
As long as any of the securities of this Trust are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the Administrator
on behalf of the Trust shall provide to any Noteholder or Certificateholder and
to any prospective purchaser from any of them designated by any of them on the
request of the Noteholder, Certificateholder, or prospective purchaser, any
information required to be provided the holder or prospective purchaser to
satisfy the conditions of Rule 144A(d)(4) under the Securities Act.
Section 11.12 Third-Party Beneficiary.
The Credit Enhancer is a third-party beneficiary of this Agreement and is
entitled to the rights and benefits given to it under this Agreement as if it
were a party to this Agreement.
43
In Witness Whereof, the parties to this Agreement have caused this
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
CWHEQ, Inc.
Depositor
By: /s/ Xxxxxx Xxxxx
-----------------------
Name: Xxxxxx Xxxxx
Title: Vice President
WILMINGTON TRUST COMPANY
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
Master Servicer
With respect to Article 8 only
By: /s/ Xxxxxx Xxxxx
-----------------------
Name: Xxxxxx Xxxxx
Title: Vice President
44
EXHIBIT A
FORM OF CERTIFICATE OF TRUST OF
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200[__]-[__]
This Certificate of Trust of CWHEQ Revolving Home Equity Loan Trust,
Series 200[__]-[__] (the "Trust"), dated [_____], 200[__], is being duly
executed and filed by Wilmington Trust Company, a Delaware banking
corporation, as trustee, to form a statutory trust under the Delaware
Statutory Trust Act (12 Del. Code, ss. 3801 et seq.) (the "Act").
1. NAME. THE NAME OF THE STATUTORY TRUST IS CWHEQ REVOLVING HOME EQUITY
LOAN TRUST, SERIES 200[__]-[__].
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company,
[________________], [_________], Delaware _____, Attention:
[________________].
3. Effective Date. This Certificate of Trust shall be effective upon its
filing with the Secretary of State of the State of Delaware.
In Witness Whereof, the undersigned has executed this Certificate of
Trust in accordance with Section 3811(a)(1) of the Act.
WILMINGTON TRUST COMPANY,
Address: not in its individual capacity,
Xxxxxx Square North but solely as owner trustee
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Administration
By: ____________________________
Name:
Title:
X-0
Xxxxxxx X-0
[FORM OF] CLASS C CERTIFICATE
This certificate has not been and will not be registered under the Securities
Act of 1933, as amended, or the securities laws of any state and may not be
resold or transferred unless it is registered pursuant to the Securities Act of
1933 and the securities laws of any state or is sold or transferred in
transactions that are exempt from registration under the Securities Act of 1933
and under applicable state law and is transferred in accordance with Section
3.10 of the Trust Agreement related to CWHEQ Revolving Home Equity Loan Trust,
Series 200[__]-[__]. Neither this certificate nor any interest in it may be
transferred unless the transferee delivers to the trustee either a
representation letter to the effect that the transferee is not an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974, as
amended, a plan subject to Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), or a person acting on behalf of or using the assets of any
such plan; or an opinion of counsel in accordance with Section 3.10(c) of the
Trust Agreement related to CWHEQ Revolving Home Equity Loan Trust, Series
200[__]-[__]. Notwithstanding anything else to the contrary herein, any
purported transfer of this certificate to or on behalf of an employee benefit
plan subject to ERISA or to Section 4975 of the Code without the opinion of
counsel satisfactory to the trustee as described above shall be void.
Solely for U.S. federal income tax purposes, this certificate is a "regular
interest" in a "Real Estate Mortgage Investment Conduit" as those terms are
defined, respectively, in Sections 860G and 860D of the Code.
B-1-1
Date of Trust Agreement : [______], 200[__]
Cut-off Date : [______], 200[__]
Percentage Interest : 100%
Certificate No. : [_______]
First Distribution Date : [_______]
REVOLVING HOME EQUITY LOAN ASSET BACKED CERTIFICATE
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200[__]-[__]
Class C Certificate
evidencing a percentage interest in the distributions allocable to the Class C
Certificates evidencing an undivided interest in a trust consisting primarily of
a pool of adjustable rate home equity revolving credit line Mortgage Loans sold
by
CWHEQ, INC.
This Certificate does not represent an obligation of or interest in
CWHEQ, Inc. (the "Depositor"), Countrywide Home Loans, Inc., or the Owner
Trustee or any of their affiliates. Neither this Certificate nor the
underlying Assets are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that [____________________________] is the registered
owner of the Percentage Interest evidenced by this Certificate in the entire
interest in the CWHEQ Revolving Home Equity Loan Trust, Series 200[__]-[__]
(the "Trust"), consisting primarily of a pool of Mortgage Loans (the "Mortgage
Loans") transferred by the Depositor and serviced by Countrywide Home Loans,
Inc. (in that capacity, the "Master Servicer"). The Trust was formed pursuant
to the Trust Agreement, dated as of [_____], 200[__] (the "Agreement"),
between the Depositor and Wilmington Trust Company, as trustee (the "Owner
Trustee"), a summary of some of the pertinent provisions of which follows.
Capitalized terms used in this Certificate without definition have the
meanings assigned in the Agreement or the Sale and Servicing Agreement. This
Certificate is issued under and is subject to the Agreement. The Holder of
this Certificate by virtue of the acceptance of it agrees to be bound by the
Agreement.
This Certificate is one of the Certificates from a duly authorized issue
of Certificates designated as Revolving Home Equity Loan Asset Backed
Certificates, Series 200[__]-[__], representing, to the extent specified in
the Agreement, an undivided interest in:
(1) each Mortgage Loan, including its Asset Balance (including all
Additional Balances), the related Mortgage File, all property that
secures the Mortgage Loans, and all collections received on it after the
Cut-off Date (excluding payments due by the Cut-off Date);
(2) property that secured a Mortgage Loan that is acquired by
foreclosure or deed in lieu of foreclosure;
(3) the Depositor's rights under the Purchase Agreement;
B-1-1
(4) the Depositor's rights under the hazard insurance policies
covering Mortgaged Properties; and
(5) certain other property described in the Agreement and Section
2.01 of the Sale and Servicing Agreement (collectively, the "Assets").
A first priority security interest in all the Assets has been granted to the
Indenture Trustee under the Indenture.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds available under the Agreement for
payment of this Certificate and that the Owner Trustee in its individual
capacity is not personally liable to the Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights, and limitations
of rights and obligations evidenced by this Certificate, and the rights and
obligations of the Owner Trustee.
The Agreement may be amended in any way by the Depositor and the Owner
Trustee, with the consent of any affected Certificateholder and the Credit
Enhancer but only if the Rating Agency Condition is satisfied and the
amendment would not cause any adverse tax event for any Noteholder.
No transfer of this Certificate shall be made unless the transfer is
exempt from the registration requirements of the Securities Act of 1933 (the
"Act") and any applicable state securities laws or is made in accordance with
the Act and those laws. In connection with any transfer of this Certificate, the
Owner Trustee will require either:
(i) the transferee to execute an investment letter acceptable to
and in form and substance satisfactory to the Owner Trustee certifying
to the Owner Trustee the facts surrounding the transfer, which
investment letter shall not be an expense of the Owner Trustee or
(ii) an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Owner Trustee and the Depositor that the transfer
may be made pursuant to an exemption from the Act, describing the
applicable exemption and its basis, or is being made pursuant to the
Act, which Opinion of Counsel shall not be an expense of the Owner
Trustee or the Depositor.
In connection with any transfer of this Certificate, the holder transferring
this Certificate shall indemnify the Trust against any liability that may result
if the transfer is not so exempt or is not made in accordance with any federal
and state laws.
Neither this Certificate nor any legal or beneficial interest in it may
be, directly or indirectly, purchased, transferred, sold, pledged, assigned,
or otherwise disposed of, and any
B-1-2
proposed transferee of this Certificate shall not become its registered
Holder, unless the conditions in Section 3.10 of the Agreement are satisfied.
No service charge shall be made for the registration of transfer or
exchange of this Certificate, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of this Certificate.
The Owner Trustee, the Certificate Registrar, and any Certificate Paying
Agent will treat the person in whose name this Certificate is registered in
the Certificate Register as its owner for the purpose of receiving
distributions pursuant to Section 5.02 of the Agreement and for all other
purposes whatsoever, and none of the Owner Trustee, the Certificate Registrar,
and any Certificate Paying Agent shall be bound by any notice to the contrary.
The obligations created by the Agreement will terminate and this
Certificate will be retired and the Trust will be dissolved when the Trust has
made the final distribution of all moneys or other property or proceeds of all
Assets in accordance with the Transaction Documents and Article V of the
Agreement. The Holder of the R-1 Certificates, with the consent of the Credit
Enhancer, may effect the transfer of all the Mortgage Loans at their
termination purchase price on any Payment Date on or after which the aggregate
Note Principal Balance of the Principal Amount Notes is less than or equal to
10% of the Original Note Principal Balance of the Principal Amount Notes. This
transfer will result in the termination of the Agreement and the dissolution
of the Trust.
B-1-3
Unless the certificate of authentication on this Certificate has been
executed by the Certificate Registrar by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
Dated: [______], 2006
CWHEQ Revolving Home Equity Loan Trust,
Series 200[__]-[__]
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee
By: _______________________________
Name:
Title:
Certificate of Authentication:
This is one of the Certificates
referenced in the within-mentioned Agreement.
JPMORGAN CHASE BANK, N.A.,
as Indenture Trustee
By: ________________________
Authorized Officer
X-0-0
XXXXXXX X-0
[FORM OF] CLASS [R-1][R-2] CERTIFICATE
Solely for U.S. federal income tax purposes, this certificate is a "residual
interest" in a "Real Estate Mortgage Investment Conduit," as those terms are
defined, respectively, in sections 860G and 860D of the Internal Revenue Code of
1986, as amended (the "Code").
This certificate has not been and will not be registered under the Securities
Act of 1933, as amended, or the securities laws of any state and may not be
resold or transferred unless it is registered pursuant to the Securities Act of
1933 and the securities laws of any state or is sold or transferred in
transactions that are exempt from registration under the Securities Act of 1933
and under applicable state law and is transferred in accordance with Section
3.10 of the trust agreement related to CWHEQ Revolving Home Equity Loan Trust,
Series 200[__]-[__] (the "Trust Agreement"). Neither this certificate nor any
interest in it may be transferred unless the transferee delivers to the owner
trustee either (a) a representation letter to the effect that the transferee is
not an employee benefit plan subject to Section 406 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or a plan subject to Section
4975 of the Code, or a person acting on behalf of, or investing plan assets of,
any such plan, or (b) an opinion of counsel in accordance with Section 3.10(c)
of the Trust Agreement. Notwithstanding anything else to the contrary herein,
any purported transfer of this certificate to or on behalf of an employee
benefit plan subject to ERISA or a plan or arrangement subject to Section 4975
of the Code without the opinion of counsel satisfactory to the owner trustee as
described above shall be void.
[ONLY FOR CLASS R-1 CERTIFICATE-][This certificate will not be entitled to
payments until such time as described in the Trust Agreement. The holder of this
certificate is required to make certain advances of funds to the trust pursuant
to the Trust Agreement. If the holder of this certificate fails to do so it may
be required to sell this certificate to the Sponsor.]
[ONLY FOR CLASS R-1 CERTIFICATE-][This certificate may not be transferred except
to the Master Servicer, the Sponsor, the Depositor or the Trust (or an affiliate
of any of them).]
[ONLY FOR TAX MATTER PERSON CERTIFICATE-][This certificate represents the "Tax
Matters Person Residual Interest" issued under the Trust Agreement and may not
be transferred to any person except in connection with the assumption by the
transferee of the duties of the Tax Matter Person under the Trust Agreement.]
B-2-1
Date of Trust Agreement : [____________], 200[__]
Cut-off Date : [____________], 200[__]
Percentage Interest : [____________]%
Certificate No. : [____________]
First Distribution Date : [____________], 200[__]
CUSIP : [____________]
REVOLVING HOME EQUITY LOAN ASSET BACKED CERTIFICATE
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200[__]-[__]
Class [R-1][R-2] Certificate
evidencing a percentage interest in the distributions
allocable to the Class [R-1][R-2] Certificates evidencing an
undivided interest in a trust consisting primarily of a pool
of adjustable rate home equity revolving credit line Mortgage
Loans sold by
CWHEQ, INC.
This Certificate does not represent an obligation of or an interest in,
and is not guaranteed by CWHEQ, Inc. (the "Depositor"), Countrywide Home
Loans, Inc., or the Owner Trustee or any of their affiliates. Neither this
Certificate nor the underlying Assets are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that [________________] [ONLY FOR TAX MATTER PERSON
CERTIFICATE-][, as Tax Matters Person,] is the registered owner of the
Percentage Interest evidenced by this Certificate in the entire interest in
the CWHEQ Revolving Home Equity Loan Trust, Series 200[__]-[__] (the "Trust"),
consisting primarily of a pool of Mortgage Loans (the "Mortgage Loans")
transferred by the Depositor and serviced by Countrywide Home Loans, Inc. (in
that capacity, the "Master Servicer"). The Trust was formed pursuant to the
Trust Agreement, dated as of [___________], 2006 (the "Agreement"), between
the Depositor and Wilmington Trust Company, as trustee (the "Owner Trustee"),
a summary of some of the pertinent provisions of which follows. Capitalized
terms used in this Certificate without definition have the meanings assigned
in the Agreement, in the Transfer Affidavit attached thereto as Annex 1 to
Exhibit C-2, or the Sale and Servicing Agreement. This Certificate is issued
under and is subject to the Agreement. The Holder of this Certificate by
virtue of the acceptance of it agrees to be bound by the Agreement.
This Certificate is one of the Certificates from a duly authorized issue
of Certificates designated as Revolving Home Equity Loan Asset Backed
Certificates, Series 200[__]-[__], representing, to the extent specified in
the Agreement, an undivided interest in:
(i) each Mortgage Loan, including its Asset Balance (including all
Additional Balances), the related Mortgage File, all property that
secures the Mortgage Loans, and
B-2-2
all collections received on it after the Cut-off Date (excluding
payments due by the Cut-off Date);
(ii)property that secured a Mortgage Loan that is acquired by
foreclosure or deed in lieu of foreclosure;
(iii) the Depositor's rights under the Purchase Agreement;
(iv)the Depositor's rights under the hazard insurance policies
covering Mortgaged Properties; and
(v) certain other property described in the Agreement and Section
2.01 of the Sale and Servicing Agreement (collectively, the "Assets").
A first priority security interest in all the Assets has been granted to
the Indenture Trustee under the Indenture.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds available under the Agreement for
payment of this Certificate and that the Owner Trustee in its individual
capacity is not personally liable to the Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
[ONLY FOR THE CLASS R-1 CERTIFICATES-][The Certificateholder, by its
acceptance of this Certificate, agrees that it will advance funds to the Trust
to purchase the Additional Balances that were not funded by Principal
Collections during a Collection Period. If the Holder of the Class R-1
Certificates fails to advance to the Trust these amounts, the Holder of the
Class R-1 Certificates will be required to sell the Class R-1 Certificates to
the Sponsor immediately upon request.]
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights, and limitations
of rights and obligations evidenced by this Certificate, and the rights and
obligations of the Owner Trustee.
The Agreement may be amended in any way by the Depositor and the Owner
Trustee, with the consent of any affected Certificateholder and the Credit
Enhancer but only if the Rating Agency Condition is satisfied and the
amendment would not cause any adverse tax event for any Noteholder.
No transfer of this Certificate shall be made unless the transfer is
exempt from the registration requirements of the Securities Act of 1933 (the
"Act") and any applicable state securities laws or is made in accordance with
the Act and those laws. In connection with any transfer of this Certificate,
the Owner Trustee will require either:
(i) the transferee to execute an investment letter acceptable to
and in form and substance satisfactory to the Owner Trustee certifying
to the Owner Trustee the facts surrounding the transfer, which
investment letter shall not be an expense of the Owner Trustee or
B-2-3
(ii) an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Owner Trustee and the Depositor that the transfer
may be made pursuant to an exemption from the Act, describing the
applicable exemption and its basis, or is being made pursuant to the
Act, which Opinion of Counsel shall not be an expense of the Owner
Trustee or the Depositor.
Any distribution of the proceeds of any remaining assets of the Trust
Fund to which the holder of this Class [R-1][R-2] Certificate is entitled to
will be made only upon presentment and surrender of this Class [R-1][R-2]
Certificate at the Corporate Trust Office or the office or agency maintained
by the Owner Trustee in Wilmington, Delaware.
No transfer of a Class [R-1][R-2] Certificate shall be made unless the
Owner Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Owner Trustee, to the effect that such transferee is not
an employee benefit plan subject to Section 406 of ERISA or a plan or
arrangement subject to Section 4975 of the Code, or a person acting on behalf
of or investing plan assets of any such benefit plan or arrangement, which
representation letter shall not be an expense of the Owner Trustee, the Master
Servicer or the Trust, or (ii) in the case of any such Certificate presented
for registration in the name of an employee benefit plan subject to ERISA or a
plan or arrangement subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), a trustee of any such benefit plan
or arrangement or any other person acting on behalf of any such benefit plan
or arrangement, an Opinion of Counsel satisfactory to the Owner Trustee to the
effect that the purchase and holding of such Certificate will not result in a
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code,
and will not subject the Owner Trustee or the Master Servicer to any
obligation in addition to those undertaken in the Agreement, which Opinion of
Counsel shall not be an expense of the Owner Trustee, the Master Servicer or
the Trust. Notwithstanding anything else to the contrary herein, any purported
transfer of a Class [R-1][R-2] Certificate to or on behalf of an employee
benefit plan subject to ERISA or a plan or arrangement subject to Section 4975
of the Code without the opinion of counsel satisfactory to the Owner Trustee
as described above shall be void and of no effect.
Each Holder of this Class [R-1][R-2] Certificate will be deemed to have
agreed to be bound by the restrictions of the Agreement, including but not
limited to the restrictions that (i) each person holding or acquiring any
Ownership Interest in this Class [R-1][R-2] Certificate must be a Permitted
Transferee, (ii) no Ownership Interest in this Class [R-1][R-2] Certificate
may be transferred without delivery to the Owner Trustee of (a) a transfer
affidavit of the proposed transferee and (b) a transfer certificate of the
transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in
this Class [R-1][R-2] Certificate must agree to require a transfer affidavit
and to deliver a transfer certificate to the Owner Trustee as required
pursuant to the Agreement, (iv) each person holding or acquiring an Ownership
Interest in this Class [R-1][R-2] Certificate must agree not to transfer an
Ownership Interest in this Class [R-1][R-2] Certificate if it has
B-2-4
actual knowledge that the proposed transferee is not a Permitted Transferee
and (v) any attempted or purported transfer of any Ownership Interest in this
Class [R-1][R-2] Certificate in violation of such restrictions will be
absolutely null and void and will vest no rights in the purported transferee.
In connection with any transfer of this Certificate, the holder
transferring this Certificate shall indemnify the Trust against any liability
that may result if the transfer is not so exempt or is not made in accordance
with any federal and state laws.
Neither this Certificate nor any legal or beneficial interest in it may
be, directly or indirectly, purchased, transferred, sold, pledged, assigned,
or otherwise disposed of, and any proposed transferee of this Certificate
shall not become its registered Holder, unless the conditions in Section 3.10
of the Agreement are satisfied.
No service charge shall be made for the registration of transfer or
exchange of this Certificate, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of this Certificate.
The Owner Trustee, the Certificate Registrar, and any Certificate Paying
Agent will treat the person in whose name this Certificate is registered in
the Certificate Register as its owner for the purpose of receiving
distributions pursuant to Section 5.02 of the Agreement and for all other
purposes whatsoever, and none of the Owner Trustee, the Certificate Registrar,
and any Certificate Paying Agent shall be bound by any notice to the contrary.
The obligations created by the Agreement will terminate and this
Certificate will be retired and the Trust will be dissolved when the Trust has
made the final distribution of all moneys or other property or proceeds of all
Assets in accordance with the terms of the Transaction Documents and Article V
of the Agreement. The Holder of the R-1 Certificates, with the consent of the
Credit Enhancer, may effect the transfer of all the Mortgage Loans at their
termination purchase price on or after which the aggregate Note Principal
Balance of the Principal Amount Notes is less than or equal to 10% of the
Original Note Principal Balance of the Principal Amount Notes. This transfer
will result in the termination of the Agreement and the dissolution of the
Trust.
B-2-5
Unless the certificate of authentication on this Certificate has been
executed by the Certificate Registrar by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
Dated: [________________]
CWHEQ Revolving Home Equity Loan Trust,
Series 200[__]-[__]
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee
By: _______________________________
Name:
Title:
Certificate of Authentication:
This is one of the Class [R-1][R-2] Certificates
referenced in the within-mentioned Agreement.
JPMORGAN CHASE BANK, N.A.
as Indenture Trustee
By: ________________________
Authorized Officer
B-2-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to
assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Owner Trustee to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________.
Dated:
______________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
_____________________________________________________________________________
,
for the account of _____________________________________________,
account number _______________, or, if mailed by check, to ______
________________________________________________________________. Applicable
B-2-7
statements should be mailed to
____________________________________________________________________________.
This information is provided by ___________________________,
the assignee named above, or ___________________________________, as its
agent.
B-2-8
STATE OF )
) ss.:
COUNTY OF )
On the __st day of _____________, _____ before me, a notary public in
and for said State, personally appeared ______________ __________, known to me
who, being by me duly sworn, did depose and say that he executed the foregoing
instrument.
_________________________________
Notary Public
[Notarial Seal]
B-2-9
EXHIBIT C-1
FORM OF TRANSFEROR INVESTMENT LETTER
FOR CERTIFICATES
Date:
CWHEQ, Inc.
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: ________________
Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration
Re: CWHEQ Revolving Home Equity Loan Trust, Series
200[__]-[__] Revolving Home Equity Loan Asset Backed
Securities, Series 200[__]-[__] Certificates
--------------------------------------------
Ladies and Gentlemen:
This letter is delivered to you in connection with the sale by
_____________ (the "Transferor") to ______________________ (the "Transferee")
of the Certificates representing a ____% Percentage Interest (the "Transferred
Certificates"). All capitalized terms used in this certificate without
definition have the meanings given to them in the Trust Agreement, dated as of
[_____], 200 [__], between CWHEQ, Inc., as depositor, and Wilmington Trust
Company, as owner trustee. The Transferor hereby certifies, represents, and
warrants to you that:
1. The Transferor is the lawful owner of the Transferred Certificates
with the full right to transfer them free from any claims and encumbrances
whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has (a)
offered, transferred, pledged, sold, or otherwise disposed of any Certificate,
any interest in any Certificate, or any other similar security to any person
in any manner, (b) solicited any offer to buy or accept a transfer, pledge, or
other disposition of any Certificate, any interest in any Certificate, or any
other similar security from any person in any manner, (c) otherwise approached
or negotiated with respect to any Certificate, any interest in any Certificate
or any
C-1-1
other similar security with any person in any manner, (d) made any general
solicitation by general advertising or in any other manner, or (e) taken any
other action that (in the case of any of the acts described in clauses (a)
through (e) of this paragraph) would constitute a distribution of any
Certificate under the Securities Act of 1933, as amended (the "Securities
Act"), or would render the disposition of any Certificate a violation of
Section 5 of the Securities Act or any state securities laws, or would require
registration or qualification of any Certificate pursuant to the Securities
Act or any state securities laws.
3. The Transferor and any person acting on behalf of the Transferor in
this matter reasonably believe that the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A ("Rule 144A") under
the Securities Act (a "Qualified Institutional Buyer") purchasing for its own
account or for the account of a Qualified Institutional Buyer. In determining
whether the Transferee is a Qualified Institutional Buyer, the Transferor and
any person acting on behalf of the Transferor in this matter have relied on
the following to establish the Transferee's ownership and discretionary
investments of securities (check one or more):
[_] The Transferee's most recent publicly available financial
statements, which statements present the information as of a date
within 16 months preceding the date of sale of the Transferred
Certificate in the case of a U.S. purchaser and within 18 months
preceding such date of sale for a foreign purchaser; or
[_] The most recent publicly available information appearing in
documents filed by the Transferee with the Securities and Exchange
Commission or another United States federal, state, or local
governmental agency or self-regulatory organization, or with a
foreign governmental agency or self-regulatory organization, which
information is as of a date within 16 months preceding the date of
sale of the Transferred Certificate in the case of a U.S.
purchaser and within 18 months preceding such date of sale for a
foreign purchaser; or
[_] The most recent publicly available information appearing in a
recognized securities manual, which information is as of a date
within 16 months preceding the date of sale of the Transferred
Certificate in the case of a U.S. purchaser and within 18 months
preceding such date of sale for a foreign purchaser; or
[_] A certification by the chief financial officer, a person
fulfilling an equivalent function, or other executive officer of
the Transferee, specifying the amount of securities owned and
invested on a discretionary basis by the Transferee as of a
specific date on or since the close of the Transferee's most
recent fiscal year, or, in the case of a Transferee that is a
member of a "family of investment companies," as that term is
defined in Rule 144A, a certification by an executive officer of
the investment adviser specifying the amount of securities owned
by the "family of investment companies" as of a specific date on
or since the close of the Transferee's most recent fiscal year.
C-1-2
4. The Transferor and any person acting on behalf of the Transferor
understand that in determining the aggregate amount of securities owned and
invested on a discretionary basis by an entity for purposes of establishing
whether such entity is a Qualified Institutional Buyer:
o the following instruments and interests shall be excluded: securities of
issuers that are affiliated with the Transferee; securities that are
part of an unsold allotment to or subscription by the Transferee, if the
Transferee is a dealer; securities of issuers that are part of the
Transferee's "family of investment companies," if the Transferee is a
registered investment company; bank deposit notes and certificates of
deposit; loan participations; repurchase agreements; securities owned
but subject to a repurchase agreement; and currency, interest rate, and
commodity swaps;
o the aggregate value of the securities shall be the cost of such
securities, except where the entity reports its securities holdings in
its financial statements on the basis of their market value, and no
current information with respect to the cost of those securities has
been published, in which case the securities may be valued at market;
o securities owned by subsidiaries of the entity that are consolidated
with the entity in its financial statements prepared in accordance with
generally accepted accounting principles may be included if the
investments of such subsidiaries are managed under the direction of the
entity, except that, unless the entity is a reporting company under
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
securities owned by such subsidiaries may not be included if the entity
itself is a majority-owned subsidiary that would be included in the
consolidated financial statements of another enterprise.
5. The Transferor or a person acting on its behalf has taken reasonable
steps to ensure that the Transferee is aware that the Transferor is relying on
the exemption from the provisions of Section 5 of the Securities Act provided
by Rule 144A.
6. The Transferor or a person acting on its behalf has furnished, or
caused to be furnished, to the Transferee all information regarding (a) the
Transferred Certificates and payments on them, (b) the nature and performance
of the Mortgage Loans, and (c) the Indenture, the Agreement, and the Trust
Estate, that the Transferee has requested.
Very truly yours,
__________________________________
(Transferor)
By: __________________________________
Name: __________________________________
Title: __________________________________
C-1-3
FORM OF TRANSFEREE INVESTMENT LETTER
FOR CERTIFICATES
Date:
CWHEQ, Inc.
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: ________________
Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration
Re: CWHEQ Revolving Home Equity Loan Trust, Series
200[__]-[__], Revolving Home Equity Loan Asset Backed
Securities, Series 200[__]-[__] Certificates
--------------------------------------------
Ladies and Gentlemen:
_______________________ (the "Transferee") intends to purchase from
______________________ (the "Transferor") Certificates representing a ___%
percentage interest in the entire interest in the Certificates (the
"Transferred Certificates"). The Certificates, including the Transferred
Certificates, were issued pursuant to the Agreement. All capitalized terms
used in this certificate without definition have the meanings given to them in
the Trust Agreement, dated as of [_____], 200[__], between CWHEQ, Inc., as
depositor, and Wilmington Trust Company, as owner trustee. The Transferee
hereby certifies, represents, and warrants that:
1. The Transferee is a "qualified institutional buyer" (a
"Qualified Institutional Buyer") as that term is defined in Rule 144A
("Rule 144A") under the Securities Act of 1933, as amended (the
"Securities Act"), and has completed one of the forms of certification
to that effect attached as Annex 1 and Annex 2. The Transferee is aware
that the sale to it of the Transferred Certificates is being made in
reliance on Rule 144A. The Transferee is acquiring the Transferred
Certificates for its own account or for the account of a Qualified
Institutional Buyer, and understands that the Transferred Certificates
may be resold, pledged, or transferred only to a person reasonably
believed to be a Qualified Institutional Buyer that purchases for its
own account or for the
C-1-4
account of a Qualified Institutional Buyer to whom notice is given that
the resale, pledge, or transfer is being made in reliance on Rule 144A.
2. The Transferee has been furnished with all information
regarding (a) the Transferred Certificates and payments on them, (b) the
nature and performance of the Mortgage Loans, (c) the Indenture, (d) the
Agreement, and (e) any credit enhancement mechanism associated with the
Transferred Certificates, that it has requested.
3. The Transferee represents that it is not an employee benefit
plan that is subject to the Employee Retirement Income Security Act of
1974, as amended, or a plan subject to Section 4975 of the Internal
Revenue Code of 1986, as amended, nor is it acting on behalf of or
investing plan assets of any such employee benefit plan.
4. The Transferee agrees to be bound by the Agreement.
Very truly yours,
__________________________________
(Transferee)
__________________________________
By: __________________________________
Name: __________________________________
Title: __________________________________
C-1-5
ANNEX 1 TO EXHIBIT C-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[for Transferees other than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and [name of Certificate Registrar], as Certificate Registrar,
with respect to the Certificates being transferred (the "Transferred
Certificates") as described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial officer, a
person fulfilling an equivalent function, or other executive officer of the
entity purchasing the Transferred Certificates (the "Transferee").
2. The Transferee is a "qualified institutional buyer" as that term is defined
in Rule 144A under the Securities Act of 1933, as amended ("Rule 144A"),
because (1) the Transferee owned or invested on a discretionary basis
$________________________ in securities (other than the excluded securities
referred to below and otherwise calculated in accordance with Rule 144A) as
of the end of the Transferee's most recent fiscal year and (2) the
Transferee satisfies the criteria in the category marked below.
[_] Corporation, etc. The Transferee is a corporation (other than a
bank, savings and loan association, or similar institution),
Massachusetts or similar statutory trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended.
[_] Bank. The Transferee (a) is a national bank or a banking
institution organized under the laws of any state, U.S. territory,
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the state
or territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest annual
financial statements, a copy of which is attached, as of a date
not more than 16 months preceding the date of sale of the
Certificates in the case of a U.S. bank, and not more than 18
months preceding such date of sale for a foreign bank or
equivalent institution.
[_] Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association, or similar institution that is supervised
and examined by a state or federal authority having supervision
over those institutions or is a foreign savings and
C-1-6
loan association or equivalent institution and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached, as of a
date not more than 16 months preceding the date of sale of the
Certificates in the case of a U.S. savings and loan association,
and not more than 18 months preceding such date of sale for a
foreign savings and loan association or equivalent institution.
[_] Broker-dealer. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
[_] Insurance Company. The Transferee is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and that is subject to supervision by the insurance
commissioner or a similar official or agency of a state, U.S.
territory, or the District of Columbia.
[_] Investment Advisor. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940, as amended.
3. [_] Other. (Please supply a brief description of the entity and a cross-
reference to the paragraph and subparagraph under subsection (a)(1) of Rule
144A pursuant to which it qualifies. Note that registered investment
companies should complete Annex 2 rather than this Annex 1.)__
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________ The term
"securities" does not include (1) securities of issuers that are affiliated
with the Transferee, (2) securities that are part of an unsold allotment to
or subscription by the Transferee, if the Transferee is a dealer, (3) bank
deposit notes and certificates of deposit, (4) loan participations, (5)
repurchase agreements, (6) securities owned but subject to a repurchase
agreement, and (7) currency, interest rate, and commodity swaps. For
purposes of determining the aggregate amount of securities owned or
invested on a discretionary basis by the Transferee, the Transferee did not
include any of the securities referred to in this paragraph.
4. For purposes of determining the aggregate amount of securities owned or
invested on a discretionary basis by the Transferee, the Transferee used
the cost of the securities to the Transferee, unless the Transferee reports
its securities holdings in its financial statements on the basis of their
market value, and no current information with respect to the cost of those
securities has been published, in which case the securities were valued at
market. Further, in determining the aggregate amount, the Transferee may
have included securities owned by subsidiaries of the Transferee, but only
if the subsidiaries are consolidated with the Transferee in its financial
statements prepared in accordance with generally accepted accounting
principles and if the investments of the subsidiaries are managed under the
C-1-7
Transferee's direction. However, such securities were not included if the
Transferee is a majority-owned, consolidated subsidiary of another
enterprise and the Transferee is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the
Transferred Certificates are relying and will continue to rely on the
statements made herein because one or more sales to the Transferee may be
in reliance on Rule 144A.
[_] [_] Will the Transferee be purchasing the Transferred Owner Trust
Yes No Certificates only for the Transferee's own account?
6. If the answer to the foregoing question is "no," then in each case where
the Transferee is purchasing for an account other than its own, the account
belongs to a third party that is itself a "qualified institutional buyer"
within the meaning of Rule 144A, and the "qualified institutional buyer"
status of the third party has been established by the Transferee through
one or more of the appropriate methods contemplated by Rule 144A.
7. The Transferee will notify each of the parties to which this certification
is made of any changes in the information and conclusions herein. Until
that notice is given, the Transferee's purchase of the Transferred
Certificates will constitute a reaffirmation of this certification as of
the date of the purchase. In addition, if the Transferee is a bank or
savings and loan as provided above, the Transferee agrees that it will
furnish to such parties any updated annual financial statements that become
available on or before the date of the purchase, promptly after they become
available.
____________________________________
Print Name of Transferee
By: ____________________________________
Name:
____________________________________
Title:
____________________________________Date:
X-0-0
XXXXX 0 XX XXXXXXX C-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[for Transferees that are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and [name of Certificate Registrar], as Certificate Registrar,
with respect to the Certificates being transferred (the "Transferred
Certificates") as described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial officer, a
person fulfilling an equivalent function, or other executive officer of
the entity purchasing the Transferred Certificates (the "Transferee")
or, if the Transferee is a "qualified institutional buyer" as that term
is defined in Rule 144A under the Securities Act of 1933, as amended
("Rule 144A"), because the Transferee is part of a Family of Investment
Companies, is an executive officer of the investment adviser (the
"Adviser").
2. The Transferee is a "qualified institutional buyer" as defined in Rule
144A because (i) the Transferee is an investment company registered
under the Investment Company Act of 1940, as amended, and (ii) as marked
below, the Transferee alone owned or invested on a discretionary basis,
or the Transferee's Family of Investment Companies owned, at least
$100,000,000 in securities (other than the excluded securities referred
to below) as of the end of the Transferee's most recent fiscal year. For
purposes of determining the amount of securities owned by the Transferee
or the Transferee's Family of Investment Companies, the cost of the
securities was used, unless the Transferee or any member of the
Transferee's Family of Investment Companies, as the case may be, reports
its securities holdings in its financial statements on the basis of
their market value, and no current information with respect to the cost
of those securities has been published, in which case the securities of
the entity were valued at market.
[_] The Transferee owned or invested on a discretionary basis
$_____________________ in securities (other than the excluded
securities referred to below and otherwise calculated in
accordance with Rule 144A) as of the end of the Transferee's most
recent fiscal year.
[_] The Transferee is part of a "Family of Investment Companies" that
owned in the aggregate $________________ in securities (other than
the excluded securities referred to below and otherwise calculated
in accordance with Rule 144A) as of the end of the Transferee's
most recent fiscal year.
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned
C-1-9
subsidiaries of the same parent or because one investment adviser is a
majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase
agreements, (v) securities owned but subject to a repurchase agreement
and (vi) currency, interest rate and commodity swaps. For purposes of
determining the aggregate amount of securities owned and/or invested on
a discretionary basis by the Transferee, or owned by the Transferee's
Family of Investment Companies, the securities referred to in this
paragraph were excluded.
5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales
to the Transferee will be in reliance on Rule 144A.
[_] [_] Will the Transferee be purchasing the Transferred
Yes No Certificates only for the Transferee's own account?
6. If the answer to the foregoing question is "no," then in each case where
the Transferee is purchasing for an account other than its own, the
account belongs to a third party that is itself a "qualified
institutional buyer" within the meaning of Rule 144A, and the "qualified
institutional buyer" status of the third party has been established by
the Transferee through one or more of the appropriate methods
contemplated by Rule 144A.
7. The undersigned will notify the parties to which this certification is
made of any changes in the information and conclusions herein. Until
that notice, the Transferee's purchase of the Transferred Certificates
will constitute a reaffirmation of this certification by the undersigned
as of the date of the purchase.
_________________________
Print Name of Transferee or Adviser
By: _________________________
Name: _________________________
Title: _________________________IF AN
ADVISER:
_________________________
Print Name of Transferee
Date: _________________________
C-1-10
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
___________________________________________
___________________________________________
___________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of the Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Issuer to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver the
Certificate to the following address:
___________________________________________.
Dated: _______________
___________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to:
____________________________________
____________________________________ ,
____________________________________ ,
for the account of____________________________ , account number _____________,
or, if mailed by check, to_________________________ . Applicable statements
should be mailed to_____________________________ ,___________________________
information is provided by____________________________________ , the assignee
named above, or____________________________________ , as its agent
C-1-11
EXHIBIT C_2
[FORM OF] TRANSFER AFFIDAVIT
CWHEQ, Inc. Revolving Home Equity Loan Trust, Series 200[__]-[__]
Revolving Home Equity Loan Asset Backed Securities, Series 200[__]-[__]
Class [R-1][R-2] Certificates
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _________________, the proposed
Transferee of an Ownership Interest in a Class [R-1][R-2] Certificate (the
"Certificate") issued pursuant to the Trust Agreement, dated as of
[________________] (the "Agreement"), between CWHEQ, Inc. (the "Depositor")
and Wilmington Trust Company, as trustee (the "Owner Trustee"). Capitalized
terms used, but not defined herein or in Exhibit 1 hereto, shall have the
meanings ascribed to such terms in the Agreement. The Transferee has
authorized the undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is not an employee benefit plan or other plan or
arrangement that is subject to Title I of ERISA or to section 4975 of the
Internal Revenue Code of 1986, nor is it acting on behalf of or with plan
assets of any such plan. The Transferee is, as of the date hereof, and will
be, as of the date of the Transfer, a Permitted Transferee. The Transferee
will endeavor to remain a Permitted Transferee for so long as it retains its
Ownership Interest in the Certificate. The Transferee is acquiring its
Ownership Interest in the Certificate for its own account.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an affidavit
that such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the
C-2-1
pass-through entity a Person that is not a Permitted Transferee is the record
holder of an interest in such entity. The Transferee understands that such tax
will not be imposed for any period with respect to which the record holder
furnishes to the pass-through entity an affidavit that such record holder is a
Permitted Transferee and the pass-through entity does not have actual
knowledge that such affidavit is false. (For this purpose, a "pass-through
entity" includes a regulated investment company, a real estate investment
trust or common trust fund, a partnership, trust or estate, and certain
cooperatives and, except as may be provided in Treasury Regulations, persons
holding interests in pass-through entities as a nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 3.10 of the
Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 3.10 of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any Person
to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Owner Trustee a certificate substantially
in the form set forth as Exhibit E to the Agreement (a "Transferor
Certificate") to the effect that such Transferee has no actual knowledge that
the Person to which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the Class
[R-1][R-2] Certificates.
8. The Transferee's taxpayer identification number is ______________.
9. The Transferee is a U.S. Person as defined in Code
section 7701(a)(30) and, unless the Transferor (or any subsequent transferor)
expressly waives such requirement, will not cause income from the Certificate
to be attributable to a foreign permanent establishment or fixed base (within
the meaning of an applicable income tax treaty) of the Transferee or another
U.S. taxpayer.
10. The Transferee is aware that the Class [R-1][R-2] Certificates may
be "noneconomic residual interests" within the meaning of Treasury Regulation
Section 1.860E-
C-2-2
1(c) and that the transferor of a noneconomic residual interest will remain
liable for any taxes due with respect to the income on such residual interest,
unless no significant purpose of the transfer was to impede the assessment or
collection of tax. In addition, as the Holder of a noneconomic residual
interest, the Transferee may incur tax liabilities in excess of any cash flows
generated by the interest and the Transferee hereby represents that it intends
to pay taxes associated with holding the residual interest as they become due.
11. The Transferee has provided financial statements or other financial
information requested by the Transferor in connection with the transfer of the
Certificate to permit the Transferor to assess the financial capability of the
Transferee to pay such taxes. The Transferee historically has paid its debts
as they have come due and intends to pay its debts as they come due in the
future.
[12. Unless the Transferor (or any subsequent transferor) expressly
waives such requirement, the Transferee (and any subsequent transferee)
certifies (or will certify), respectively, that the transfer satisfies either
the "Asset Test" imposed by Treasury Regulation ss. 1.860E-1(c)(5) or the
"Formula Test" imposed by Treasury Regulation ss. 1.860E-1(c)(7).]
* * *
C-2-3
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf by its duly authorized officer, this_____ day of
___________, 2___.
_________________________________
PRINT NAME OF TRANSFEREE
By: ______________________________
Name:
Title:
[Corporate Seal]
ATTEST:
_________________________________
[Assistant] Secretary
Personally appeared before me the above-named ______________________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the __________________ of the Transferee, and
acknowledged that he executed the same as his free act and deed and the free
act and deed of the Transferee.
Subscribed and sworn before me this ____ day of ___________, 20___.
________________________________
NOTARY PUBLIC
My Commission expires the
___ day of____________, 20__
C-2-4
[WAIVER OF REQUIREMENT THAT TRANSFEREE CERTIFIES TRANSFER OF CERTIFICATE
SATISFIES CERTAIN REGULATORY "SAFE HARBORS"
The Transferor hereby waives the requirement that the Transferee certify
that the transfer of the Certificate satisfies either the "Asset Test" imposed
by Treasury Regulation ss.1.860E-1(c)(5) or the "Formula Test" imposed by
Treasury Regulation ss. 1.860E-1(c)(7).
CWHEQ, INC.
By: ______________________________
Name:
Title:]
X-0-0
XXXXX 0 XX XXXXXXX X-0
Xxxxxxx Definitions
"Asset Test": A transfer satisfies the Asset Test if: (i) At the time of
the transfer, and at the close of each of the transferee's two fiscal years
preceding the transferee's fiscal year of transfer, the transferee's gross
assets for financial reporting purposes exceed $100 million and its net assets
for financial reporting purposes exceed $10 million. The gross assets and net
assets of a transferee do not include any obligation of any "related person"
or any other asset if a principal purpose for holding or acquiring the other
asset is to permit the transferee to satisfy such monetary conditions; (ii)
The transferee must be an "eligible corporation" and must agree in writing
that any subsequent transfer of the interest will be to another eligible
corporation in a transaction that satisfies paragraphs 9 through 11 of this
Transfer Affidavit and the Asset Test. A transfer fails to meet the Asset Test
if the transferor knows, or has reason to know, that the transferee will not
honor the restrictions on subsequent transfers of the Certificate; and (iii) A
reasonable person would not conclude, based on the facts and circumstances
known to the transferor on or before the date of the transfer, that the taxes
associated with the Certificate will not be paid. The consideration given to
the transferee to acquire the Certificate is only one factor to be considered,
but the transferor will be deemed to know that the transferee cannot or will
not pay if the amount of consideration is so low compared to the liabilities
assumed that a reasonable person would conclude that the taxes associated with
holding the Certificate will not be paid. For purposes of applying the Asset
Test, (i) an "eligible corporation" means any domestic C corporation (as
defined in section 1361(a)(2) of the Code) other than (A) a corporation which
is exempt from, or is not subject to, tax under section 11 of the Code, (B) an
entity described in section 851(a) or 856(a) of the Code, (C) A REMIC, or (D)
an organization to which part I of subchapter T of chapter 1 of subtitle A of
the Code applies; (ii) a "related person" is any person that (A) bears a
relationship to the transferee enumerated in section 267(b) or 707(b)(1) of
the Code, using "20 percent" instead of "50 percent" where it appears under
the provisions, or (B) is under common control (within the meaning of section
52(a) and (b)) with the transferee.
"Formula Test": A transfer satisfies the formula test if the present
value of the anticipated tax liabilities associated with holding the
Certificate does not exceed the sum of (i) the present value of any
consideration given to the transferee to acquire the Certificate; (ii) the
present value of the expected future distributions on the Certificate; and
(iii) the present value of the anticipated tax savings associated with holding
the Certificate as the issuing REMIC generates losses. For purposes of
applying the Formula Test: (i) The transferee is assumed to pay tax at a rate
equal to the highest rate of tax specified in section 11(b)(1) of the Code. If
the transferee has been subject to the alternative minimum tax under section
55 of the Code in the preceding two years and will compute its taxable income
in the current taxable year using the alternative minimum tax rate, then the
tax rate specified in section 55(b)(1)(B) of the Code may be used in lieu of
the highest rate specified in section 11(b)(1) of the Code; (ii) The transfer
C-2-6
must satisfy paragraph 9 of the Transfer Affidavit; and (iii) Present values
are computed using a discount rate equal to the Federal short-term rate
prescribed by section 1274(d) of the Code for the month of the transfer and
the compounding period used by the taxpayer.
"Ownership Interest": As to any Certificate, any ownership interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
"Permitted Transferee" means any person other than
o the United States, any State or political subdivision
thereof, or any agency or instrumentality of any of them,
o a foreign government, International Organization, or any
agency or instrumentality of either of them,
o an organization (except certain farmers' cooperatives
described in Section 521 of the Code) that is exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by
Section 511 of the Code on unrelated business taxable income) on
any excess inclusions (as defined in Section 860E(c)(1) of the
Code) with respect to any Residual Certificate,
o rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code,
o an "electing large partnership" as defined in Section 775
of the Code,
o a person that is not a citizen or resident of the United
States, a corporation, partnership, or other entity created or
organized in or under the laws of the United States, any state of
the United States, or the District of Columbia, or an estate or
trust whose income from sources without the United States is
includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade
or business within the United States or a trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons
have the authority to control all substantial decisions of the
trust unless such person has furnished the transferor and the
Owner Trustee with a duly completed Internal Revenue Service Form
W-8ECI or any applicable successor form, and
o any other person so designated by the Depositor based on
an Opinion of Counsel that the Transfer of an Ownership Interest
in a Residual Certificate to such person may cause any REMIC to
fail to qualify as a REMIC at any time that the Certificates are
outstanding.
The terms "United States," "State," and "International Organization"
have the meanings in Section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof for these
C-2-7
purposes if all of its activities are subject to tax and, with the exception
of the Federal Home Loan Mortgage Corporation, a majority of its board of
directors is not selected by such government unit.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, bank, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency
or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
C-2-8
