Exhibit 99.3
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CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2007-B
Issuer
and
THE BANK OF NEW YORK
Indenture Trustee
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INDENTURE
Dated as of March 30, 2007
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions and Other Provisions of General Application 2
Section 1.01. Definitions..........................................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act....................................2
Section 1.03. Other Terms..........................................................................3
Section 1.04. Rules of Construction................................................................3
ARTICLE II The Notes 5
Section 2.01. Form.................................................................................5
Section 2.02. Execution, Authentication, and Delivery..............................................5
Section 2.03. Registration; Registration of Transfer and Exchange..................................6
Section 2.04. Mutilated, Destroyed, Lost, or Stolen Notes..........................................7
Section 2.05. Persons Considered Owner.............................................................8
Section 2.06. Payment of Principal and Interest; Defaulted Interest................................8
Section 2.07. Cancellation.........................................................................9
Section 2.08. Book-Entry Notes....................................................................10
Section 2.09. Notices To Depository...............................................................11
Section 2.10. Definitive Notes....................................................................11
Section 2.11. Tax Treatment.......................................................................11
Section 2.12. Transfer Restrictions; Restrictive Legends..........................................11
ARTICLE III Covenants 12
Section 3.01. Payment of Principal and Interest...................................................12
Section 3.02. Maintenance of Office or Agency.....................................................13
Section 3.03. Money For Payments To Be Held in Trust..............................................13
Section 3.04. Existence...........................................................................14
Section 3.05. Protection of the Collateral........................................................15
Section 3.06. Opinions About Collateral...........................................................16
Section 3.07. Performance of Obligations..........................................................16
Section 3.08. Negative Covenants..................................................................18
Section 3.09. Annual Compliance Statement.........................................................19
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.................................19
Section 3.11. Successor or Transferee.............................................................20
Section 3.12. Further Instruments and Acts........................................................20
Section 3.13. Compliance with Laws................................................................20
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Section 3.14. Master Servicer as Agent and Bailee of the Indenture Trustee........................20
Section 3.15. Investment Company Act..............................................................21
Section 3.16. Representations.....................................................................21
ARTICLE IV Satisfaction and Discharge 22
Section 4.01. Satisfaction and Discharge of Indenture.............................................22
Section 4.02. Application of Trust Money..........................................................23
Section 4.03. Subrogation and Cooperation.........................................................23
Section 4.04. Release of Collateral...............................................................24
ARTICLE V Remedies 25
Section 5.01. Events of Default...................................................................25
Section 5.02. Acceleration of Maturity; Rescission and Annulment..................................26
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee...........27
Section 5.04. Indenture Trustee May File Proofs of Claim..........................................27
Section 5.05. Remedies; Priorities................................................................29
Section 5.06. Optional Preservation of the Collateral.............................................30
Section 5.07. Limitation of Suits.................................................................31
Section 5.08. Unconditional Right to Receive Principal and Interest...............................31
Section 5.09. Restoration of Rights and Remedies..................................................32
Section 5.10. Rights and Remedies Cumulative......................................................32
Section 5.11. Delay or Omission Not a Waiver......................................................32
Section 5.12. Control by Credit Enhancer or Noteholders...........................................32
Section 5.13. Waiver of Past Defaults.............................................................32
Section 5.14. Undertaking For Costs...............................................................33
Section 5.15. Waiver of Stay or Extension Laws....................................................33
Section 5.16. Rapid Amortization Events...........................................................33
Section 5.17. Sale of Collateral..................................................................35
Section 5.18. Performance and Enforcement of Certain Obligations..................................36
ARTICLE VI The Indenture Trustee 36
Section 6.01. Duties of Indenture Trustee.........................................................36
Section 6.02. Notice of Defaults..................................................................38
Section 6.03. Rights of Indenture Trustee.........................................................38
Section 6.04. Indenture Trustee Not Responsible for Certain Things................................39
Section 6.05. Individual Rights of Indenture Trustee..............................................40
Section 6.06. Money Held in Trust.................................................................40
Section 6.07. Compensation........................................................................40
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Section 6.08. Eligibility.........................................................................41
Section 6.09. Preferential Collection of Claims Against Issuer....................................41
Section 6.10. Replacement of Indenture Trustee....................................................41
Section 6.11. Acceptance of Appointment by Successor..............................................42
Section 6.12. Successor Indenture Trustee by Merger...............................................43
Section 6.13. Appointment of Co-Indenture Trustee or Separate Indenture Trustee...................43
Section 6.14. Representations and Warranties of Indenture Trustee.................................44
ARTICLE VII Noteholders' Lists and Reports 45
Section 7.01. Issuer to Furnish Names and Addresses of Noteholders................................45
Section 7.02. Preservation of Information; Communications.........................................45
Section 7.03. Exchange Act Reports................................................................45
Section 7.04. Reports by Indenture Trustee........................................................47
ARTICLE VIII Accounts, Cap Contract, Disbursements, and Releases 48
Section 8.01. Accounts............................................................................48
Section 8.02. Withdrawals from the Collection Account and the Additional Loan Account.............50
Section 8.03. Payments............................................................................51
Section 8.04. Calculation of the Note Rate........................................................54
Section 8.05. Claims on the Policy; Policy Payments Account.......................................54
Section 8.06. Replacement Policy..................................................................56
Section 8.07. Cap Contract........................................................................56
Section 8.08. Payment of Cap Payment Entitlement..................................................57
Section 8.09. Monitoring of Significance Percentage...............................................57
ARTICLE IX Supplemental Indentures 58
Section 9.01. Supplemental Indentures.............................................................58
Section 9.02. Execution of Supplemental Indentures................................................60
Section 9.03. Effect of Supplemental Indenture....................................................60
Section 9.04. Reference in Notes to Supplemental Indentures.......................................61
Section 9.05. Tax Opinion.........................................................................61
Section 9.06. Tax Matters.........................................................................61
ARTICLE X Redemption of Notes 63
Section 10.01. Redemption..........................................................................63
Section 10.02. Form of Redemption Notice...........................................................64
Section 10.03. Notes Payable on Redemption Date....................................................65
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ARTICLE XI Miscellaneous 65
Section 11.01. Compliance Certificates and Opinions, etc...........................................65
Section 11.02. Form of Documents Delivered to Indenture Trustee....................................67
Section 11.03. Acts of Noteholders.................................................................68
Section 11.04. Notices.............................................................................68
Section 11.05. Notices to Noteholders; Waiver......................................................69
Section 11.06. Alternate Payment and Notice Provisions.............................................70
Section 11.07. Conflict with Trust Indenture Act...................................................70
Section 11.08. Effect of Headings and Table of Contents............................................71
Section 11.09. Successors and Assigns..............................................................71
Section 11.10. Separability........................................................................71
Section 11.11. Benefits of Indenture...............................................................71
Section 11.12. Legal Holidays......................................................................71
Section 11.13. Governing Law.......................................................................71
Section 11.14. Counterparts; Electronic Delivery...................................................71
Section 11.15. Recording of Indenture..............................................................71
Section 11.16. No Petition.........................................................................72
Section 11.17. Non-recourse........................................................................72
Section 11.18. Act on Instructions from Credit Enhancer............................................72
Section 11.19. Trust Obligation....................................................................72
EXHIBITS
EXHIBIT A - FORM OF NOTES............................................................................A-1
EXHIBIT B - FORM OF CUSTODIAL AGREEMENT .............................................................B-1
ANNEXES
ANNEX 1 - MASTER GLOSSARY OF DEFINED TERMS.........................................................XXX-1
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THIS INDENTURE, dated as of March 30, 2007, between CWHEQ Revolving Home
Equity Loan Trust, Series 2007-B, a Delaware statutory trust and the INDENTURE
TRUSTEE, as indenture trustee,
WITNESSETH THAT
Each party agrees for the benefit of the other party and for the benefit
of the Secured Parties as follows.
GRANTING CLAUSE
The Issuer Grants to the Indenture Trustee for the Class of Notes and
series referred to in the Master Glossary of Defined Terms as of the Closing
Date, as Indenture Trustee for the benefit of the relevant Secured Parties,
all of the Issuer's interest existing now or in the future in:
o the Mortgage Loans including their Asset Balances (including all
Additional Balances) and the Mortgage Files and all property that
secures the Mortgage Loans and all property that is acquired by
foreclosure or deed in lieu of foreclosure, and all collections received
on each Mortgage Loan after the Cut-off Date (excluding payments due by
the Cut-off Date);
o the Additional Loan Account;
o the Additional Home Equity Loans acquired by the Trust from
funds in the Additional Loan Account;
o the Issuer's rights under hazard insurance policies related to
the Mortgage Loans ;
o the interest of the Issuer in the Sale and Servicing Agreement
and the Purchase Agreement (including the Issuer's right to cause the
Mortgage Loans to be repurchased);
o all rights under any guaranty executed in connection with the
Mortgage Loans ;
o the Collection Account and the Payment Account maintained to
hold collections related to the Mortgage Loans and their contents; and
o all present and future claims, demands, causes of action, and
choses in action regarding any of the foregoing and all payments on and
all proceeds from any of the foregoing, including all proceeds of their
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of every kind, and other forms of
obligations, instruments, and other
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property that at any time constitute any part of or are included in the
proceeds of any of the foregoing (collectively, the "Collateral").
Additionally, the Class A Notes will have the benefit of the Cap
Contract to the extent of the Cap Payment for payment of the Cap Payment
Entitlement. The Indenture Trustee has accepted an assignment of Cap Contract
as Cap Contract Administrator and hereby agrees to hold the Cap Contract for
the benefit of the Holders of the Notes pursuant to the Cap Contract
Administration Agreement.
The Insured Notes will have the benefit of the Policy issued by the
Credit Enhancer.
The Issuer agrees that the foregoing Grants are intended to grant in
favor of the Indenture Trustee, for the respective benefit of the Secured
Parties, a first priority, continuing lien and security interest in all of the
Issuer's personal property. The Issuer authorizes the Indenture Trustee to
file one or more financing statements describing the collateral as "all
personal property" or "all assets" of the Issuer.
These Grants are made in trust to secure the payment of principal and
interest on, and any other amounts owing on, the Notes, without prejudice,
priority, or distinction (except as specifically provided in this Indenture),
and to secure compliance with the provisions of this Indenture, all as
provided in this Indenture.
The foregoing Grants shall inure to the benefit of the Credit Enhancer
to the extent of draws made on the Policy and amounts owing under the
Insurance Agreement, and shall continue for the benefit of the Credit Enhancer
until all amounts owed the Credit Enhancer have been repaid in full.
The Indenture Trustee, as Indenture Trustee on behalf of the Secured
Parties, acknowledges the Grants, accepts the trusts under this Indenture in
accordance with this Indenture, and agrees to perform its duties required in
this Indenture in accordance with its terms and the terms of the Transaction
Documents.
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Indenture as defined in Master Glossary of Defined Terms attached
as Annex 1.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference into this Indenture. The following TIA terms used
in this Indenture have the following meanings:
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"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute, or defined by Commission rule
have the meanings so assigned to them.
Section 1.03. Other Terms.
Defined terms that are used only in one section or only in another
definition may be omitted from the Master Glossary of Defined Terms. Defined
terms used in this Indenture are sometimes defined after their first use
without a reference such as "(as hereinafter defined)."
Section 1.04. Rules of Construction.
Except as otherwise expressly provided in this Indenture 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 Indenture, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Indenture as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Indenture are a part of this Indenture. The words
"herein," "hereof," "hereto," "hereunder," and other words of similar import
refer to this Indenture as a whole and not to any particular article, section,
exhibit, or other subdivision of this Indenture.
(c) The headings of the various Articles and Sections in this Indenture
are for convenience of reference only and shall not define or limit any of the
provisions of this Indenture.
(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 Indenture, except in the case of the TIA. 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.
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(e) Any party may execute any of the requirements under this Indenture
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 Indenture. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Indenture 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 Indenture, 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 Indenture are inconsistent with their
meanings under generally accepted accounting principles, the definitions in
this Indenture shall control. Capitalized terms used in this Indenture without
definition that are defined in the Uniform Commercial Code of the relevant
jurisdiction are used in this Indenture as defined in that Uniform Commercial
Code.
(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. The words "amended" and
"modified" and their
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derivatives as they relate to agreements refer to any changes in the agreement
and may be used interchangeably.
(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 Note is recognized, such
as in "Section 2.05. 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 Notes,
references to Noteholders, holders, and the like refer equally to beneficial
owners who have an interest in a Note but are not reflected in the note
register as the owner and references to transfers of Notes include transfers
of interests in a Note.
(l) A Mortgage Loan is "30 days delinquent" if a Minimum Monthly Payment
has not been received by the close of business on the Due Date on which the
next Minimum Monthly Payment is due. Similarly for "60 days delinquent," "90
days delinquent," and so on.
ARTICLE II
THE NOTES
Section 2.01. Form.
The Notes, together with the Indenture Trustee's certificate of
authentication, shall be in substantially the form of Exhibit A, with any
appropriate insertions, omissions, substitutions, and other variations
required or permitted by this Indenture. The Notes may have any letters,
numbers, or other marks of identification and any legends or endorsements
placed on them that the officers executing them determine appropriate and that
are consistent with this Indenture, as evidenced by their execution of the
Notes. Any portion of the text of any Note may be on its reverse.
The Notes may be typewritten, printed, lithographed, or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing them, as evidenced by
their execution of them.
The terms of the Notes are part of the terms of this Indenture.
Section 2.02. Execution, Authentication, and Delivery.
(a) The Notes shall be executed on behalf of the Issuer by any of its
Authorized Officers. The signature of any Authorized Officer on the Notes may
be manual or facsimile. Notes bearing the manual or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that they may have ceased to hold
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their offices before the authentication and delivery of the Notes or did not
hold their offices at the date of the Notes.
(b) The Indenture Trustee shall, upon Issuer Order, authenticate and
deliver the Notes in the aggregate Original Note Principal Balance. The
aggregate principal amount of the Notes outstanding at any time may not exceed
that amount except as provided in Section 2.04. Each Note shall be dated the
date of its authentication, except that Notes issued on the Closing Date shall
be dated the Closing Date. The Notes shall be issuable as registered Notes in
the minimum denomination of $25,000 and in integral multiples of $1 above
that.
(c) No Note shall be entitled to any benefit under this Indenture or be
a valid obligation of the Issuer for any purpose, unless a certificate of
authentication appears on it executed by the Indenture Trustee by the manual
signature of one of its authorized signatories. A certificate of
authentication on any Note shall be conclusive evidence, and the only
evidence, that it has been duly authenticated and delivered under this
Indenture.
Section 2.03. Registration; Registration of Transfer and Exchange.
(a) The Issuer shall cause a register (the "Note Register") to be kept
in which the Issuer shall provide for the registration of Notes and the
registration of transfers of Notes. The Indenture Trustee initially shall be
the "Note Registrar" for registering Notes and transfers of Notes. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to, it shall assume the duties of Note
Registrar.
If the Issuer appoints a person other than the Indenture Trustee to be
Note Registrar, the Issuer will give the Indenture Trustee prompt notice of
the appointment of the Note Registrar and of the location, and any change in
the location, of the Note Register. The Indenture Trustee may inspect the Note
Register at all reasonable times and obtain copies of it. The Indenture
Trustee may rely on a certificate executed on behalf of the Note Registrar by
one of its Authorized Officers as to the names and addresses of the
Noteholders and the principal amounts and number of the Notes.
(b) Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained pursuant to Section 3.02, if
the requirements of this Indenture and Section 8-401(a) of the UCC are met,
the Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferees, new Notes in any authorized denominations, of a like
aggregate principal amount.
(c) At the option of the Holder, Notes may be exchanged for other Notes
in any authorized denominations, of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at the office or agency of the Issuer
maintained pursuant to Section 3.02. Whenever any Notes are so surrendered for
exchange, if the requirements of Section 8-401(a) of the UCC are met the
Issuer shall execute, and the Indenture Trustee shall authenticate and the
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Noteholder shall obtain from the Indenture Trustee, the Notes that the
Noteholder making the exchange is entitled to receive.
(d) All Notes issued on any registration of transfer or exchange of
Notes shall be valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
for registration of transfer or exchange.
(e) Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
its Holder or any attorney for its Holder duly authorized in writing. The
endorsement signature shall be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or any other "signature guarantee program"
chosen by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Exchange Act.
(f) No Holder shall incur a service charge for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
on any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 2.04 or 9.04 not involving any transfer.
(g) The preceding provisions of this Section notwithstanding, the Note
Registrar need not register and the Issuer need not make transfers or
exchanges of Principal Amount Notes selected for redemption or transfers or
exchanges of any Note during the 15 days preceding the due date for any
payment on it.
Section 2.04. Mutilated, Destroyed, Lost, or Stolen Notes.
If any mutilated Note is surrendered to the Indenture Trustee, then the
Issuer shall execute, and on its request the Indenture Trustee shall
authenticate and deliver, in exchange for the Note, a replacement Note of the
same Class of like tenor and principal amount.
If the Indenture Trustee receives evidence to its satisfaction of the
destruction, loss, or theft of any Note, and each of the Issuer and the
Indenture Trustee receive the security or indemnity they require to hold the
Issuer and the Indenture Trustee harmless, then, in the absence of notice to
the Issuer, the Note Registrar, or the Indenture Trustee that the Note 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, the Issuer
shall execute, and on its request the Indenture Trustee shall authenticate and
deliver, in exchange for the Note, a replacement Note of the same Class of
like tenor and principal amount. If the mutilated, destroyed, lost, or stolen
Note is, or within seven days becomes, payable, instead of issuing a
replacement Note the Issuer may pay the mutilated, destroyed, lost, or stolen
Note when payable.
If, after the delivery of the replacement Note or payment of a
destroyed, lost, or stolen Note pursuant to this Section, a Protected
Purchaser of the original Note in lieu of which the
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replacement Note was issued presents it for payment, the Issuer and the
Indenture Trustee may recover the replacement Note (or the payment) from the
person to whom it was delivered or any person taking the replacement Note from
the person to whom the replacement Note was delivered or any assignee of that
person, except a Protected Purchaser, and may recover on the security or
indemnity provided for it to the extent of any expense incurred by the Issuer
or the Indenture Trustee in connection with it.
Upon the issuance of any replacement Note under this Section, the Issuer
may require the payment by the Holder of the Note of a sum sufficient to cover
any tax or other governmental charge that may be imposed on it and any other
reasonable expenses (including the expenses of the Indenture Trustee) in
connection with it.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost, or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost, or stolen Note is enforceable by anyone at any time, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any other Notes duly issued under this Indenture.
The provisions of this Section are exclusive and shall preclude all
other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost, or stolen Notes.
Section 2.05. Persons Considered Owner.
Before due presentment for registration of transfer of any Note, the
Issuer, the Indenture Trustee, and any agent of the Issuer or the Indenture
Trustee may treat the person in whose name any Note is registered (as of the
day of determination) as the owner of the Note for the purpose of receiving
payments of principal and interest on the Note and for all other purposes
whatsoever, whether or not the Note is overdue. None of the Issuer, the
Indenture Trustee, or any agent of the Issuer or the Indenture Trustee shall
be affected by notice to the contrary.
Section 2.06. Payment of Principal and Interest; Defaulted Interest.
(a) The Interest Bearing Notes shall accrue interest on their
Outstanding Amount at the Note Rate before and after maturity. Interest shall
be payable on each Payment Date as specified in Section 8.03 or 5.05, subject
to Section 3.01. Any installment of interest payable on an Interest Bearing
Note or installment of principal payable on a Principal Amount Note that is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the person in whose name the Note (or its predecessor
Note) is registered on the Record Date by wire transfer of immediately
available funds to the account designated by the Holder at a bank or other
entity having appropriate facilities, if the Holder has so notified the
Indenture Trustee in writing at least five Business Days before the Record
Date and is either the Depository or owner of record of Notes having an
aggregate principal or notional amount of at least $1,000,000, and otherwise
by check mailed first-class postage prepaid to the Holder's address as it
appears on the Note Register on the Record Date, or by any other means the
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Noteholder and the Indenture Trustee agree to, except for the final
installment of principal payable on a Principal Amount Note on a Payment Date,
a redemption date, or the Scheduled Maturity Date (and except for the
redemption price for the Principal Amount Notes called for redemption pursuant
to Section 10.01) which shall be payable as provided below.
(b) The principal of each Principal Amount Note shall be payable, if not
previously paid, on the related Scheduled Maturity Date in the manner
specified in Section 8.03. All principal payments on the Principal Amount
Notes shall be made pro rata to the Noteholders. The Indenture Trustee shall
send a notice to each person in whose name a Principal Amount Note is
registered at the close of business on the Record Date preceding the Scheduled
Maturity Date. The notice shall be sent by first-class mail, postage prepaid,
or by facsimile (promptly confirmed by mail) not later than ten days before
the Scheduled Maturity Date to each Holder of Principal Amount Notes as of the
close of business on the Record Date preceding the Scheduled Maturity Date, at
the Holder's address or facsimile number appearing in the Note Register, and
shall specify that the principal of the Note will be payable only on
presentation and surrender of the Note and shall specify the place where the
Note may be presented and surrendered for payment. Notices in connection with
redemptions of Notes shall be mailed to Noteholders as provided in Section
10.02.
(c) If the Issuer defaults in a payment of interest on the Interest
Bearing Notes, the Issuer shall pay defaulted interest (plus interest on the
defaulted interest to the extent lawful) at the Note Rate in any lawful
manner. The Issuer may pay the defaulted interest to the persons who are
Noteholders on a subsequent special record date, which date shall be at least
five Business Days before the Payment Date. The Issuer shall fix the special
record date and Payment Date, and, at least 15 days before the special record
date, the Issuer shall mail to each affected Holder a notice that states the
special record date, the Payment Date, and the amount of defaulted interest to
be paid.
Section 2.07. Cancellation.
All Notes surrendered for payment, registration of transfer, exchange,
or redemption shall, if surrendered to any person other than the Indenture
Trustee, be delivered to the Indenture Trustee and shall be promptly cancelled
by the Indenture Trustee. The Issuer may at any time deliver to the Indenture
Trustee for cancellation any Notes previously authenticated and delivered
under this Indenture that the Issuer may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated instead of or in exchange
for any Notes cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless before their disposal the Issuer
directs by an Issuer Order that they be returned to it.
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Section 2.08. Book-Entry Notes.
(a) The Book-Entry Notes, on original issuance, will be issued by the
Issuer in the form of typewritten Notes representing the Book-Entry Notes, to
the Depository Trust Company, the initial Depository. The Book-Entry Notes
shall be registered initially on the Note Register in the name of Cede & Co.,
the nominee of the initial Depository, and no Note Owner will receive a
definitive Note representing its interest in a Note, except as provided in
Section 2.10. Until definitive, fully registered Notes have been issued to the
Note Owners pursuant to Section 2.10:
(i) the provisions of this Section shall be in full force;
(ii) the Note Registrar and the Indenture Trustee may deal with
the Depository for all purposes of this Indenture (including the payment
of principal and interest on the Notes and accepting instructions under
this Indenture) as the sole holder of the Notes, and shall have no
obligation to the Note Owners;
(iii) to the extent that this Section conflicts with any other
provisions of this Indenture, this Section shall control;
(iv) the rights of Note Owners shall be exercised only through the
Depository and shall be limited to those established by law and
agreements between the Note Owners and the Depository;
(v) until definitive Notes are issued for the Book-Entry Notes
pursuant to Section 2.10, the Depository will make book-entry transfers
among the Depository's participants and receive and transmit payments of
principal and interest on the Book-Entry Notes to the Depository's
participants;
(vi) whenever this Indenture requires or permits actions to be
taken based on instructions from Holders of Notes evidencing a specified
percentage of the Outstanding Amount, the Depository shall be treated as
representing that percentage only to the extent that it has received
instructions to that effect from Note Owners owning the required
percentage of the beneficial interest in the Notes and has delivered the
instructions to the Indenture Trustee; and
(vii) the Indenture Trustee may conclusively rely on information
furnished by the Depository about its participants and furnished by the
participants about indirect participating firms and persons shown on the
books of the indirect participating firms as direct or indirect Note
Owners.
(b) The Book-Entry Notes may not be transferred except as a whole and
then only by the Depository to its nominee or by its nominee to the Depository
or another nominee of the Depository, or by the Depository or its nominee to a
successor to the Depository or the successor's nominee.
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Section 2.09. Notices To Depository.
Whenever a communication to the Noteholders is required under this
Indenture, until definitive Notes have been issued to the Note Owners pursuant
to Section 2.10, the Indenture Trustee shall communicate with the Depository
as Holder of the Notes, and shall have no obligation to the Note Owners.
Section 2.10. Definitive Notes.
If
(i) the Issuer advises the Indenture Trustee in writing that the
Depository is no longer willing or able to discharge its
responsibilities properly with respect to the Book-Entry Notes and the
Issuer is unable to locate a qualified successor, or
(ii) after the occurrence of an Event of Default, Note Owners of
not less than 51% of the aggregate Outstanding Amount of the Book-Entry
Notes advise the Depository in writing that the continuation of a
book-entry system through the Depository is no longer in the best
interests of the Note Owners,
then the Depository shall notify all Note Owners and the Indenture Trustee of
the occurrence of the event and of the availability of definitive Notes to
Note Owners requesting them. Upon surrender to the Indenture Trustee of the
Book-Entry Notes by the Depository, accompanied by registration instructions,
the Issuer shall execute and the Indenture Trustee shall authenticate and
deliver the definitive Notes in accordance with the instructions of the
Depository. None of the Issuer, the Note Registrar, or the Indenture Trustee
shall be liable for any delay in delivery of the instructions and may
conclusively rely on, and shall be protected in relying on, the instructions.
On the issuance of definitive Notes, the Indenture Trustee shall recognize the
Holders of the definitive Notes as Noteholders.
Section 2.11 Tax Treatment.
The Issuer has agreed to make a REMIC election pursuant to the Trust
Agreement, and the Notes will be REMIC regular interests.
Section 2.12. Transfer Restrictions; Restrictive Legends.
(a) Each transferee or purchaser of a Note that is a plan or is
investing plan assets shall represent (or, in the case of a Book-Entry Note,
shall be deemed to represent) that the investment and holding of the Note
satisfy the conditions for exemptive relief under XXXX 00-00, XXXX 00-0, XXXX
00-00, XXXX 00-00, XXXX 96-23, the service provider exemption provided under
Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code or a similar
exemption. No plan advised by the Issuer, the Master Servicer, any other
servicer, the Indenture Trustee, the underwriter or any of their respective
affiliates may invest in the Notes unless an appropriate administrative
prohibited transaction exemption applies to the investment. A plan is advised
by a person if the person has investment or administrative discretion with
respect to plan assets to be invested in the Notes, has authority or
responsibility to give, or regularly gives, investment advice with respect to
those plan assets for a fee and pursuant to an agreement or
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understanding that the advice will serve as a primary basis for investment
decisions with respect to those plan assets, and will be based on the
particular investment needs for the plan, or the person is an employer
maintaining or contributing to the plan. The Note Registrar will not register
any transfer of a Note that violates the foregoing representation or
prohibitions. A "plan" is an employee benefit plan (as defined in section 3(3)
of ERISA) that is subject to Title I of ERISA, a plan (as defined in and
subject to section 4975 of the Code), and any entity whose underlying assets
include plan assets by reason of a plan's investment in the entity or
otherwise.
(b) Unless the Indenture Trustee and the Credit Enhancer receive an
Opinion of Counsel to the effect that it is no longer appropriate, each
definitive Note shall bear the following legend on its face:
"Each transferee or purchaser of this Note that is a plan or is investing plan
assets, by acceptance of this Note or an interest in this Note, represents
that the investment and holding of this Note satisfy the conditions for
exemptive relief under XXXX 00-00, XXXX 00-0, XXXX 00-00, XXXX 00-00, XXXX
96-23, the service provider exemption provided under Section 408(b)(17) of
ERISA and Section 4975(d)(20) of the Code or a similar exemption. A "plan" is
an employee benefit plan (as defined in section 3(3) of ERISA) that is subject
to Title I of ERISA, a plan (as defined in and subject to section 4975 of the
Code) and any entity whose underlying assets include plan assets by reason of
a plan's investment in the entity or otherwise.
Any transfer in violation of either of the foregoing will be void ab
initio, and will not operate to transfer any rights to the transferee,
notwithstanding any instructions to the contrary."
(c) Each Book-Entry Note shall bear the following legend on its face:
"Unless this Note is presented by an authorized representative of the
Depository to the Issuer or its agent for registration of transfer, exchange,
or payment, and any Note issued in exchange for this Note is registered in the
name of the Depository or in another name requested by an authorized
representative of the Depository (and any payment on this Note is made to the
Depository or to another entity requested by an authorized representative of
the Depository), any transfer, pledge, or other use of this Note for value or
otherwise by or to any person is wrongful inasmuch as the registered owner of
this Note, the Depository, has an interest in this Note."
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest.
The Issuer will duly and punctually pay the principal of the
Principal Amount Notes and interest on the Interest Bearing Notes and other
amounts payable on the Notes in
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accordance with the terms of the Notes and this Indenture. Amounts properly
withheld under the Code or other applicable tax laws by any person from a
payment to any Noteholder of interest or principal or other amounts shall be
considered to have been paid by the Issuer to the Noteholder for all purposes
of this Indenture.
The Notes are non-recourse obligations of the Issuer and are limited in
right of payment to amounts available from the Trust. The Issuer shall not
otherwise be liable for payments on the Notes.
Section 3.02. Maintenance of Office or Agency.
The Issuer will maintain in the Borough of Manhattan, The City of New
York, an office or agency where Notes may be surrendered for registration of
transfer or exchange, and where notices to and demands on the Issuer regarding
the Notes and this Indenture may be served. The Issuer initially appoints the
Indenture Trustee to serve as its agent for these purposes. The Indenture
Trustee will give prompt notice to the Issuer of the location, and of any
change in the location, where the Indenture Trustee maintains this office or
agency. If the Issuer ever fails to maintain the required office or agency,
then surrenders, notices, and demands may be made or served at the Corporate
Trust Office.
Section 3.03. Money For Payments To Be Held in Trust.
All payments of amounts payable on any Notes pursuant to Section 8.03,
shall be made from amounts deposited in the Payment Account by the Indenture
Trustee or by another Paying Agent, and no amounts so deposited in the Payment
Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section or Section 8.03.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which the
Paying Agent agrees with the Indenture Trustee that it will, and the Indenture
Trustee hereby agrees in its capacity as Paying Agent that it will:
(i) hold all sums held by it for the payment of amounts due on the
Notes in trust for the benefit of the persons entitled to them until
they are paid to the persons entitled to them or otherwise disposed of
as provided in this Indenture, and pay them to the persons entitled to
them as provided in this Indenture;
(ii) give the Indenture Trustee and the Credit Enhancer notice of
any payment default by the Issuer on the Notes of which it has actual
knowledge;
(iii) at any time during the continuance of any payment default on
the Notes, at the request of the Indenture Trustee, immediately pay to
the Indenture Trustee all sums held in trust by it for the payment of
the Notes;
(iv) immediately resign as a Paying Agent and immediately pay to
the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it
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ceases to meet the standards required to be met by a Paying Agent at the
time of its appointment;
(v) be bound by Section 11.16; and
(vi) comply with all requirements of the Code to withhold from any
payments made by it on any Notes any applicable withholding taxes
imposed on them and comply with any applicable reporting requirements.
To obtain the satisfaction and discharge of this Indenture or for any
other purpose, the Issuer may at any time by Issuer Order direct any Paying
Agent to pay to the Indenture Trustee all sums held by it in trust. Those sums
shall be held by the Indenture Trustee on the same trusts as those on which
the sums were held by the Paying Agent. On payment by a Paying Agent to the
Indenture Trustee, it shall be released from all further liability with
respect to that money.
Subject to applicable laws on abandoned property, any money held in
trust by the Indenture Trustee or any Paying Agent for the payment of any
amount due on any Note remaining unclaimed for two years after it has become
payable shall be discharged from the trust and be paid to the Issuer on Issuer
Request. After that the Holder of the unpaid Note shall look only to the
Issuer for its payment as an unsecured general creditor (but only to the
extent of the amounts paid to the Issuer). On its payment to the Issuer all
liability of the Indenture Trustee or the Paying Agent with respect to that
trust money shall cease. The Indenture Trustee or the Paying Agent, before
being required to make the payment to the Issuer, shall at the expense and
direction of the Issuer cause to be published once a notice that the money
remains unclaimed and that, after a date specified in the notice not less than
30 days from the date of the publication, any unclaimed balance of the money
then remaining will be repaid to the Issuer. The notice shall be published in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York. The Indenture
Trustee may also adopt and employ, at the expense and direction of the Issuer,
any other reasonable means of notification of the repayment (including mailing
notice of the repayment to their last address of record to Holders whose
Principal Amount Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys payable but not claimed is
determinable from the records of the Indenture Trustee or of any Paying
Agent).
Section 3.04. Existence.
The Issuer will preserve its existence, rights, and franchises as a
Delaware statutory trust (unless it or any successor becomes organized under
the laws of any other State or of the United States, in which case the Issuer
will preserve its existence, rights, and franchises under the laws of that
other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which qualification to do business is
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral, and each other material agreement of the Issuer.
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Section 3.05. Protection of the Collateral.
(a) The Issuer intends the Security Interest Granted pursuant to this
Indenture in favor of the Indenture Trustee on behalf of the Secured Parties
to be before all other liens on the Collateral (except as otherwise provided
in the Transaction Documents). The Issuer shall take all actions necessary to
obtain and maintain, for the benefit of the Indenture Trustee on behalf of the
Secured Parties, a first priority perfected Security Interest in the
Collateral (except as otherwise provided in the Transaction Documents). The
Issuer will execute and deliver any supplements and amendments to this
Indenture and any Financing Statements, Continuation Statements, instruments
of further assurance, and other instruments and will take any other action
appropriate to:
(i) Grant more effectively any portion of the Collateral;
(ii) preserve the Security Interest (and its priority) created by
this Indenture or carry out more effectively the purposes of this
Indenture;
(iii) perfect, publish notice of, or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to any of the Collateral;
(v) preserve and defend title to the Collateral and the rights of
the Indenture Trustee, the Credit Enhancer, and the Noteholders in the
Collateral against all adverse claims; or
(vi) pay all taxes or assessments levied or assessed on the
Collateral when due.
(b) Except as otherwise provided in this Indenture or the other
Transaction Documents, the Indenture Trustee shall not remove any portion of
the Collateral that consists of money or is evidenced by an instrument,
certificate, or other writing from the jurisdiction in which it was held at
the date of the most recent Opinion of Counsel delivered pursuant to Section
3.06 unless the Indenture Trustee and the Credit Enhancer receive an Opinion
of Counsel to the effect that the lien and Security Interest created by this
Indenture will continue to be maintained on any removed property after giving
effect to its removal.
(c) The Issuer designates the Indenture Trustee its agent and
attorney-in-fact to execute any Financing Statement, Continuation Statement,
or other instrument required to be executed pursuant to this Section. The
Issuer authorizes the Indenture Trustee to file Financing Statements or
Continuation Statements, and amendments to them, relating to any part of the
Collateral without the signature of the Issuer where permitted by law. A
carbon, photographic, or other reproduction of this Indenture or any filed
Financing Statement covering the Collateral or any part of it shall be
sufficient as a Financing Statement where permitted by law. The Indenture
Trustee will promptly send to the Issuer any Financing Statements or
Continuation Statements that it files without the signature of the Issuer. Any
Financing Statement filed
15
relating to any part of the Collateral will state in bold-faced type that a
purchase of the Mortgage Loans included in the collateral covered by the
Financing Statement from the debtor will violate the rights of the secured
party and its assignee.
Section 3.06. Opinions About Collateral.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee and the Credit Enhancer an Opinion of Counsel either
(i) stating that, in its opinion, no action is necessary to
perfect the Security Interest of this Indenture in the Mortgage Loans or
(ii) stating that, in its opinion, all action
o with respect to the recording and filing of this
Indenture, any indentures supplemental to this Indenture, and any
other requisite documents and
o with respect to the execution and filing of any Financing
Statements and Continuation Statements
has been taken that is necessary to perfect the Security Interest of
this Indenture in the Mortgage Loans, and reciting the details of the
action.
(b) By the date specified in the Adoption Annex in each calendar year
beginning in the year specified in the Adoption Annex, the Issuer shall
furnish to the Indenture Trustee and the Credit Enhancer an Opinion of Counsel
either stating that, in its opinion, no action is necessary to maintain the
perfected Security Interest of this Indenture in the Mortgage Loans or stating
that, in its opinion, all action has been taken
(i) with respect to the recording, filing, re-recording, and
refiling of this Indenture, any indentures supplemental to this
Indenture, and any other requisite documents and
(ii) with respect to the execution and filing of any Financing
Statements and Continuation Statements
necessary to maintain the perfected Security Interest created by this
Indenture in the Mortgage Loans and reciting the details of the action. The
Opinion of Counsel shall also describe the recording, filing, re-recording,
and refiling of this Indenture, any indentures supplemental to this Indenture,
and any other requisite documents and the execution and filing of any
Financing Statements and Continuation Statements that will, in counsel's
opinion, be required to maintain the perfected Security Interest of this
Indenture in the Mortgage Loans until the date specified in the Adoption Annex
in the following calendar year.
Section 3.07. Performance of Obligations.
(a) The Issuer will not take any action (and will not permit others to
take any action) that would release any person from any of their material
obligations under any of the
16
Transaction Documents, that would create any Security Interests that are not
provided for in the Transaction Documents, or that would change or impair the
validity or effectiveness of the Transaction Documents or any Security
Interest granted under them, except as expressly provided in the Transaction
Documents. The Indenture Trustee, as pledgee of the Mortgage Loans and an
assignee of the Issuer's rights under the Sale and Servicing Agreement may
exercise all of the rights of the Issuer to direct the actions of the Master
Servicer pursuant to the Sale and Servicing Agreement. Unless granted or
permitted by the Credit Enhancer, the Issuer may not waive any default by the
Master Servicer under the Sale and Servicing Agreement or terminate the Master
Servicer under the Sale and Servicing Agreement.
(b) The Issuer may contract with other persons to assist it in
performing its duties under this Indenture, and the performance of those
duties by a person identified to the Indenture Trustee in an Officer's
Certificate shall be considered to be action taken by the Issuer.
(c) The Issuer will punctually perform all of its obligations under the
Transaction Documents, including properly filing all Financing Statements and
Continuation Statements required to be filed by the Transaction Documents.
Except as provided in Section 9.01, the Rating Agency Condition must be
satisfied in connection with any amendment, termination, or material change in
a Transaction Document. The Issuer shall not amend, terminate, or otherwise
change any Transaction Document without the consent of the Indenture Trustee
and the Credit Enhancer. The Issuer will provide notice of any termination,
amendment, or material change in any Transaction Document to the Rating
Agencies. The consent of the Indenture Trustee will not be required if the
Rating Agency Condition is satisfied with respect to the proposed action.
(d) Without derogating from the Grants to the Indenture Trustee under
this Indenture or the rights of the Indenture Trustee under this Indenture,
the Issuer agrees
(i) that it will not, without the prior consent of the Credit
Enhancer and either the Indenture Trustee or the Holders of not less
than 51% of the aggregate Outstanding Amount of the Notes, change or
waive, or agree to or otherwise permit any change to or waiver of, the
terms of any Collateral (except to the extent otherwise provided in the
Sale and Servicing Agreement); and
(ii) that any change in the terms of any Collateral shall not
(A) increase or reduce the amount of, or accelerate or delay
the timing of, distributions that are required to be made for the
benefit of the Noteholders (except as may be incidental to changes
or waivers allowed under (d)(i)) or
(B) reduce the percentage of the Notes that is required to
consent to any change in the terms of any Collateral without the
consent of the Holders of all the Outstanding Notes and the Credit
Enhancer.
17
If the Credit Enhancer and either the Indenture Trustee or the requisite
percentage of Holders consent to any change in the terms of any Collateral,
the Issuer agrees, promptly following a request by the Indenture Trustee to do
so, to execute and deliver, in its own name and at its own expense, any
documents the Indenture Trustee deems appropriate under the circumstances.
Section 3.08. Negative Covenants.
So long as any Notes are Outstanding, the Issuer shall not:
(a) dispose of any of the Collateral or other properties or assets of
the Issuer, except as expressly permitted by this Indenture or the Sale and
Servicing Agreement, unless directed to do so by the Indenture Trustee with
the consent of the Credit Enhancer;
(b) claim any credit on, or make any deduction from the principal or
interest or other amounts payable on, the Notes (other than amounts properly
withheld from payments under the Code or applicable State law) or assert any
claim against any present or former Noteholder for the payment of the taxes
levied or assessed on any part of the Collateral;
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be changed (except as
otherwise provided in the Sale and Servicing Agreement), or permit any person
to be released from any obligations on the Notes or under this Indenture
except as expressly permitted by this Indenture, (ii) permit any lien, charge,
excise, claim, Security Interest, mortgage, or other encumbrance (other than
the lien of this Indenture and as otherwise provided in the Sale and Servicing
Agreement) to affect any part of the Collateral, or any interest in it or its
proceeds, or (iii) permit the lien of this Indenture not to constitute a valid
first priority Security Interest in the Collateral; or
(d) dissolve or liquidate in whole or in part;
(e) make any distributions on any ownership interest in the Issuer
(except as expressly provided for in the Transaction Documents), redeem,
purchase, or otherwise retire or acquire for value any ownership interest in
the Issuer (except as expressly provided for in the Transaction Documents), or
set aside any amounts for any of these purposes;
(f) engage in any business other than financing, purchasing, owning,
selling, and managing the Collateral; issuing the Notes; and activities
incidental to those contemplated businesses, in each case, in the manner
contemplated by the Transaction Documents;
(g) issue, incur, assume, guarantee, or otherwise have the Trust become
liable, directly or indirectly, for any indebtedness except for its
liabilities under the Transaction Documents and other expenses for which the
Issuer is entitled to reimbursement under this Indenture or the Sale and
Servicing Agreement;
(h) .make any loan or advance of credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment
or performance on any obligation), endorse (except for endorsement of
instruments for collection in the ordinary course
18
of business), or otherwise become contingently liable, directly or indirectly,
in connection with the obligations, stocks, or dividends of, or own, purchase,
repurchase, or acquire (or agree contingently to do so) any stock,
obligations, assets, or securities of, or any other interest in, or make any
capital contribution to, any other person out of the Trust;
(i) make any expenditure (by long-term or operating lease or otherwise)
for capital assets;
(j) subject to the Master Servicer's servicing the Mortgage Loans in
accordance with the Sale and Servicing Agreement, waive or impair, or fail to
assert rights under, the Mortgage Loans, or effect impairment of the Issuer's
interest in the Mortgage Loans, the Sale and Servicing Agreement, or any other
Transaction Document, if the action would materially and adversely affect the
interests of the Noteholders or the Credit Enhancer; or
(k) take any other action or fail to take any action that would result
in the imposition of tax on the Issuer (including the tax on prohibited
transactions under Section 860F(a)(2) or contributions after the Startup Date,
as defined in Section 860G(d) of the Code) .
Section 3.09. Annual Compliance Statement.
Within 80 days after the end of each year (commencing with the year
specified in the Adoption Annex) the Issuer will deliver to the Indenture
Trustee and the Credit Enhancer an Officer's Certificate stating, as to the
Authorized Officer signing the Officer's Certificate, that:
(i) a review of the activities of the Issuer during the calendar
year and of its performance under this Indenture and the Trust Agreement
has been made under the Authorized Officer's supervision; and
(ii) to the best of the Authorized Officer's knowledge, based on
that review, the Issuer has complied with all its obligations under this
Indenture and the Trust Agreement throughout that year or, if there has
been a default in its compliance with any obligation, specifying each
default known to the Authorized Officer and its nature and status.
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
The Issuer shall not consolidate or merge with or into or transfer all
or substantially all of its properties or assets to any other person, unless:
(i) the person (if other than the Issuer) formed by or surviving
the consolidation or merger or to which the transfer is made is
organized and existing under the laws of the United States or any State
and expressly assumes the due and punctual payment of the principal and
interest on the Notes and the performance of every obligation under each
Transaction Document on the part of the Issuer to be performed by an
indenture supplemental to this Indenture, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture Trustee and the
Credit Enhancer;
19
(ii) immediately after giving effect to the transaction, no
Incipient Default has occurred and is continuing;
(iii) the Rating Agency Condition has been satisfied with respect
to the transaction;
(iv) the Issuer has delivered to the Indenture Trustee and the
Credit Enhancer an Opinion of Counsel to the effect that the transaction
will not have any material adverse tax consequence to the Issuer or any
Noteholder;
(v) any action that is necessary to maintain the Security Interest
created by this Indenture has been taken; and
(vi) the Issuer has delivered to the Indenture Trustee and the
Credit Enhancer an Officer's Certificate and an Opinion of Counsel each
stating that the consolidation or merger and the supplemental indenture
comply with this Article and that all conditions precedent in this
Indenture relating to the transaction have been complied with (including
any filing required by the Exchange Act).
Section 3.11. Successor or Transferee.
Upon any consolidation or merger of the Issuer or transfer of all or
substantially all of its properties or assets in accordance with Section 3.10,
the person formed by or surviving the consolidation or merger (if other than
the Issuer) or to which the transfer is made shall succeed to, and be
substituted for, and may exercise every right of, the Issuer under this
Indenture with the same effect as if it had been named as the Issuer in this
Indenture.
Section 3.12. Further Instruments and Acts.
On request of the Indenture Trustee or the Credit Enhancer, the Issuer
will execute and deliver any further instruments and do any further acts that
may be appropriate to carry out more effectively the purpose of this
Indenture.
Section 3.13. Compliance with Laws.
The Issuer shall comply with the requirements of all laws the
non-compliance with which would, individually or in the aggregate, materially
and adversely affect the ability of the Issuer to perform its obligations
under the Notes or any Transaction Document.
Section 3.14. Master Servicer as Agent and Bailee of the Indenture
Trustee.
Solely for the purposes of perfection under Section 9-313(c) of the UCC
or other similar applicable law, rule, or regulation of the State in which
property is held by the Master Servicer, the Master Servicer is acting as
agent and bailee of the Indenture Trustee in holding amounts subject to
deposit to the Collection Account, as well as its agent and bailee in holding
any Mortgage File released to the Master Servicer, and any other items of
Collateral that come into the possession of the Master Servicer. By the Master
Servicer's execution of the Sale and Servicing Agreement, the Indenture
Trustee, as a secured party of the Mortgage Loans, has
20
possession of these items for the purposes of Section 9-313(c) of the UCC of
the state in which the Issuer is organized.
Section 3.15. Investment Company Act.
The Issuer shall not become an "investment company" or under the
"control" of an "investment company" as those terms are defined in the
Investment Company Act of 1940 and the rules and regulations under it (taking
into account not only the general definition of the term "investment company"
but also any available exceptions to the general definition). The Issuer shall
be in compliance with this Section 3.15 if it obtains an order exempting it
from regulation as an "investment company" so long as it is in compliance with
the conditions imposed in the order.
Section 3.16. Representations.
(a) The Issuer represents and warrants to the Indenture Trustee and the
Credit Enhancer that as of the Closing Date, unless specifically stated
otherwise:
(i) This Indenture creates a valid and continuing Security
Interest in the Collateral in favor of the Indenture Trustee. The
Security Interest created by this Indenture is a first priority
perfected Security Interest and it is enforceable as such against
creditors of, and purchasers from, the Issuer.
(ii) The Mortgage Notes are "instruments" as defined in the UCC.
(iii) Before the Grants of the Security Interest pursuant to the
Granting Clause of this Indenture, the Issuer owns, and has good and
marketable title to, the Mortgage Loans free of any lien, claim, or
encumbrance of any person.
(iv) By the Closing Date with respect to the Mortgage Loans and
within 10 days of the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, the Issuer will file Financing
Statements in the proper filing office in the appropriate jurisdiction
to perfect the Security Interest in the Collateral Granted under this
Indenture.
(v) The Issuer has received a written acknowledgement from the
Custodian that the Custodian is acting solely as agent of the Indenture
Trustee.
(vi) The Issuer has not authorized the filing of and is not aware
of any Financing Statements against the Issuer that include a
description of collateral covering the Collateral other than any
financing statement (A) relating to the Security Interests granted to
the Indenture Trustee pursuant to this Indenture, (B) that has been
terminated, or (C) that names the Indenture Trustee as secured party.
(vii) The Mortgage Notes that constitute or evidence the
Collateral do not have any marks or notations indicating that they have
been pledged, assigned, or otherwise conveyed to any person other than
the Indenture Trustee. All Financing Statements filed or to be filed
against the Issuer in favor of the Indenture Trustee in
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connection with this Indenture describing the Collateral contain a
statement to the following effect: "A purchase of the Mortgage Loans
included in the collateral covered by this financing statement will
violate the rights of the Indenture Trustee."
(viii) On the Closing Date, the Issuer is a "Qualifying SPE" as
such term is defined in the statement of Accounting Standards No. 140 of
the Financial Accounting Standards Board, as in effect on the Closing
Date.
(b) The representations and warranties in this Section 3.16 shall
survive delivery of the respective Mortgage Files to the Custodian pursuant to
the Custodial Agreement and the termination of the Sale and Servicing
Agreement.
(c) The Indenture Trustee and the Credit Enhancer shall not, without the
prior written consent of the Rating Agencies, waive any of the representations
and warranties in Section 3.16(a).
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.
Except for rights of conversion or transfer or exchange of Notes
expressly provided for, the rights of the Indenture Trustee under Section
6.07, the rights of Noteholders as beneficiaries of this Indenture, and the
rights of the Credit Enhancer as subrogee of the Noteholders, this Indenture
shall cease to be of further effect, and the Indenture Trustee, on demand of
and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when the option of
the Issuer to redeem the Principal Amount Notes as described in Section 10.01
is exercised or, if not exercised then:
(i) either:
(A) all Notes previously authenticated and delivered have
been delivered to the Indenture Trustee for cancellation, other
than
(1) Notes that have been destroyed, lost, or stolen
and that have been replaced or paid as provided in Section
2.04;
(2) Notes for whose payment money has been deposited
in trust or segregated and held in trust by the Issuer and
later repaid to the Issuer or discharged from the trust, as
provided in Section 3.03); and
(3) Notes that have been paid in full and that by
their terms expire without the payment of a principal
balance; or
(B) all Notes not previously delivered to the Indenture
Trustee for cancellation:
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(1) have become payable,
(2) will become payable at their Scheduled Maturity
Date within one year, or
(3) are to be called for redemption within one year
under arrangements satisfactory to the Indenture Trustee for
the giving of notice of redemption by the Indenture Trustee
in the name, and at the expense, of the Issuer or by their
terms expire within one year without the payment of a
principal balance,
and the Issuer, in the case of (1), (2), or (3) above, has
irrevocably deposited with the Indenture Trustee cash or direct
obligations of or obligations guaranteed by the United States
(which will mature before the date the amounts are payable), in
trust for these purposes, in an amount sufficient to pay the
entire indebtedness when due on the unexpired Notes not previously
delivered to the Indenture Trustee for cancellation to the
applicable Scheduled Maturity Date or redemption date (if Notes
have been called for redemption pursuant to Section 10.01), as the
case may be;
(ii) the Issuer has paid all other sums payable under this
Indenture by the Issuer; and
(iii) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate, an Opinion of Counsel, and (if required by the
TIA, the Indenture Trustee, or the Credit Enhancer) an Independent
Certificate from a firm of certified public accountants, each meeting
the applicable requirements of Section 11.01, each stating that all
conditions precedent provided for in this Indenture relating to the
satisfaction and discharge of this Indenture have been complied with.
Section 4.02. Application of Trust Money.
All money deposited with the Indenture Trustee pursuant to Section 4.01
shall be held in trust and applied by it, in accordance with the Notes and
this Indenture, to the payment to the Holders of the particular Notes for the
payment or redemption of which the money has been deposited with the Indenture
Trustee, of all sums due and to become due on them for principal and interest.
That money need not be segregated from other funds except to the extent
required in this Indenture or required by law.
Section 4.03. Subrogation and Cooperation.
To the extent the Credit Enhancer makes payments of principal or
interest on the Insured Notes under the Policy, the Credit Enhancer will be
fully subrogated to the rights of the Holders of the Insured Notes to receive
that principal and interest from the Mortgage Loans, any other Collateral, and
the Credit Enhancer shall be paid that principal and interest, but only from
the sources and in the manner provided in this Indenture and the Sale and
Servicing Agreement
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for the payment of that principal and interest. Any payment of principal or
interest on the Insured Notes made with moneys received under the Policy shall
not be considered payment of the Insured Notes from the Trust and shall not
result in the payment of or the provision for the payment of the principal or
interest on the Insured Notes under Section 4.01. The Credit Enhancer shall be
paid from the assets of the Trust from the sources and in the manner provided
in this Indenture and in the Insurance Agreement.
The Indenture Trustee shall cooperate in all respects at the expense
of the Trust with any reasonable request or direction by the Credit Enhancer
to take any of the following actions to preserve or enforce the Credit
Enhancer's interest under each of this Indenture and the Sale and Servicing
Agreement, consistent with this Indenture and without limiting the rights of
the Noteholders under this Indenture, including upon the occurrence and
continuance of a Credit Enhancer Default:
(i) institute Proceedings for the collection of all amounts then
payable on the Insured Notes or under this Indenture with respect to the
Notes and all amounts payable under the Insurance Agreement and to
enforce any judgment obtained and collect from the Issuer monies
adjudged due;
(ii) sell any part of Collateral or interests in it at one or more
public or private sales called and conducted in any manner permitted by
law;
(iii) file or record all Assignments of Mortgage that have not
previously been recorded;
(iv) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the interests
of the Credit Enhancer under this Indenture.
Following the payment in full of the Insured Notes, the Credit Enhancer
shall continue to have all the rights given to it under this Section and in
all other provisions of this Indenture, until all amounts owing to the Credit
Enhancer have been paid in full.
Section 4.04. Release of Collateral.
(a) Upon satisfaction and discharge of this Indenture pursuant to
Section 4.01 and otherwise as permitted by this Indenture, the Indenture
Trustee shall execute instruments to release property from the lien of this
Indenture, or convey the Indenture Trustee's interest in the property, in a
manner and under circumstances that are not inconsistent with this Indenture.
No party relying on an instrument executed by the Indenture Trustee as
provided in this Section shall be bound to ascertain the Indenture Trustee's
authority, inquire into the satisfaction of any conditions precedent, or see
to the application of any moneys.
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(b) When no Notes are Outstanding and the Issuer has paid all other sums
payable under this Indenture by the Issuer, the Indenture Trustee shall
release any remaining Collateral that secured the Notes from the lien of this
Indenture and release to the Issuer any funds then on deposit in any account
other than funds held in trust for the satisfaction of Notes that have not
been surrendered for payment. The Indenture Trustee shall release property
from the lien of this Indenture pursuant to this Section only on receipt of an
Issuer Request accompanied by an Officer's Certificate.
(c) Whenever a Mortgage Loan has been substituted for or repurchased in
accordance with Section 2.02(b) or 2.04(d) of the Sale and Servicing
Agreement, purchased in accordance with Section 3.06 of the Sale and Servicing
Agreement, or designated for transfer in accordance with Section 2.06 of the
Sale and Servicing Agreement, the Indenture Trustee shall execute appropriate
documents to release the Mortgage Loan from the lien of this Indenture and
deliver the Mortgage File to the appropriate party.
(d) The Indenture Trustee shall release property from the lien of this
Indenture only on receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel, and Independent Certificates in accordance
with TIA Sections 314(c) and 314(d)(l) or an Opinion of Counsel in lieu of
Independent Certificates to the effect that the TIA does not require any
Independent Certificates.
ARTICLE V
REMEDIES
Section 5.01. Events of Default.
Any one of the following events is an "Event of Default" whatever the
reason:
(i) default by the Issuer in the payment of any interest on any
Interest Bearing Note when it becomes payable, and the default continues
for five days; or
(ii) default by the Issuer in the payment of the principal of any
Principal Amount Note when it becomes payable and the default continues
for five days; or
(iii) default in the performance of any obligation of the Issuer
under this Indenture (other than an obligation specifically dealt with
elsewhere in this Section), or any representation or warranty of the
Issuer made in this Indenture or in any certificate or other writing
delivered in connection with this Indenture proves to have been
materially incorrect as of the time when it was made, and the default or
the circumstance making the representation or warranty incorrect has not
been cured within 60 days after notice to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by the Credit
Enhancer (or, if a Credit Enhancer Default exists, by the Holders of at
least 25% of the Outstanding Amount of the Notes) by registered or
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certified mail specifying the default or incorrect representation or
warranty and requiring it to be remedied and stating that the notice is
a notice of default under this Indenture; or
(iv) an Insolvency Event occurs with respect to the Issuer.
The Issuer shall deliver to the Indenture Trustee and the Credit
Enhancer, within five days after its occurrence, notice in the form of an
Officer's Certificate of any Incipient Default under clause (iii), its status,
and what action the Issuer is taking or proposes to take with respect to the
event.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default is continuing, then the Indenture Trustee or the
Holders of not less than 51% of the aggregate Outstanding Amount of the
Principal Amount Notes, in either case with the consent of the Credit
Enhancer, or the Credit Enhancer, may declare all the Notes to be immediately
payable, by a notice in writing to the Issuer (and to the Indenture Trustee if
given by Noteholders), and upon that declaration the unpaid principal amount
of the Principal Amount Notes, together with accrued interest on them through
the date of acceleration, shall become immediately payable.
At any time after the declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee, the Holders of not less than 51% of the
aggregate Outstanding Amount of the Notes, with the consent of the Credit
Enhancer, or the Credit Enhancer, by notice to the Issuer and the Indenture
Trustee, may rescind the declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
(A) all payments of principal on the Principal Amount Notes
and interest on the Interest Bearing Notes and all other amounts
that would then be due under this Indenture or on the Notes if the
Event of Default giving rise to the acceleration had not occurred;
and
(B) all sums paid or advanced by the Indenture Trustee under
this Indenture and the reasonable compensation, expenses,
disbursements, and advances of the Indenture Trustee and its
agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal or interest of the Notes that have become due solely by the
acceleration, have been cured or waived as provided in Section 5.13.
No rescission shall affect any subsequent default or impair any right
consequent to it.
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Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if the Notes are accelerated following an
Event of Default, then the Issuer will pay to the Indenture Trustee on demand,
for the benefit of the Noteholders or the Credit Enhancer if the Credit
Enhancer has made a payment on the Insured Notes under the Policy, the whole
amount then payable on the Notes and, in addition, any further amount needed
to cover the expenses of collection, including the reasonable compensation and
expenses of the Indenture Trustee and its agents and counsel.
(b) If the Issuer fails to pay those amounts immediately on demand, the
Indenture Trustee, in its own name and as trustee of an express trust, subject
to Section 11.16 may in its discretion with the consent of the Credit
Enhancer, and at the direction of the Credit Enhancer shall, institute a
Proceeding for the collection of the sums due, and may prosecute the
Proceeding to final decree, and may enforce the judgment against the Issuer
(or other obligor on the Notes) and collect in the manner provided by law out
of the property of the Issuer (or other obligor on the Notes) wherever
situated, the moneys determined to be payable.
(c) If an Event of Default is continuing, the Indenture Trustee subject
to Section 11.16 may in its discretion with the consent of the Credit Enhancer
(subject to Section 5.04), and at the direction of the Credit Enhancer shall,
proceed to protect and enforce its rights and the rights of the Secured
Parties, by Proceedings the Indenture Trustee deems most effective to protect
and enforce those rights, whether for the specific enforcement of any
agreement in this Indenture or in aid of the exercise of any power granted in
this Indenture, or to enforce any other proper remedy or legal or equitable
right vested in the Indenture Trustee by this Indenture or by law.
(d) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of this Indenture to which the
Indenture Trustee is a party), the Indenture Trustee shall be held to
represent all the Secured Parties, and it shall not be necessary to make any
Noteholder or the Credit Enhancer a party to the Proceedings.
(e) All rights of action and assertion of claims under this Indenture,
the Sale and Servicing Agreement, or any of the Notes may be enforced by the
Indenture Trustee without the possession of any of the Notes or their
production in any Proceedings regarding them. Any Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an
express trust. Any recovery of judgment, subject to the payment of the
expenses, disbursements, and compensation of the Indenture Trustee, each
predecessor Indenture Trustee, and their agents and counsel, shall be for the
ratable benefit of the Secured Parties.
Section 5.04. Indenture Trustee May File Proofs of Claim.
(a) If
(1) Proceedings under Title 11 of the United States Code or any
other applicable federal or State bankruptcy, insolvency, or other
similar law are pending
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relating to the Issuer or any other obligor on the Notes or any person
having or claiming an ownership interest in the Collateral, or
(2) a receiver, assignee, or trustee in bankruptcy or
reorganization, or liquidator, sequestrator, or similar official has
been appointed for or taken possession of the Issuer or its property or
the other obligor or person, or
(3) any other comparable judicial Proceedings are pending relating
to the Issuer or other obligor on the Notes, or to the creditors or
property of the Issuer or the other obligor,
then, irrespective of whether the principal of any Principal Amount Notes is
then payable as expressed in them or by declaration or otherwise and
irrespective of whether the Indenture Trustee has made any demand pursuant to
this Section, with the consent of the Credit Enhancer the Indenture Trustee is
authorized by intervention in the Proceedings or otherwise:
(i) to file and prove claims for the entire amount of principal
owing on any Principal Amount Notes and interest owing on any Interest
Bearing Notes and other amounts owing on any Notes and to file any other
documents appropriate to have the claims of the Indenture Trustee, the
Credit Enhancer, and of the Noteholders allowed in the Proceedings
(including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Indenture Trustee
and each predecessor Indenture Trustee, except as a result of negligence
or bad faith);
(ii) to vote on behalf of the Holders of Notes in any election of
a trustee, a standby trustee, or person performing similar functions in
the Proceedings; and
(iii) to collect and receive any moneys or other property payable
on any claims and to distribute all amounts received on the claims of
the Noteholders, the Credit Enhancer, and of the Indenture Trustee on
their behalf;
and any trustee, receiver, liquidator, custodian, or other similar official in
any Proceeding is hereby authorized by each of the Noteholders to make
payments to the Indenture Trustee and, if the Indenture Trustee consents to
the Noteholders receiving payments directly, to pay to the Indenture Trustee
amounts sufficient to cover reasonable compensation to the Indenture Trustee,
each predecessor Indenture Trustee, and their respective agents and counsel,
and all other expenses and liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture Trustee except as a result of
negligence or bad faith, and to pay all amounts due to the Credit Enhancer.
(b) Nothing in this Indenture authorizes the Indenture Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder or the Credit Enhancer any plan of reorganization, arrangement,
adjustment, or composition affecting the Notes or the
28
rights of any Noteholder or the Credit Enhancer or authorizes the Indenture
Trustee to vote on the claim of any Noteholder or the Credit Enhancer in any
such proceeding except to vote for the election of a trustee in bankruptcy or
similar person.
Section 5.05. Remedies; Priorities.
(a) If an Event of Default is continuing, the Indenture Trustee subject
to Section 11.16 may with the consent of the Credit Enhancer, and at the
direction of the Credit Enhancer shall, do any of the following (subject to
Section 5.11):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture, whether by declaration or otherwise, and
all amounts payable under the Sale and Servicing Agreement, and enforce
any judgment obtained, and collect from the Issuer and any other obligor
on the Notes moneys adjudged due;
(ii) institute Proceedings for the complete or partial foreclosure
of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights of
the Indenture Trustee, the Credit Enhancer, and the Noteholders;
(iv) exercise all rights of the Issuer in connection with the
Purchase Agreement and the Sale and Servicing Agreement against the
Sponsor, the Depositor, or the Master Servicer or otherwise; and
(v) sell any portion of the Collateral or interests in it as
directed by the Credit Enhancer, at one or more public or private sales
called and conducted in any manner permitted by law.
The Indenture Trustee, however, may not sell or otherwise liquidate
Collateral following an Event of Default unless
(A) the Indenture Trustee obtains the consent of the Credit
Enhancer and the Holders of 100% of the aggregate Outstanding Amount of
the Notes,
(B) the proceeds of the sale or liquidation distributable to the
Secured Parties are sufficient to discharge in full all amounts then due
on the Principal Amount Notes and to reimburse the Credit Enhancer for
any unreimbursed Credit Enhancement Draw Amounts and any other amounts
due the Credit Enhancer under the Insurance Agreement, or
(C) the Indenture Trustee determines that the Collateral will not
continue to provide sufficient funds for the payment of principal of the
Principal Amount Notes and interest on the Interest Bearing Notes as
they would have become due if the Notes had not been declared due and
payable, and the Indenture Trustee obtains the consent of the
29
Credit Enhancer and the Holders of a majority of the aggregate
Outstanding Amount of the Notes.
In determining the sufficiency or insufficiency under clause (B) and
(C), the Indenture Trustee may, but need not, obtain and rely on an opinion of
an Independent investment banking or accounting firm of national reputation as
to the feasibility of the proposed action and as to the sufficiency of the
Collateral for the purpose. If a Credit Enhancer Default exists at the time
any consent is required or direction may be given under this Section 5.05(a),
the consent or direction shall be by Holders representing at least 66?% of the
Outstanding Amount of the Notes instead of by the Credit Enhancer.
(b) If the Indenture Trustee collects any money or property under this
Article, it shall pay out the money or property in the following order:
FIRST: to the Indenture Trustee the Indenture Trustee Fee then
due, to the extent not previously paid, and any expenses incurred by it
in connection with the enforcement of the remedies under this Article
and to the Owner Trustee the Owner Trustee Fee then due, to the extent
not previously paid, and any expenses due to the Owner Trustee under any
of the Transaction Documents;
SECOND: any premium owing to the Credit Enhancer;
THIRD: to the Noteholders for interest due on the Interest Bearing
Notes (except for Basis Risk Carryforward);
FOURTH: to the Noteholders for amounts due on the Principal Amount
Notes for principal, until the Note Principal Balance is reduced to
zero;
FIFTH: to the Credit Enhancer, any other amounts owed to the
Credit Enhancer under the Insurance Agreement;
SIXTH: to pay any Basis Risk Carryforward owed to the Principal
Amount Notes to the Noteholders; and
SEVENTH: to the Issuer for distribution in accordance with the
Trust Agreement.
Section 5.06. Optional Preservation of the Collateral.
If the Notes have been declared to be due under Section 5.02 following
an Event of Default and the declaration and its consequences have not been
annulled, the Indenture Trustee may with the consent of the Credit Enhancer,
but need not unless so directed by the Credit Enhancer, elect to maintain
possession of the Collateral. The parties and the Noteholders want sufficient
funds to exist at all times for the payment of principal of and interest on
the Notes and other obligations of the Issuer including payments to the Credit
Enhancer, and the Indenture Trustee shall take that into account when
determining whether or not to maintain possession of any Collateral. In
determining whether to maintain possession of the Collateral, the Indenture
Trustee may, but need not, obtain and rely on an opinion of an Independent
investment banking
30
or accounting firm of national reputation as to the feasibility of the
proposed action and as to the sufficiency of the Collateral for the purpose.
Section 5.07. Limitation of Suits.
No Noteholder may institute any Proceeding with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy under this Indenture, unless the Credit Enhancer has consented and
subject to Section 11.16:
(i) the Holder has previously given notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 51% of the aggregate Outstanding
Amount of the Notes have requested the Indenture Trustee in writing to
institute a Proceeding with respect to the Event of Default in its own
name as Indenture Trustee under this Indenture;
(iii) the Holders have offered the Indenture Trustee reasonable
indemnity against the costs and liabilities to be incurred in complying
with the request;
(iv) the Indenture Trustee for 60 days after its receipt of the
request and offer of indemnity has failed to institute Proceedings;
(v) no direction inconsistent with the request has been given to
the Indenture Trustee during the 60-day period by the Holders of not
less than 51% of the aggregate Outstanding Amount of the Notes; and
(vi) the Holders have obtained the consent of the Credit Enhancer.
No Holders of Notes shall have any right in any manner whatever because
of this Indenture to affect the rights of any other Holders of Notes or to
obtain or to seek to obtain priority or preference over any other Holders or
to enforce any right under this Indenture, except in the manner provided in
this Indenture.
If the Indenture Trustee receives inconsistent requests and indemnity
from two or more groups of Holders of Notes, each representing less than 51%
of the aggregate Outstanding Amount of the Notes, the Indenture Trustee in its
sole discretion may determine what action shall be taken.
Section 5.08. Unconditional Right to Receive Principal and Interest.
Notwithstanding any other provisions in this Indenture, every Noteholder
has an absolute and unconditional right to receive payment of the principal of
the Principal Amount Notes and interest on the Interest Bearing Notes and
other amounts payable on its Note after their due dates (or, in the case of
redemption, after the redemption date) and to institute suit for the
enforcement of any payment, and this right shall not be impaired without the
consent of the Holder.
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Section 5.09. Restoration of Rights and Remedies.
If the Indenture Trustee or any Noteholder has instituted any Proceeding
to enforce any right under this Indenture and the Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to
the Indenture Trustee or to the Noteholder, then the Issuer, the Indenture
Trustee, the Credit Enhancer, and the Noteholders shall, subject to any
determination in the Proceeding, be restored severally and respectively to
their former positions under this Indenture, and all rights of the Indenture
Trustee and the Noteholders shall continue as though no Proceeding had been
instituted.
Section 5.10. Rights and Remedies Cumulative.
No right given to the Indenture Trustee, the Credit Enhancer, or to the
Noteholders in this Indenture is intended to be exclusive of any other right,
and every right shall, to the extent permitted by law, be cumulative to every
other right given under this Indenture or existing at law or in equity or
otherwise. The assertion of any right under this Indenture, or otherwise,
shall not prevent the concurrent assertion of any other appropriate right.
Section 5.11. Delay or Omission Not a Waiver.
No delay in exercising or failure to exercise any right accruing on any
Incipient Default shall impair the right or constitute a waiver of the
Incipient Default or an acquiescence in it. Every right given by this Article
or by law to the Indenture Trustee, to the Credit Enhancer, or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee, by the Credit Enhancer, or by the
Noteholders.
Section 5.12. Control by Credit Enhancer or Noteholders.
If no Credit Enhancer Default exists, then the Credit Enhancer,
otherwise the Holders of not less than 51% of the aggregate Outstanding Amount
of the Notes may direct the time, method, and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect to
the Notes or exercising any right conferred on the Indenture Trustee. No
direction shall be binding unless:
(i) it does not conflict with any rule of law or with this
Indenture; and
(ii) if no Credit Enhancer Default exists, it is by the Credit
Enhancer, otherwise by the Holders of Notes representing not less than
100% of the aggregate Outstanding Amount of the Notes if the direction
to the Indenture Trustee is to sell or liquidate the Collateral.
The Indenture Trustee may take any other action it deems proper that is
not inconsistent with the direction, Section 5.04, or Section 5.05.
Section 5.13. Waiver of Past Defaults.
Before the declaration of the acceleration of the maturity of the Notes
as provided in Section 5.02, the Credit Enhancer or, if a Credit Enhancer
Default exists, the Holders of not less
32
than 51% of the aggregate Outstanding Amount of the Notes may waive any past
default and its consequences except a default
(i) in payment of principal on any Principal Amount Notes or
interest on any Interest Bearing Notes or
(ii) regarding a provision of this Indenture that cannot be
changed without the consent of the Holder of each affected Note.
After any such waiver, the Incipient Default shall cease to exist and be
considered to have been cured and not to have occurred, and any Event of
Default arising from it shall be considered to have been cured and not to have
occurred, for every purpose of this Indenture. No waiver shall extend to any
subsequent or other default or impair any right consequent to it.
Section 5.14. Undertaking For Costs.
All parties to this Indenture agree, and each Holder of a Note by its
acceptance of its Note agrees, that in any suit for the enforcement of any
right under this Indenture, or in any suit against the Indenture Trustee for
any action taken, suffered, or omitted by it as Indenture Trustee, any court
may in its discretion require the filing by any party litigant in the suit of
an undertaking to pay the costs of the suit, and that the court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant. The
provisions of this Section shall not apply to
(i) any suit instituted by the Indenture Trustee or the Credit
Enhancer,
(ii) any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate more than 25% of the aggregate
Outstanding Amount of the Notes, or
(iii) any suit instituted by any Noteholder for the enforcement of
the payment of principal of any Principal Amount Note or interest on any
Interest Bearing Note after the due dates expressed in the Note and in
this Indenture (or, in the case of redemption, after the redemption
date).
Section 5.15. Waiver of Stay or Extension Laws.
To the extent that it may lawfully do so, the Issuer covenants that it
will not at any time insist on, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time after this in force, that may affect the covenants or the
performance of this Indenture. To the extent that it may lawfully do so, the
Issuer expressly waives all benefit of any such law, and covenants that it
will not hinder, delay, or impede the execution of any power granted in this
Indenture to the Indenture Trustee, but will permit the execution of every
power as though the law had not been enacted.
Section 5.16. Rapid Amortization Events.
If any one of the following events occurs during the Managed
Amortization Period:
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(a) The failure of the Sponsor or the Master Servicer to make any
payment or deposit required by the Sale and Servicing Agreement within three
Business Days after the payment or deposit was required to be made;
(b) The failure of the Sponsor or the Master Servicer to cause the
Depositor to observe or perform in any material respect the covenants of the
Depositor in Section 2.01(h) or 2.05 of the Sale and Servicing Agreement;
(c) The failure of the Sponsor to observe or perform in any material
respect any other covenants of the Sponsor in the Sale and Servicing Agreement
that materially and adversely affects the interests of the Noteholders or the
Credit Enhancer and that continues unremedied and continues to affect
materially and adversely the interests of the Noteholders or the Credit
Enhancer for 60 days (five days in the case of any failure to transfer to the
Trust Eligible Substitute Mortgage Loans or deposit into the Collection
Account the Transfer Deposit Amount in accordance with Section 2.07(a) of the
Sale and Servicing Agreement) after the date on which written notice of the
failure, requiring it to be remedied, shall have been given to the Sponsor by
the Indenture Trustee, or to the Sponsor and the Indenture Trustee by the
Credit Enhancer or the Holders of not less than 51% of the aggregate
Outstanding Amount of the Notes;
(d) Any representation or warranty made by the Sponsor or the Depositor
in the Sale and Servicing Agreement proves to have been incorrect in any
material respect when made, as a result of which the interests of the
Noteholders or the Credit Enhancer are materially and adversely affected and
that continues to be incorrect in any material respect and continues to affect
materially and adversely the interests of the Noteholders or the Credit
Enhancer for 60 days after the date on which notice of the failure, requiring
it to be remedied, shall have been given to the Sponsor or the Depositor, as
the case may be, by the Indenture Trustee, or to the Sponsor, the Depositor,
and the Indenture Trustee by either the Credit Enhancer or the Holders of not
less than 51% of the aggregate Outstanding Amount of the Notes (a Rapid
Amortization Event pursuant to this subparagraph (d) shall not occur if the
Sponsor has accepted retransfer of the related Mortgage Loans or substituted
for them during the 60-day period (or such longer period (not to exceed an
additional 60 days) as the Indenture Trustee may specify) in accordance with
the Sale and Servicing Agreement);
(e) An Insolvency Event occurs with respect to the holder of the Class
R-1 Certificates or the Depositor, but for this purpose the 60-day periods in
the definition of Insolvency Event shall be 30 days;
(f) The Trust becomes subject to registration as an "investment company"
under the Investment Company Act of 1940; or
(g) The aggregate of all draws under the Policy exceeds the percentage
of the Original Note Principal Balance of the Insured Notes specified in the
Adoption Annex.
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then, when any event described in subparagraph (a), (b), (c), or (d) occurs,
either the Indenture Trustee (with the consent of the Credit Enhancer), the
Credit Enhancer, or the Holders of not less than 51% of the aggregate
Outstanding Amount of the Notes (with the consent of the Credit Enhancer), by
notice given in writing to the holder of the Class R-1 Certificates, the
Depositor, and the Master Servicer (and to the Indenture Trustee if given by
either the Credit Enhancer or the Noteholders) may declare that an early
amortization event (a "Rapid Amortization Event") has occurred as of the date
of the notice, and in the case of any event described in subparagraph (e),
(f), or (g), a Rapid Amortization Event shall occur without any notice or
other action on the part of the Indenture Trustee, the Credit Enhancer, or the
Noteholders, immediately upon its occurrence.
Section 5.17. Sale of Collateral.
(a) The power to effect any sale or other disposition (a "Sale") of any
portion of the Collateral pursuant to Section 5.05 is subject to this Section
5.17. The Indenture Trustee waives its right to any amount fixed by law as
compensation for any Sale.
(b) In connection with a Sale of any of the Collateral,
(i) any Holder of Notes may bid for the property offered for sale,
and on compliance with the terms of sale may own the property without
further accountability, and may, in paying its purchase price, deliver
any Principal Amount Notes or claims for interest on Interest Bearing
Notes rather than cash up to the amount that would be payable on them
from the distribution of the net proceeds of the sale, and the Notes
shall be returned to the Holders after being appropriately stamped to
show partial payment if the amount payable for the property is less than
the amount due on the Notes;
(ii) the Indenture Trustee may bid for and acquire the property
offered for Sale, and may purchase any portion of the Collateral in a
private sale, and rather than paying cash, may settle the purchase price
by crediting the gross Sale price against the amount that would be
distributable as a result of the Sale in accordance with Section 5.05(b)
on the next Payment Date after the Sale without being required to
produce the Notes to complete the Sale or for the net Sale price to be
credited against the Notes, and any property so acquired by the
Indenture Trustee shall be held and dealt with by it in accordance with
this Indenture;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Collateral in connection with its Sale;
(iv) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Issuer to transfer its interest in any
portion of the Collateral in connection with its Sale, and to take all
action necessary to effect the Sale; and
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(v) no purchaser or transferee at a Sale need ascertain the
Indenture Trustee's authority, inquire into the satisfaction of any
conditions precedent, or see to the application of any monies.
Section 5.18. Performance and Enforcement of Certain Obligations.
The Indenture Trustee, as pledgee of the Mortgage Loans, may, and at the
direction of the Credit Enhancer (or the Holders of 66?% of the Outstanding
Amount of the Notes if a Credit Enhancer Default exists) shall exercise all
rights of the Issuer against the Sponsor or the Master Servicer in connection
with the Sale and Servicing Agreement, including the right to take any action
to obtain performance by either Seller or the Master Servicer, as the case may
be, of each of their obligations to the Issuer under the Sale and Servicing
Agreement and to give any consent, request, notice, direction, approval,
extension, or waiver under the Sale and Servicing Agreement, and any right of
the Issuer to take such action shall not be suspended. Any direction by the
Credit Enhancer under this Section may be by telephone, promptly confirmed in
writing.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent
person would use under the circumstances in the conduct of its own affairs,
except when this Indenture or the Sale and Servicing Agreement requires it to
follow the directions of the Credit Enhancer.
(b) Except during the continuance of an Event of Default:
(i) obligations of the Indenture Trustee shall be determined
solely by the express provisions of this Indenture and the Sale and
Servicing Agreement, the Indenture Trustee undertakes to perform only
the duties specifically stated in this Indenture and the Sale and
Servicing Agreement, and no implied covenants or obligations shall be
read into this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed in them, on certificates,
opinions, or other documents furnished to the Indenture Trustee and
conforming to the requirements of this Indenture and the Sale and
Servicing Agreement, and the Indenture Trustee need not investigate into
any of the matters expressed in them; but in the case of certificates or
opinions specifically required to be furnished to the Indenture Trustee,
the Indenture Trustee must examine them to determine whether or not they
conform to the requirements of this Indenture
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and the Sale and Servicing Agreement. If any instrument is found not to
conform to the requirements of this Indenture or the Sale and Servicing
Agreement and is not timely corrected to the Indenture Trustee's
satisfaction, the Indenture Trustee shall notify the Credit Enhancer and
request written instructions as to the action the Credit Enhancer deems
appropriate to have the instrument corrected, and if the instrument is
not so corrected, the Indenture Trustee will so notify the Credit
Enhancer, who may then direct the Indenture Trustee as to any action to
be taken.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this subsection does not limit the effect of Section 6.01(b);
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with
the direction of the Credit Enhancer or in accordance with a direction
received by it from the Holders of not less than 51% of the aggregate
Outstanding Amount of the Notes relating to the method and place of
conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any right conferred on
the Indenture Trustee under this Indenture or the Sale and Servicing
Agreement;
(iv) the Indenture Trustee shall not be charged with knowledge of
the occurrence of an Incipient Default, a Rapid Amortization Event, or
of any failure by the Master Servicer to comply with its obligations
under Section 6.01(i) or (ii) of the Sale and Servicing Agreement unless
a Responsible Officer at the Corporate Trust Office obtains actual
knowledge of the failure or the Indenture Trustee receives notice of the
failure; and
(v) no provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties under this Indenture
or in the exercise of any of its rights, if it has reasonable grounds to
believe that repayment of the funds or adequate indemnity against the
risk is not reasonably assured to it, however, the Indenture Trustee is
still required to perform its duties under the Indenture or any of the
Transaction Documents even if its fees and expenses are not paid.
(d) Every provision of this Indenture relating to the conduct or
affecting the liability of the Indenture Trustee shall be subject to the
provisions of this Section and the TIA.
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(e) The limitations on the obligations of the Indenture Trustee under
this Indenture shall not affect any obligations of the Indenture Trustee
acting as Master Servicer under the Sale and Servicing whenever it may be so
acting.
(f) The Issuer hereby directs the Indenture Trustee to execute, deliver,
and perform its obligations under the Cap Contract Administration Agreement
(in its capacity as Cap Contract Administrator). The Sellers, the Depositor,
the Master Servicer, and the Noteholders by their acceptance of the Notes
acknowledge and agree that the Indenture Trustee shall execute, deliver, and
perform its obligations under the Cap Contract Administration Agreement and
shall do so solely in its capacity as Cap Contract Administrator and not in
its individual capacity. Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Indenture
Trustee shall apply to the Indenture Trustee's execution of the Cap Contract
Administration Agreement in its capacity as Cap Contract Administrator, and
the performance of its duties and satisfaction of its obligations under the
Cap Contract Administration Agreement.
Section 6.02. Notice of Defaults.
If an Incipient Default is continuing or if a Rapid Amortization Event
occurs and, in either case, a Responsible Officer knows of it, the Indenture
Trustee shall notify the Credit Enhancer and mail to each Noteholder notice of
the Incipient Default or Rapid Amortization Event within 90 days after it
occurs. Except in the case of an Incipient Default in payment of principal or
interest on any Note, the Indenture Trustee may withhold the notice to
Noteholders so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
Section 6.03. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel unless
other evidence is specifically required.
(c) The Indenture Trustee may execute any of the trusts or powers under
this Indenture or perform any duties under this Indenture either directly or
through agents or counsel or a custodian or nominee, and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of, or
for the supervision of, any agent, counsel, custodian, or nominee appointed
with due care by it under this Indenture.
(d) The Indenture Trustee may consult with counsel, and the written
advice of counsel with respect to legal matters relating to this Indenture,
the Transaction Documents, and the Notes and any Opinion of Counsel shall be
full authorization and protection from liability
38
for any action taken, omitted, or suffered by it under this Indenture in good
faith and in accordance with the advice of counsel or any Opinion of Counsel.
(e) The Indenture Trustee may enter into any amendment of the Sale and
Servicing Agreement as to which the Rating Agency Condition is satisfied, and
when so requested by an Issuer Request and the Rating Agency Condition is
satisfied, the Indenture Trustee shall enter into any amendment of the Sale
and Servicing Agreement
(i) that does not impose further obligations or liabilities on the
Indenture Trustee, and
(ii) as to which either the Rating Agency Condition is satisfied
or Holders of not less than 66(2)/3% of the aggregate Outstanding Amount
of the Notes and the Credit Enhancer have consented.
(f) With the consent of the Master Servicer and the Credit Enhancer, the
Indenture Trustee may appoint Custodians to hold any portion of the Collateral
as agent for the Indenture Trustee, by entering into a Custodial Agreement
substantially in the form of Exhibit B. Subject to this Article, the Indenture
Trustee agrees to comply with each Custodial Agreement and to enforce each
Custodial Agreement against the custodian for the benefit of the Secured
Parties. Each custodian shall be a depository institution (or an affiliate of
a depository institution) subject to supervision by federal or state authority
and shall be qualified to do business in the jurisdiction in which it holds
any Collateral. Each Custodial Agreement may be amended only with the consent
of the Credit Enhancer, which shall not be unreasonably withheld.
Section 6.04. Indenture Trustee Not Responsible for Certain Things.
The Indenture Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of the Collateral or any
Transaction Document (other than the signature and authentication of the
Indenture Trustee on the Notes). It shall not be responsible for any statement
in this Indenture other than Section 6.14 or in any document issued in the
sale of the Notes or in the Notes other than the Indenture Trustee's
certificate of authentication.
The Indenture Trustee is not accountable for the use or application by
the Issuer of any of the Notes or of the proceeds of the Notes, or for the use
or application of any funds paid to the Depositor or the Master Servicer on
the Mortgage Loans or deposited in or withdrawn from the Collection Account by
the Master Servicer. The Indenture Trustee shall not be responsible for:
(i) the validity and enforceability of any Mortgage or any
Mortgage Loan, or the perfection and priority of any Mortgage or the
maintenance of its perfection and priority, or for the sufficiency of
the Trust or its ability to generate the payments to be distributed to
Noteholders under this Indenture, or the sufficiency or validity of MERS
or the MERS(R) System, including the existence, condition, and ownership
of any Mortgaged Property;
39
(ii) the existence and enforceability of any hazard insurance on
any Mortgaged Property;
(iii) the validity of the assignment of any Mortgage Loan to the
Indenture Trustee or of any intervening assignment;
(iv) the completeness of any Mortgage Loan;
(v) the performance or enforcement of any Mortgage Loan;
(vi) any investment of monies by or at the direction of the Master
Servicer or any resulting loss;
(vii) the acts or omissions of any of the Depositor, the Master
Servicer, any subservicer, or any mortgagor under a Mortgage;
(viii) any action of the Master Servicer or any subservicer taken
in the name of the Indenture Trustee; or
(ix) the failure of the Master Servicer or any subservicer to act
or perform any duties required of it as agent of the Indenture Trustee.
The Indenture Trustee shall not be responsible 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 this Indenture or to prepare or file any Commission filing for the
Trust or to record this Indenture.
Section 6.05. Individual Rights of Indenture Trustee.
The Indenture Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Issuer, the
Sponsor, and their affiliates with the same rights it would have if it were
not Indenture Trustee. Any co-trustee, Paying Agent, Note Registrar,
co-registrar, or co-paying agent may do the same with like rights.
Section 6.06. Money Held in Trust.
Money held in trust by the Indenture Trustee need not be segregated from
other funds except to the extent required by law or the Transaction Documents.
The Indenture Trustee shall not be liable for interest on any money received
by it except as it may agree in writing.
Section 6.07. Compensation.
The compensation of the Indenture Trustee will equal the Indenture
Trustee Fees. After an Event of Default, and to the extent not paid otherwise,
the Indenture Trustee Fee will be payable as provided in Section 5.05(b).
Except for amounts available for the purpose as provided in Section 5.05(b),
the Indenture Trustee shall have no claim against the Issuer or any of the
Collateral for the payment of any of its fees and expenses. The Indenture
Trustee shall not fail to perform its duties under the Transaction Documents
if its fees and expenses are not paid.
40
Section 6.08. Eligibility.
The Indenture Trustee shall be a corporation organized and doing
business under the laws of the United States or any State, authorized under
those laws to exercise trust powers, and shall satisfy the requirements of
Rule 3a-7(a)(4)(i) of the Investment Company Act of 1940. The Indenture
Trustee shall satisfy the requirements of TIA Section 310(a) at all times. The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as shown in its most recent published annual report of condition.
The Indenture Trustee shall comply with TIA Section 310(b), including the
optional provision permitted by the second sentence of TIA Section 310(b)(9).
However, any indentures under which other securities of the Issuer are
outstanding shall be excluded from the operation of TIA Section 310(b)(1) if
the requirements for the exclusion in TIA Section 310(b)(1) are met. The
principal office of any successor Indenture Trustee shall be in a state for
which an Opinion of Counsel has been delivered to the successor Indenture
Trustee at the time it is appointed to the effect that the Trust will not be a
taxable entity under the laws of the state of its principal office. Whenever
an Indenture Trustee ceases to be eligible in accordance with the provisions
of this Section, the Indenture Trustee shall resign immediately in accordance
with Section 6.10.
Section 6.09. Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). An Indenture Trustee
who has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.10. Replacement of Indenture Trustee.
No resignation or removal of the Indenture Trustee and no appointment of
a successor Indenture Trustee shall become effective until the acceptance of
appointment by the successor Indenture Trustee. The Indenture Trustee may
resign at any time by so notifying the Issuer, the Transferor, the Depositor,
the Master Servicer, and the Credit Enhancer. The Credit Enhancer or the
Holders of not less than 51% of the aggregate Outstanding Amount of the Notes
may remove the Indenture Trustee at any time and the Issuer shall then appoint
a successor Indenture Trustee reasonably acceptable to the Credit Enhancer by
so notifying the Indenture Trustee, the Transferor, the Depositor, the Master
Servicer, and the Credit Enhancer. The Issuer (and if the Issuer fails to do
so, the Transferor) shall remove the Indenture Trustee and appoint a successor
reasonably acceptable to the Credit Enhancer if:
(i) the Indenture Trustee fails to satisfy Section 6.08;
(ii) an Insolvency Event occurs with respect to the Indenture
Trustee;
(iii) the Indenture Trustee otherwise becomes incapable of acting;
or
(iv) during the period in which the Depositor is required to file
Exchange Act Reports with respect to the Trust, the Indenture Trustee
fails to comply with its obligations under the last sentence of Section
6.01 of the Sale and Servicing Agreement, Article VII of the Sale and
Servicing Agreement, the preceding paragraph,
41
or Section 6.12 and that failure is not remedied within the lesser of 10
calendar days or the period in which the applicable Exchange Act Report
can be filed timely (without taking into account any extensions).
As a condition to the effectiveness of a resignation by the Indenture
Trustee, at least 15 calendar days before the effective date of that
resignation, the Indenture Trustee must provide (x) written notice to the
Depositor of any successor pursuant to this Section and (y) in writing and in
form and substance reasonably satisfactory to the Depositor, all information
reasonably requested by the Depositor in order to comply with the Depositor's
reporting obligation under Item 6.02 of Form 8-K with respect to the
resignation of the Indenture Trustee.
If the Indenture Trustee fails to satisfy Section 6.08, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee. If a
successor Indenture Trustee does not take office within 60 days after the
retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer, the Transferor, the Depositor, the Master Servicer, the
Credit Enhancer, or the Holders of not less than 51% of the aggregate
Outstanding Amount of the Notes may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee. If the
Indenture Trustee resigns or is removed or if a vacancy exists in the office
of Indenture Trustee for any reason, the Issuer, with the approval of the
Transferor and the Credit Enhancer, shall promptly appoint a successor
Indenture Trustee for the retiring Indenture Trustee.
Section 6.11. Acceptance of Appointment by Successor.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer, the
Transferor, the Depositor, and the Master Servicer, and the Credit Enhancer.
The resignation or removal of the retiring Indenture Trustee shall become
effective on the later of (x) receipt of the written acceptance and (y) the
successor providing the Depositor in writing and in form and substance
reasonably satisfactory to the Depositor, all information reasonably requested
by the Depositor in order to comply with the Depositor's reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement trustee, and the
successor Indenture Trustee shall have all the rights and obligations, and
automatically succeed to the estate, of the Indenture Trustee under this
Indenture without any further act or transfer. The successor Indenture Trustee
shall mail a notice of its succession to the Noteholders. The retiring
Indenture Trustee shall promptly deliver any instruments of transfer with
respect to the trust estate requested by the Issuer or the successor Indenture
Trustee and deliver all property held by it as Indenture Trustee to the
successor Indenture Trustee. No proposed successor Indenture Trustee shall
accept its appointment unless at the time of its acceptance it is eligible
under Section 6.08.
In addition, if the Cap Contract is still outstanding, the person
appointed as successor indenture trustee, in its acceptance of its
appointment, shall acknowledge accepting its appointment as successor Cap
Contract Administrator under the Cap Contract Administration
42
Agreement and execute and deliver any other documentation necessary to become
and act as successor Cap Contract Administrator.
Section 6.12. Successor Indenture Trustee by Merger.
If the Indenture Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving, or
transferee corporation shall be the successor Indenture Trustee if it is
otherwise eligible under Section 6.08 without any further act on the part of
anyone. The Indenture Trustee shall provide the Credit Enhancer and each
Rating Agency notice of any such transaction.
If any of the Notes have been authenticated but not delivered when the
successor Indenture Trustee takes over, it may adopt the certificate of
authentication of any predecessor Indenture Trustee and deliver the
authenticated Notes with the same effect as if it had authenticated the Notes.
At least 15 calendar days before the effective date of any merger or
consolidation of the Indenture Trustee, the Indenture Trustee will provide (x)
written notice to the Depositor of any successor pursuant to this Section and
(y) in writing and in form and substance reasonably satisfactory to the
Depositor, all information reasonably requested by the Depositor in order to
comply with the Depositor's reporting obligation under Item 6.02 of Form 8-K
with respect to a replacement Indenture Trustee.
Section 6.13. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Indenture Trustee
and the Issuer, acting jointly, may execute and deliver instruments to appoint
one or more persons approved by the Master Servicer and the Credit Enhancer to
act as a co-trustees, or separate trustees, of any part of the Collateral, and
to vest in them, in that capacity and for the benefit of the Secured Parties,
title to any part of the Collateral and any rights and obligations the
Indenture Trustee considers appropriate, subject to the other provisions of
this Section. No co-trustee or separate trustee under this Indenture need
satisfy the requirements for a successor trustee under Section 6.08, and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.09.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following:
(i) all rights and obligations of the Indenture Trustee shall be
performed by the Indenture Trustee and any separate trustee or
co-trustee jointly (the separate trustee or co-trustee is not authorized
to act without the Indenture Trustee joining in the act), except to the
extent that under any law of any jurisdiction in which any particular
acts are to be performed the Indenture Trustee is unable to perform the
acts, in which case the rights and obligations (including holding title
to any part of the Collateral) shall be
43
performed singly by the separate trustee or co-trustee, but solely at
the direction of the Indenture Trustee;
(ii) no trustee under this Indenture shall be personally liable
for any act or omission of any other trustee under this Indenture; and
(iii) the Indenture Trustee, the Master Servicer, and the Issuer
may at any time accept the resignation of or remove any separate trustee
or co-trustee.
(c) Any notice, request, or other writing given to the Indenture 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 this Indenture
and the conditions of this Article. Each separate trustee and co-trustee, on
its acceptance of the trusts conferred, shall be subject to this Indenture and
vested with the estates specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided in the
instrument of appointment. Every instrument of appointment shall be filed with
the Indenture Trustee and a copy of it given to the Issuer.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee dies, becomes incapable of acting, resigns or is removed, all of
its estates, rights, and obligations shall vest in the Indenture Trustee, to
the extent permitted by law, without the appointment of a new trustee.
Section 6.14. Representations and Warranties of Indenture Trustee.
The Indenture Trustee represents and warrants that on the Closing Date:
(i) it is a corporation duly organized, validly existing, and in
good standing under the laws of its place of incorporation;
(ii) it has full power and authority to execute, deliver, and
perform this Indenture and the Sale and Servicing Agreement, and has
taken all necessary action to authorize the execution, delivery, and
performance by it of this Indenture and the Sale and Servicing
Agreement;
(iii) the consummation of the transactions contemplated by this
Indenture and the fulfillment of its terms do not conflict with, result
in any breach of, or constitute (with or without notice or lapse of
time) a default under, the certificate of incorporation or bylaws of the
Indenture Trustee or any agreement or other instrument to which it is a
party or by which it is bound;
(iv) it does not have notice of any adverse claim (as used in
Section 8-302 of the UCC in effect in Delaware) with respect to the
Mortgage Loans;
(v) it satisfies the requirements of Section 6.08; and
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(vi) to the Indenture Trustee's best knowledge, no proceedings or
investigations concerning the Indenture Trustee are pending or
threatened before any court, regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over or its
properties:
(A) asserting the invalidity of this Indenture,
(B) seeking to prevent the consummation of any of the
transactions contemplated by this Indenture, or
(C) seeking any determination that might affect its
performance of its obligations under this Indenture or the
validity or enforceability of this Indenture.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Names and Addresses of Noteholders.
The Issuer will furnish to the Indenture Trustee not more than five days
after each Record Date a list of the names and addresses of the Holders of
Notes as of the Record Date in the form the Indenture Trustee reasonably
requires, and at any other times the Indenture Trustee or Credit Enhancer
requests in writing, within 30 days after the Issuer receives the request, a
list of similar form and content as of a date not more than ten days before
the time the list is furnished. So long as the Indenture Trustee is the Note
Registrar, the Issuer need not furnish these lists.
Section 7.02. Preservation of Information; Communications.
(a) The Indenture Trustee shall preserve the names and addresses of the
Holders of Notes in the most recent list furnished to the Indenture Trustee as
provided in Section 7.01 and the names and addresses of Holders of Notes
received by the Indenture Trustee in its capacity as Note Registrar in as
current a form as is reasonably practicable. The Indenture Trustee may destroy
any list furnished to it under Section 7.01 on receipt of a new list so
furnished.
(b) Noteholders may communicate with other Noteholders with respect to
their rights under this Indenture or under the Notes in the manner provided
under TIA Section 312(b).
(c) The Issuer, the Indenture Trustee, and the Note Registrar shall have
the protections provided under TIA Section 312(c).
Section 7.03. Exchange Act Reports.
(a) The Indenture Trustee shall prepare for filing and file in
accordance with the Exchange Act within 15 days after each Payment Date
(subject to permitted extensions under the Exchange Act) with the Commission a
Form 10-D with copies of the Monthly Statement
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and, to the extent delivered to the Indenture Trustee, no later than 5 days
following the Payment Date, any other information identified by the Issuer or
the Master Servicer (the "Additional Designated Information") to be filed with
the Commission. If the Issuer or Master Servicer directs that any Additional
Designated Information is to be filed with any Form 10-D, the Issuer or Master
Servicer, as the case may be, shall specify the item on Form 10-D to which the
information is responsive and, with respect to any exhibit to be filed on Form
10-D, the exhibit number. Any Additional Designated Information to be filed on
Form 10-D shall be delivered to the Indenture Trustee in XXXXX-compatible
form. If no Additional Designated Information is provided to the Indenture
Trustee by the 5th day after a Payment Date, the Indenture Trustee will not be
required to include such information in the Form 10-D filing for the Payment
Date. The Indenture Trustee shall prepare for filing and file any amendment to
any Form 10-D previously filed with the Commission with respect to the Issuer
at the request of the Issuer or the Master Servicer. The Master Servicer shall
sign each Form 10-D filed on behalf of the Issuer. The Indenture Trustee shall
encode these filings to provide for automated filing notification instructions
to the Countrywide MBS Surveillance Group at its email address at
XXXxxxx@xxxxxxxxxxx.xxx (or at any other address designated in writing by the
Master Servicer) in its XXXXX submissions when making these filings.
(b) Other than the reports required to be filed on behalf of the Issuer
by the Indenture Trustee pursuant to Section 7.03(a), the Issuer shall:
(i) file with the Commission, the Indenture Trustee, and the
Credit Enhancer copies of the annual reports and of the information,
documents, and other reports (or copies of the portions of any of these
the Commission prescribes in its rules and regulations) that the Issuer
may be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act, within 15 days after the Issuer is required
to file the same with the Commission;
(ii) file with the Indenture Trustee, the Credit Enhancer, and the
Commission in accordance with the Commission's rules and regulations any
additional information, documents, and reports with respect to
compliance by the Issuer with the conditions and covenants of this
Indenture the rules and regulations require; and
(iii) supply to the Indenture Trustee and the Credit Enhancer
summaries of any information, documents, and reports required to be
filed by the Issuer pursuant to clauses (i) and (ii) of this Section and
by the rules and regulations of the Commission (and the Indenture
Trustee shall transmit them by mail to all Noteholders described in TIA
Section 313(c)).
(c) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
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Section 7.04. Reports by Indenture Trustee.
If required by TIA Section 313(a), within 60 days after March 15, 2008,
beginning with March 15, 2008, the Indenture Trustee shall mail to each
Noteholder as required by TIA Section 313(c) and to the Credit Enhancer a
brief report dated that date that complies with TIA Section 313(a). The
Indenture Trustee also shall comply with TIA Section 313(b). A copy of each
report at the time of its mailing to Noteholders shall be filed by the
Indenture Trustee with the Commission and each securities exchange on which
the Notes are listed. The Issuer shall notify the Indenture Trustee and the
Credit Enhancer before the Notes are listed on any securities exchange.
The Indenture Trustee shall deliver to each Noteholder the information
necessary for the Holder to prepare its federal and State income tax returns.
On each Payment Date, the Indenture Trustee shall make available to each
Noteholder, the Master Servicer, the Credit Enhancer, and each Rating Agency
on its Internet website the statement for Noteholders prepared by the Master
Servicer and delivered to it pursuant to Section 4.04 of the Sale and
Servicing Agreement for the Payment Date.
If the statement for Noteholders is not accessible to any of the
Noteholders, the Master Servicer, the Credit Enhancer, or either Rating Agency
on the Indenture Trustee's internet website, the Indenture Trustee shall
forward a hard copy of it to each Noteholder, the Master Servicer, the Credit
Enhancer, and each Rating Agency immediately after the Indenture Trustee
becomes aware that it is not accessible to any of them via its website. The
address of the Indenture Trustee's internet website where the statement for
Noteholders will be accessible is xxxxx://xxx.xxxxxxxx.xxx. Assistance in
using the Indenture Trustee's internet website may be obtained by calling the
Indenture Trustee's customer service desk at [(000) 000-0000]. The Indenture
Trustee shall notify each Noteholder, the Master Servicer, the Credit
Enhancer, and each Rating Agency in writing of any change in the address or
means of access to the internet website where the statement for Noteholders is
accessible.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Issuer, Internal Revenue Service
Form 1099 (or any successor form) and any other tax forms required to be filed
or furnished to Noteholders covering payments by the Indenture Trustee (or the
Paying Agent) on the Notes and shall file and distribute them as required by
law. In addition, the Indenture Trustee shall promptly furnish any information
reasonably requested by the Issuer that is reasonably available to the
Indenture Trustee to enable the Issuer to perform its federal and state income
tax reporting obligations.
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ARTICLE VIII
ACCOUNTS, CAP CONTRACT, DISBURSEMENTS, AND RELEASES
Section 8.01. Accounts.
(a) The Indenture Trustee will establish and maintain on behalf of the
Secured Parties an Eligible Account (the "Payment Account") with the title
specified in the Adoption Annex. The Indenture Trustee shall hold amounts
deposited in the Payment Account as Indenture Trustee for the benefit of the
Secured Parties. The Indenture Trustee will, promptly upon receipt, deposit in
the Payment Account and retain in it the aggregate amount remitted by the
Master Servicer pursuant to the Sale and Servicing Agreement. The Indenture
Trustee shall invest amounts on deposit in the Payment Account at the
direction of the Master Servicer in Eligible Investments payable on demand or
maturing no later than the day before the next Payment Date. All income
realized from investment of funds in the Payment Account shall be for the
benefit of the Master Servicer. Any losses incurred on funds in the Payment
Account that reduce their principal amount shall be immediately deposited in
the Payment Account by the Master Servicer out of its own funds.
Pursuant to the Sale and Servicing Agreement, the Master Servicer is
required to deposit the Interest Shortfall Deposit in the Payment Account on
the dates specified in Section 3.03 of the Sale and Servicing Agreement and,
not later than the Business Day before each Payment Date, to withdraw from the
Collection Account and remit to the Indenture Trustee the amount to be applied
on the next Payment Date by the Indenture Trustee pursuant to Section 8.03, to
the extent on deposit in the Collection Account.
Pursuant to the Sale and Servicing Agreement, the Master Servicer has
established the Collection Account. The Sale and Servicing Agreement requires
the Master Servicer to deposit specified collections on the Mortgage Loans
into the Collection Account no later than two Business Days following their
receipt.
If on a Determination Date the Master Servicer notifies the Indenture
Trustee and the Credit Enhancer of the amount in the Collection Account
allocable to Interest Collections and Principal Collections for the Mortgage
Loans for the Payment Date, then the Master Servicer may withdraw from the
Collection Account and the Payment Account and retain any amounts that
constitute income and gain realized from the investment of the collections.
(b) The Indenture Trustee shall establish and maintain an Additional
Loan Account with the title specified in the Adoption Annex. The Additional
Loan Account shall be an Eligible Account solely for the benefit of the
Secured Parties. Neither the Sponsor nor the Depositor shall have any interest
in any of the principal of the funds deposited into the Additional Loan
Account. The Additional Loan Account is not an asset of any REMIC created
under the Trust Agreement. The Additional Loan Account shall be maintained in
accordance with Section 8.02.
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(c) On the Closing Date, the Indenture Trustee shall establish and
maintain in its name, in trust for the benefit of the Holders of the Principal
Amount Notes, the Basis Risk Carryforward Reserve Fund and shall deposit in
it, upon receipt from or on behalf of the Depositor, $1,000. All funds on
deposit in the Basis Risk Carryforward Reserve Fund shall be held separate
from, and not commingled with, any other money, including other money held by
the Indenture Trustee pursuant to this Indenture.
The Indenture Trustee shall make withdrawals from the Basis Risk
Carryforward Reserve Fund for distribution to the Principal Amount Notes in
the manner specified in Section 8.03(f). At the earlier of the retirement of
the Principal Amount Notes and the termination of the Trust in accordance with
Section 10.01, the Indenture Trustee shall distribute to the Depositor all
monies remaining on deposit in the Basis Risk Carryforward Reserve Fund after
making the distributions specified in Section 8.03(f).
On the Closing Date, the Indenture Trustee shall establish and maintain
in its name, in trust for the benefit of the Class A Notes, the Cap Contract
Account and shall deposit in it the Cap Payment. The Indenture Trustee will
withdraw funds from the Cap Contract Account up to the Cap Payment Entitlement
for payment pursuant to Section 8.08.
In addition, the Indenture Trustee may withdraw from the Basis Risk
Carryforward Reserve Fund any amount deposited in the Basis Risk Carryforward
Reserve Fund and not required to be deposited in it.
The Indenture Trustee shall invest amounts on deposit in the Basis Risk
Carryforward Reserve Fund at the written direction of the Master Servicer in
Eligible Investments payable on demand or maturing no later than the day
before the next Payment Date. Absent such direction from the Master Servicer,
the Indenture Trustee shall invest amounts on deposit in the Basis Risk
Carryforward Reserve Fund in Bank of New York Cash Reserves. All income
realized from investment of funds in the Basis Risk Carryforward Reserve Fund
shall be for the benefit of the Holders of the Class C Certificates. Any net
investment earnings on such amounts shall be retained therein until withdrawn
as provided in Section 8.03(f). Any losses incurred on funds in the Basis Risk
Carryforward Reserve Fund that reduce their principal amount shall be charged
against amounts on deposit in the Basis Risk Carryforward Reserve Fund
immediately as realized. The Basis Risk Carryforward Reserve Fund will not be
an asset of any REMIC created under the Trust Agreement. The Class C
Certificates shall evidence ownership of the Basis Risk Carryforward Reserve
Fund for federal tax purposes.
(d) The Indenture Trustee shall establish and maintain, on behalf of the
Certificateholders, a Principal Reserve Fund in the name of the Indenture
Trustee. On the Closing Date, CHL shall deposit into the Principal Reserve
Fund $100.00. Funds on deposit in the Principal Reserve Fund shall not be
invested. The Principal Reserve Fund shall be treated as an outside reserve
fund under applicable Treasury regulations and shall not be part of any REMIC
created under the Trust Agreement.
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On the Business Day before the first Payment Date, the Indenture Trustee
shall transfer $100.00 from the Principal Reserve Fund to the Payment Account,
and on the first Payment Date, the Indenture Trustee shall withdraw $100.00
from the Payment Account and distribute it to the Issuer for distribution
pursuant to the Trust Agreement, and thereafter terminate the Principal
Reserve Fund.
Section 8.02. Withdrawals from the Collection Account and the Additional
Loan Account.
(a) Upon delivery of an Officer's Certificate to the Indenture Trustee,
the Master Servicer may withdraw funds from the Collection Account for the
following purposes:
(i) to pay to the Master Servicer its Servicing Fee to the extent
that it has not been retained pursuant to Section 3.02(b) of the Sale
and Servicing Agreement;
(ii) to pay to the Master Servicer net earnings on amounts on
deposit in the Collection Account as provided in Section 8.01;
(iii) to pay from Principal Collections the amounts provided for
the purchase of Additional Balances pursuant to Section 2.01 of the Sale
and Servicing Agreement; and
(iv) to pay to the Master Servicer amounts deposited by the Master
Servicer that are not required to be deposited or any amount
representing payments by mortgagors made by checks subsequently returned
uncollected.
If the Master Servicer deposits in the Collection Account any amount not
required to be deposited or any amount representing payments by mortgagors
made by checks subsequently returned uncollected, it may at any time withdraw
that amount from the Collection Account upon delivery of an Officer's
Certificate to the Indenture Trustee.
(b) On the date on which the Indenture Trustee receives:
(i) the Officer's Certificate specified in Section 2.01(b)(2)(H)
of the Sale and Servicing Agreement confirming satisfaction of the
conditions precedent to subsequent additions in Section 2.01(b) of the
Sale and Servicing Agreement on a Subsequent Closing Date,
(ii) the revised Mortgage Loan Schedule reflecting the addition of
the Additional Home Equity Loans covered by a Transfer Document, and
(iii) an Opinion of Counsel, substantially in the form delivered
on the Closing Date and addressed to the same addressees, to the effect
that a court in a bankruptcy context addressing the transfer of the
Additional Home Equity Loans would characterize the transfer as a sale
rather than as a secured lending and an Opinion of Counsel,
substantially in the form delivered on the Closing Date and addressed to
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the same addressees, relating to the perfection of security interest in
the Additional Home Equity Loans,
the Indenture Trustee shall withdraw from the Additional Loan Account,
and release from the lien of this Indenture an amount equal to the Cut-off
Date Asset Balance of the Additional Home Equity Loans covered by the Transfer
Document.
(c) All earnings on funds in the Additional Loan Account under Section
2.01(b) of the Sale and Servicing Agreement and Section 8.02(b) are for the
account of the Master Servicer. The Additional Loan Account shall be invested
in Eligible Investments. If any funds remain in the Additional Loan Account on
the Latest Subsequent Closing Date, to the extent that they represent earnings
on the amount originally deposited into the Additional Loan Account, the
Indenture Trustee shall distribute them to the order of the Master Servicer.
The remaining funds shall be transferred to the Collection Account and treated
as Investor Principal Collections. Any losses incurred on these investments
that reduce their principal amount shall be deposited in the Additional Loan
Account by the Master Servicer out of its own funds immediately as realized.
(d) If at any time the Depositor becomes aware that the Cut-off Date
Asset Balance of Additional Home Equity Loans reflected on any Transfer
Document exceeds the actual Cut-off Date Asset Balance of the relevant
Additional Home Equity Loans, the Depositor shall so notify the Indenture
Trustee in writing and the Indenture Trustee shall redeposit into the
Additional Loan Account the excess reported to it by the Depositor.
Section 8.03. Payments.
(a) Payments of Available Interest Collections and Investment Proceeds.
On each Payment Date, the Indenture Trustee shall distribute out of the
Payment Account (to the extent of Available Interest Collections collected
during the Collection Period) the following amounts and in the following order
of priority to the following persons (based on the information in the
Servicing Certificate):
(i) concurrently, to pay the Indenture Trustee the Indenture
Trustee Fee and the Owner Trustee the Owner Trustee Fee;
(ii) to pay the premium pursuant to the Insurance Agreement to the
Credit Enhancer;
(iii) to pay the Aggregate Note Interest to the Holders of the
Principal Amount Notes for the Payment Date;
(iv) to pay the Investor Loss Amount to the Holders of the
Principal Amount Notes for the Payment Date as principal in reduction of
the Note Principal Balance;
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(v) to pay previously unreimbursed Credit Enhancement Draw Amounts
together with interest on such amounts at the applicable rate specified
in the Insurance Agreement to the Credit Enhancer;
(vi) after the third Payment Date, to pay the Accelerated
Principal Payment Amount to the Holders of the Principal Amount Notes as
principal in reduction of the Note Principal Balance;
(vii) to pay any amounts owed to the Credit Enhancer pursuant to
the Insurance Agreement to the Credit Enhancer;
(viii) to pay any amounts required to be paid to the Master
Servicer with respect to the Notes pursuant to Sections 3.08 and 5.03 of
the Sale and Servicing Agreement that have not been previously paid to
the Master Servicer;
(ix) to the Basis Risk Carryforward Reserve Fund, first the Basis
Risk Carryforward for the Principal Amount Notes remaining unpaid after
application of amounts in the Basis Risk Carryforward Reserve Fund under
Section 8.03(f)(i) and the amount in the Cap Contract Account under
Section 8.08, and second to restore the amount in the Basis Risk
Carryforward Reserve Fund to $1,000; and
(x) any remaining amount to the Issuer for distribution in
accordance with the Trust Agreement.
(b) Payment of Principal Collections. Except on the Payment Date in the
month specified in the Adoption Annex, on each Payment Date, the Indenture
Trustee shall distribute out of the Payment Account to the Holders of the
Principal Amount Notes the Investor Principal Collections to the extent
required to meet the Required Transferor Subordinated Amount. On each Payment
Date on or after the occurrence of a Rapid Amortization Event the Indenture
Trustee shall distribute out of the Payment Account to the Holders of the
Principal Amount Notes the Investor Principal Collections until the Note
Principal Balance is reduced to zero. On the Scheduled Maturity Date the
Indenture Trustee shall distribute to the Holders of the Principal Amount
Notes all Principal Collections up to the Note Principal Balance. In addition
to Investor Principal Collections, on the Payment Date after the end of the
Funding Period, any amount deposited in the Additional Loan Account not used
during the first Collection Period to purchase Additional Home Equity Loans
will be distributed to the Holders of the Principal Amount Notes in reduction
of the Note Principal Balance.
(c) Application of Subordinated Transferor Collections. If, after
applying Available Interest Collections any Required Amount remains unpaid,
the Indenture Trustee shall, based on information in the Servicing Certificate
for the Payment Date, apply Subordinated Transferor Collections to pay the
unpaid Required Amounts in the priority provided for Required Amounts in
Section 8.03(a).
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(d) Payment of the Credit Enhancement Draw Amount. The Indenture Trustee
will make payments to the Insured Notes from the Credit Enhancement Draw
Amount (but not including any portion of it representing a Preference Amount)
drawn under the Policy for any Payment Date and the Insured Notes pursuant to
Section 8.05 on the Payment Date as follows:
FIRST, as an addition to the amount distributed pursuant to Section
8.03(a)(iii); and
SECOND, the portion of the Credit Enhancement Draw Amount remaining
after the application of the amounts referred to in First above, as an
addition to the amounts distributed pursuant to Section 8.03(b).
The aggregate amount of principal distributed to the Holders of the Principal
Amount Notes under this Indenture shall not exceed the Original Note Principal
Balance.
(e) Distributions to Issuer. On each Payment Date, based on the
information in the Servicing Certificate for the Payment Date and subject to
Section 8.03(a),(b), and (c), the Indenture Trustee shall distribute to the
Issuer from amounts in the Payment Account
(i) any Net Draws Principal Payment for the Payment Date,
(ii) the Interest Collections that are not Available Interest
Collections on the Payment Date for the Collection Period and are not
paid out as Subordinated Transferor Collections under Section 8.03(c),
and
(iii) the portion of Transferor Principal Collections for the
Collection Period that are not paid out as Subordinated Transferor
Collections under Section 8.03(c).
For the purposes of this Section 8.03(e), payments of Subordinated
Transferor Collections under Section 8.03(c) shall be considered to be made
first from Interest Collections until they are reduced to zero, and then from
Principal Collections.
(f) Distributions of Basis Risk Carryforward. Because it is intended for
each Payment Date that any distributions of Basis Risk Carryforward be made
first from either the initial $1,000 deposit to the Basis Risk Carryforward
Reserve Fund or from moneys deposited in the Basis Risk Carryforward Reserve
Fund on prior Payment Dates and second from any moneys deposited in the Basis
Risk Carryforward Reserve Fund on such Payment Date, on each Payment Date, any
amounts in the Basis Risk Carryforward Reserve Fund shall be distributed by
the Indenture Trustee as follows:
(i) first, to the Principal Amount Notes, the lesser of
(A) the amount available in the Basis Risk Carryforward
Reserve Fund from any prior Payment Dates (and with respect to the
first Payment Date the $1,000 on deposit therein), and
(B) the aggregate Basis Risk Carryforward with respect to
the Principal Amount Notes for that Payment Date after payment of
any Cap Payment Entitlement under Section 8.08, and
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(ii) second, from amounts deposited on that Payment Date in the
Basis Risk Carryforward Reserve Fund for that purpose under Section
8.03(a)(ix), to the Principal Amount Notes, up to the remaining amount
of Basis Risk Carryforward.
(g) Distributions of Charged-off Mortgage Loan Proceeds. On each Payment
Date, any Charged-off Mortgage Loan Proceeds received during the related
Collection Period will be distributed in the following order of priority:
(i) to the Credit Enhancer, previously unreimbursed Credit
Enhancement Draw Amounts together with interest on such amounts at the
rate specified in the Insurance Agreement;
(ii) concurrently, to pay the Notes the Investor Loss Amount for
that Payment Date and the Class R-1 Certificates in respect of the Net
Draws (after taking into account all payments on that Payment Date other
than the payments of Charged-off Mortgage Loan Proceeds and payments
under the Policy), pro-rata based on the Investor Loss Amount and
Liquidation Loss Amount, as applicable, for that Payment Date; and
(iii) to the Owner Trustee, for distribution to the Class E-P
Certificates, any remaining Charged-off Mortgage Loan Proceeds.
Section 8.04. Calculation of the Note Rate.
On each Adjustment Date, the Indenture Trustee shall determine LIBOR for
the related Interest Period and inform the Master Servicer (at the facsimile
number given to the Indenture Trustee in writing) of the rate. On each
Determination Date, the Indenture Trustee shall determine the Note Rate of
Interest Bearing Notes for the related Payment Date.
Section 8.05. Claims on the Policy; Policy Payments Account.
(a) If the Credit Enhancement Draw Amount (other than any portion
thereof representing a Preference Amount) for the Insured Notes specified in
the Servicing Certificate for a Payment Date is more than zero (determined as
of the close of business on the third Business Day before the Payment Date),
then the Indenture Trustee shall notify the Credit Enhancer by telephone or
telecopy of the Credit Enhancement Draw Amount (other than any portion thereof
representing a Preference Amount) for the Insured Notes. The notice shall be
confirmed to the Credit Enhancer in writing in the form of the Notice of Claim
and Certificate in Exhibit A to the Policy, by 10:00 a.m., New York City time,
on the second Business Day before the Payment Date. Following receipt by the
Credit Enhancer of the notice in that form, the Credit Enhancer will pay any
amount payable under the Policy (other than any portion thereof representing a
Preference Amount) for the Insured Notes on the later to occur of (i) 12:00
noon, New York City time, on the second Business Day following the receipt and
(ii) 12:00 noon, New York City time, on the Payment Date to which the
deficiency relates.
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(b) The Indenture Trustee shall establish the Policy Payments Account.
The Indenture Trustee shall deposit upon receipt any amount paid under the
Policy in the Policy Payments Account and distribute the amount only to pay
Holders of the Insured Notes the Guaranteed Payment for the Insured Notes for
which a claim was made. No payments under the Policy may be used to pay any
costs, expenses, or liabilities of the Master Servicer, the Indenture Trustee,
or the Trust (other than payments of principal and interest on the Insured
Notes). Amounts paid under the Policy shall be transferred to the Payment
Account in accordance with the next paragraph and disbursed by the Indenture
Trustee to Holders of the Insured Notes in accordance with Section 8.03.
Payments from draws on the Policy need not be made by checks or wire transfers
separate from the checks or wire transfers used to pay other funds paid to
Noteholders on the Payment Date. The portion of any payment of principal of or
interest on the Insured Notes paid from funds transferred from the Policy
Payments Account, however, shall be noted in the statement to be furnished to
Holders of the Notes pursuant to Section 7.04. Funds held in the Policy
Payments Account shall not be invested.
On any Payment Date (or the day on which a payment on the Policy is
received, if later) for which a claim has been made under the Policy, the
amount of any funds received by the Indenture Trustee as a result of any claim
under the Policy, to the extent required to make the Guaranteed Payment on the
Insured Notes on the Payment Date, shall be withdrawn from the Policy Payments
Account and deposited in the Payment Account and applied by the Indenture
Trustee, together with the other funds to be paid from the Payment Account
pursuant to Section 8.03, directly to the payment in full of the Guaranteed
Payment due on the Insured Notes. Any funds remaining in the Policy Payments
Account on the first Business Day following the later of the Payment Date and
the Business Day after the day on which a payment on the Policy has been paid
to the Holders of the Insured Notes shall be remitted to the Credit Enhancer,
pursuant to the instructions of the Credit Enhancer, by the end of the
Business Day.
(c) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid on any Insured Note from moneys
received under the Policy. The Credit Enhancer may inspect the records at
reasonable times during normal business hours on one Business Day's notice to
the Indenture Trustee.
(d) The Indenture Trustee shall promptly notify the Credit Enhancer of
any Preference Claim of which a Responsible Officer has actual knowledge. The
Credit Enhancer shall pay Preference Amounts in the manner provided in the
Policy. Each Holder of Insured Notes by its purchase of Insured Notes, the
Master Servicer, and the Indenture Trustee agree that the Credit Enhancer may
at any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to the Preference Claim, including the
direction of any appeal of any order relating to the Preference Claim and the
posting of any surety, supersedeas, or performance bond pending any appeal. In
addition and without limiting the foregoing, the Credit Enhancer shall be
subrogated to the rights of the Master Servicer, the Indenture Trustee, and
each Holder of Insured Notes in the conduct of any Preference Claim,
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including all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any Preference Claim.
Section 8.06. Replacement Policy.
If a Credit Enhancer Default occurs, the Depositor may substitute a new
insurance policy for the existing Policy so long as (i) the new rating of the
Insured Notes would be an improvement over their then current rating, (ii) the
new insurance policy will qualify as a "similar commercially available credit
enhancement contract" within the meaning of Treas. Reg. ss.
1.1001-3(e)(4)(iv)(B), (iii) the Credit Enhancer shall have failed to cure
such Credit Enhancer Default within 10 Business Days following its receipt of
written notice of such Credit Enhancer Default, and (iv) the Rating Agency
Condition is satisfied. No new credit enhancement may be substituted, however,
unless the Indenture Trustee receives a legal opinion, acceptable in form and
substance to the Indenture Trustee, from counsel to the provider of the new
credit enhancement with respect to its enforceability and any other matters
the Indenture Trustee reasonably requires. Within five Business Days after the
Indenture Trustee takes physical possession of the new credit enhancement and
the opinion of counsel, it will deliver the replaced Policy to the Credit
Enhancer. Any other form of credit enhancement may also be substituted for the
Policy after a Credit Enhancer Default if the new rating of the Insured Notes
would be an improvement over their then current rating and the Indenture
Trustee receives an Opinion of Counsel to the effect that the substitution
will not be treated as a significant modification within the meaning of Treas.
Reg. ss. 1.1001-3 and provided that the requirements of clauses (iii) and (iv)
of this Section 8.06 are met. Notwithstanding the foregoing, the substitution
of new credit enhancement shall not affect the rights of the Credit Enhancer
to receive payments of any amounts due to it or reimbursement for any draws
made on the Policy or any other amounts owed to the Credit Enhancer, in each
case pursuant to this Indenture and the Insurance Agreement.
Section 8.07. Cap Contract.
The Cap Contract Administrator and the Cap Contract Counterparty have
entered into the Cap Contract Administration Agreement. The Indenture
Trustee's rights to receive certain proceeds of the Cap Contract as provided
in the Cap Contract Administration Agreement shall be rights of the Indenture
Trustee under this Indenture and shall not be an asset of any REMIC. The Cap
Contract Administrator and the Master Servicer shall remit any amounts
received from time to time with respect to the Cap Contract, and the Cap
Contract Administrator shall deposit the Cap Payment portion of any amounts
received from time to time with respect to the Cap Contract into the Cap
Contract Account, and shall remit to Countrywide Home Loans, Inc. the excess
of any amounts received with respect to the Cap Contract for a related Payment
Date over the related Cap Payment for the related Payment Date.
Upon a Responsible Officer of the Cap Contract Administrator obtaining
actual knowledge of an Event of Default (as defined in the Cap Contract) or
Termination Event (as defined in the Cap Contract) for which the Cap Contract
Administrator has the right to
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designate an Early Termination Date for the Cap Contract (as defined in the
Cap Contract), the Cap Contract Administrator shall act at the written
direction of the Depositor as to whether to designate an Early Termination
Date with respect to the Cap Contract. The Cap Contract Administrator shall
provide written notice to each Rating Agency following the Event of Default or
Termination Event. Upon the termination of the Cap Contract under the
circumstances contemplated by this Section and at the expense of the
Depositor, the Cap Contract Administrator shall use commercially reasonable
efforts to enforce its rights under the Cap Contract, consistent with this
Indenture, and the Cap Contract Administrator shall use commercially
reasonable efforts to procure a replacement cap contract with terms
approximating those of that original Cap Contract.
Section 8.08. Payment of Cap Payment Entitlement.
On each Payment Date, the Indenture Trustee shall distribute to the
Noteholders, as Basis Risk Carryforward, funds on deposit in the Cap Contract
Account up to the Cap Payment Entitlement and any amounts remaining in the Cap
Contract Account (other than any early termination payment) to the Sponsor.
For federal income tax purposes, the Cap Contract Account shall be owned by
the Sponsor. If an early termination payment is received with respect to an
Early Termination Date, the early termination payment will be deposited by the
Cap Contract Administrator in the Cap Contract Account to cover future Cap
Payment Entitlement on the Notes until the Cap Contract Termination Date and
any remaining amount will be paid on that date to the Sponsor.
Section 8.09. Monitoring of Significance Percentage.
With respect to each Payment Date, the Indenture Trustee shall calculate
the "significance percentage" (as defined in Item 1115 of Regulation AB) of
any derivative instrument based on the Note Principal Balance and Payment Date
(after all payments to be made thereon on such Payment Date) and based on the
methodology provided in writing by or on behalf of Countrywide no later than
five Business Days preceding that Payment Date. On each Payment Date, the
Indenture Trustee shall provide to Countrywide a written report (which written
report may include similar information with respect to other derivative
instruments relating to securitization transactions sponsored by Countrywide)
specifying the "significance percentage" of each derivative instrument, if
any, for that Payment Date. If the "significance percentage" of any derivative
instrument exceeds 7.0% with respect to any Payment Date, the Indenture
Trustee shall make a separate notation thereof in the written report described
in the preceding sentence. Such written report may contain such assumptions
and disclaimers as are deemed necessary and appropriate by the Indenture
Trustee.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures.
(a) Without the consent of the Holders of any Notes but with the consent
of the Credit Enhancer (which shall not be unreasonably withheld) and with
prior notice to each Rating Agency, subject to Section 9.05, the Issuer and
the Indenture Trustee may enter into indentures supplemental to this
Indenture, in form satisfactory to the Indenture Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property subject
to the lien of this Indenture, or to confirm unto the Indenture Trustee
any property subject or required to be subjected to the lien of this
Indenture, or to subject additional property to the lien of this
Indenture;
(ii) to evidence the succession of another person to the Issuer
pursuant to this Indenture, and the assumption by the successor of the
covenants of the Issuer in this Indenture and the Notes in compliance
with the applicable provisions of this Indenture;
(iii) to add to the covenants of the Issuer, for the benefit of
the Noteholders, or the Credit Enhancer or to surrender any right
conferred on the Issuer in this Indenture;
(iv) to convey, transfer, assign, mortgage, or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity or mistake;
(vi) to correct or supplement any provision in this Indenture or
in any supplemental indenture that may be inconsistent with any other
provision in this Indenture or in any supplemental indenture or the
other Transaction Documents;
(vii) to conform this Indenture to the final prospectus supplement
issued in respect of the Notes referred to in the Adoption Annex;
(viii) to modify, eliminate, or add to the provisions of this
Indenture as required by any Rating Agency or any other nationally
recognized statistical rating organization to maintain or improve any
rating of the Notes without taking the Policy into account;
(ix) to modify, eliminate, or add to the provisions of this
Indenture to comply with any requirement imposed by the Code or to
comply with any rules or regulations of the Securities and Exchange
Commission;
(x) to modify, eliminate, or add to the provisions of this
Indenture to the extent appropriate to maintain the qualification of the
Trust as a REMIC under the Code or 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
Notes;
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(xi) to modify, eliminate, or add to the provisions of this
Indenture to the extent necessary to comply with any rules or
regulations of the Securities and Exchange Commission;
(xii) to modify, eliminate, or add to the provisions of this
Indenture to the extent necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture other provisions expressly required
by the TIA; or
(xiii) to provide for the acceptance of the appointment of a
successor trustee under this Indenture and to add to or change any of
the provisions of this Indenture necessary to facilitate the
administration of the trusts under this Indenture by more than one
trustee, pursuant to the requirements of Article VI.
The Indenture Trustee is authorized to join in the execution of any
supplemental indenture and to make any further appropriate agreements and
stipulations that may be contained in it.
(b) Without the consent of any of the Noteholders but with satisfaction
of the Rating Agency Condition (in connection with which the consent of the
Credit Enhancer shall not be unreasonably withheld), subject to Section 9.05,
the Issuer and the Indenture Trustee may enter into indentures supplemental to
this Indenture to change this Indenture in any manner or to modify the rights
of the Noteholders or the Credit Enhancer under this Indenture, except that,
without the consent of each affected Noteholder by an Act of the applicable
Noteholders delivered to the Issuer and the Indenture Trustee and without the
consent of the Credit Enhancer and subject to Section 9.05, no supplemental
indenture under this Section 9.01(b) shall:
(i) change the date of payment of any installment of principal of
any Principal Amount Note or interest on any Interest Bearing Note, or
reduce the principal amount of any Principal Amount Note, the interest
rate on any Interest Bearing Note, or its redemption price, or change
any place of payment where, or the coin or currency in which, any Note
or its interest is payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of available
funds to the payment of any amount due on the Notes after their due
dates (or, in the case of redemption, after the redemption date), as
provided in Article V;
(iii) reduce the percentage of the Outstanding Amount the consent
of the Holders of which is required for any supplemental indenture, or
the consent of the Holders of which is required for any waiver of
compliance with certain provisions of this Indenture or certain defaults
under this Indenture and their consequences or to direct the liquidation
of the Collateral;
(iv) modify any provision of Section 9.01(b)(i), (ii), (iii),
(iv), or (v) except to increase any percentage specified in this
Indenture or provide that certain additional provisions of this
Indenture or the Transaction Documents cannot be modified or
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waived without the consent of the Holder of each Note affected by it;
modify any of the provisions of this Indenture in a manner affecting the
calculation of the amount of any payment of interest or principal due on
any Note on any Payment Date (including the calculation of any of the
individual components of the calculation) or affect the rights of the
Holders of Notes to the benefit of any provisions for the mandatory
redemption of the Notes in this Indenture; or
(v) permit the creation of any lien ranking before or on a parity
with the lien of this Indenture with respect to any part of the
Collateral (except any change in any mortgage's lien status in
accordance with the Sale and Servicing Agreement) or, except as
otherwise permitted or contemplated in this Indenture, terminate the
lien of this Indenture on any property at any time subject to this
Indenture or deprive the Holder of any Note of the security provided by
the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not any Notes
would be affected by any supplemental indenture and that determination shall
be conclusive on the Holders of all Notes, whether authenticated and delivered
under this Indenture before or after that. The Indenture Trustee shall not be
liable for any determination made in good faith.
An Act of Noteholders under this Section need not approve the particular
form of any proposed supplemental indenture, but is sufficient if it approves
the substance of the supplemental indenture.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee
shall mail to the Noteholders to which the supplemental indenture relates a
notice stating in general terms the substance of the supplemental indenture.
Any failure of the Indenture Trustee to mail a notice, or any defect in it,
shall not, however, in any way impair or affect the validity of the
supplemental indenture.
Section 9.02. Execution of Supplemental Indentures.
In executing any supplemental indenture permitted by this Article, the
Indenture Trustee may require and, subject to Sections 6.01 and 6.03, shall be
fully protected in relying on an Opinion of Counsel (addressed to the
Indenture Trustee) stating that the execution of the supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but need
not, enter into any supplemental indenture that affects the Indenture
Trustee's own rights or obligations under this Indenture or otherwise.
Section 9.03. Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture pursuant to this
Indenture, this Indenture shall be changed in accordance with the supplemental
indenture, and the Indenture Trustee, the Issuer, and the Noteholders shall
bound by the supplemental indenture.
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Section 9.04. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in the supplemental indenture. If the
Issuer so determines, new Notes so modified as to conform, in the opinion of
the Indenture Trustee and the Issuer, to the supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
Section 9.05. Tax Opinion.
This Indenture may not be amended under this Article or otherwise
unless, in connection with the amendment, an Opinion of Counsel is furnished
to the Indenture Trustee that the amendment will not result in a tax on any
REMIC created under the Trust Agreement pursuant to the REMIC Provisions or
cause any REMIC created under the Trust Agreement to fail to qualify as a
REMIC at any time that any Securities are outstanding.
Section 9.06. Tax Matters
(a) The assets of the Issuer with respect to which a REMIC election is
to be made as provided in the Trust Agreement are intended to be a real estate
mortgage investment conduit, and the affairs of the Trust shall be conducted
so that each REMIC created pursuant to the Trust Agreement qualifies as a real
estate mortgage investment conduit.
(b) The Indenture Trustee shall act as agent on behalf of the Trust and
as such agent the Indenture Trustee shall:
(i) 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;
(ii) 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 Issuer;
(iii) 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);
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(iv) 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 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;
(v) 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);
(vi) 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;
(vii) pay, from the sources specified in Section 3.12(c) of the
Trust Agreement or Section 9.06(c) of this Indenture, as applicable, 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);
(viii) ensure that federal, state, or local income tax or
information returns are signed as required by the Code or state or local
laws;
(ix) 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
(x) subject to the succeeding sentence, represent 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 and payable by
the Sponsor a separate agreement, if necessary.
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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 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) 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 the Indenture Trustee, if the
tax arises out of a breach by the Indenture Trustee of any of its obligations
described in Section 9.06(b).
(d) 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 Trustee shall treat the Basis Risk Carryforward
Reserve Fund as an outside reserve fund within the meaning of Treasury
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 X
REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) The Principal Amount Notes are subject to redemption by the Issuer
with the consent of the Credit Enhancer and the Master Servicer in whole on
any Payment Date on or after the Optional Termination Date. The redemption
price for the Principal Amount Notes shall be the Note Principal Balance plus
accrued aggregate Note Interest through the day before the redemption date
plus interest accrued on the aggregate Unpaid Investor Interest Shortfall, to
the extent legally permissible. No premium or penalty will be payable by the
Issuer in any redemption of the Notes.
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(b) The Issuer shall notify the Indenture Trustee of its election to
redeem the Principal Amount Notes not later than the first day of the month
preceding the month of the redemption. The Indenture Trustee shall first
notify the Credit Enhancer and the Master Servicer and then notify the
Noteholders by letter mailed or sent by facsimile transmission not earlier
than the 15th day and not later than the 25th day of the month before the
month of the redemption.
Payment on the Principal Amount Notes will only be made on presentation
and surrender of the Notes at the office or agency of the Indenture Trustee
specified in the redemption notice. By the redemption date, the Issuer shall
deposit in the Payment Account in immediately available funds an amount that,
when added to the funds on deposit in the Payment Account and the Collection
Account that are payable to the Noteholders, equals the redemption price for
the Principal Amount Notes, whereupon all the Notes called for redemption
shall be payable on the redemption date.
(c) On presentation and surrender of the Principal Amount Notes, the
Indenture Trustee shall pay to the Holders of Notes on the redemption date an
amount equal to their redemption price. On the redemption date, the Indenture
Trustee shall, based on the information in the Servicing Certificate for the
relevant Payment Date, withdraw from the Payment Account and remit to the
Credit Enhancer the lesser of
(i) the amount available for distribution on the redemption date,
net of the amount needed to pay the redemption price and
(ii) the unpaid amounts due to the Credit Enhancer for unpaid
premiums and unreimbursed draws on the Policy (together with interest on
them as provided under the Insurance Agreement) and any other sums owed
under the Insurance Agreement.
If all of the Noteholders do not surrender their Principal Amount Notes
for final payment and cancellation by the redemption date, the Indenture
Trustee shall hold in the Payment Account, for the benefit of the Noteholders
and the Issuer, the remaining amounts representing the redemption price not
distributed in redemption to Noteholders.
(d) Any election to redeem Principal Amount Notes pursuant to Section
10.01(a) shall be evidenced by an Issuer Order. The Issuer Order shall specify
the items required in the notice of redemption to be mailed to Noteholders.
The Issuer shall notify each Rating Agency of the redemption.
Section 10.02. Form of Redemption Notice.
Notice of redemption under Section 10.01 shall be given by the Indenture
Trustee by first-class mail, postage prepaid, or by facsimile or other
reliable electronic means (promptly confirmed by mail) to each Holder of
Principal Amount Notes and to the Credit Enhancer as of
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the close of business on the Record Date preceding the redemption date, at the
Holder's address or facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) the amount of interest accrued to the redemption date;
(iv) the place where Principal Amount Notes are to be surrendered
for payment of the redemption price (which shall be the office or agency
of the Issuer maintained pursuant to Section 3.02); and
(v) that on the redemption date, the redemption price will become
payable on each Principal Amount Note and that interest on the Principal
Amount Notes shall cease to accrue beginning on the redemption date.
Notice of redemption of the Principal Amount Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer. Failure to
give notice of redemption, or any defect in it, to any Holder of any Principal
Amount Note shall not affect the validity of the redemption of any other
Principal Amount Note.
Section 10.03. Notes Payable on Redemption Date.
Following notice of redemption as required by Section 10.02, on the
redemption date the Principal Amount Notes shall become payable at the
redemption price and (unless the Issuer defaults in the payment of the
redemption price) no interest shall accrue on the redemption price for any
period after the date to which accrued interest is calculated for purposes of
calculating the redemption price.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.
(a) Whenever the Issuer requests the Indenture Trustee to take any
action under this Indenture, the Issuer shall furnish to the Indenture Trustee
and the Credit Enhancer an Officer's Certificate stating that any conditions
precedent provided for in this Indenture relating to the proposed action have
been complied with and an Opinion of Counsel stating that in its opinion any
conditions precedent have been complied with.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
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(i) a statement that each signatory of the certificate or opinion
has read the covenant or condition and the definitions in this Indenture
relating to it;
(ii) a brief statement as to the nature and scope of the
examination or investigation on which the statements or opinions in the
certificate or opinion are based;
(iii) a statement that, in the opinion of each signatory, the
signatory has made any examination or investigation necessary for the
signatory to express an informed opinion about whether or not the
covenant or condition has been complied with;
(iv) a statement as to whether, in the opinion of each signatory,
the condition or covenant has been complied with; and
(v) if the signer of the certificate is required to be
Independent, the statement required by the definition of Independent.
(b)
(i) Before the deposit of any Collateral or other property with
the Indenture Trustee that is to be made the basis for the release of
any property subject to the lien of this Indenture, the Issuer shall, in
addition to any obligation imposed in Section 11.01(a) or elsewhere in
this Indenture, furnish to the Indenture Trustee and the Credit Enhancer
an Officer's Certificate stating the opinion of each person signing the
certificate as to the fair value (within 90 days of the deposit) to the
Issuer of the Collateral or other property to be deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate stating the opinion of any signer as to
the matters described in clause (b)(i), the Issuer shall also deliver to
the Indenture Trustee and the Credit Enhancer an Independent Certificate
as to the same matters, if the fair value to the Issuer of the property
to be deposited as the basis of any release and of all other property
made the basis of any release since the commencement of the then-current
calendar year as described in the certificates delivered pursuant to
clause (b)(i) is 10% or more of the aggregate Outstanding Amount of the
Principal Amount Notes, but the certificate need not be furnished for
any securities deposited, if their fair value to the Issuer as described
in the related Officer's Certificate is less than $25,000 or less than
1% of the then aggregate Outstanding Amount of the Principal Amount
Notes.
(iii) Whenever any property is to be released from the lien of
this Indenture, the Issuer shall also furnish to the Indenture Trustee
and the Credit Enhancer an Officer's Certificate stating the opinion of
each person signing the certificate as to the fair value (within 90 days
of the release) of the property proposed to be released and stating that
in the opinion of that person the proposed release will not impair the
security under this Indenture in contravention of the provisions of this
Indenture.
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(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate stating the opinion of any signer as to
the matters described in clause (b)(iii), the Issuer shall also furnish
to the Indenture Trustee and the Credit Enhancer an Independent
Certificate as to the same matters if the fair value of the property and
of all other property released from the lien of this Indenture since the
commencement of the then-current calendar year, as described in the
certificates required by clause (b)(iii) and this clause (b)(iv), equals
10% or more of the aggregate Outstanding Amount of the Principal Amount
Notes, but the certificate need not be furnished for any release of
property if its fair value as described in the related Officer's
Certificate is less than $25,000 or less than 1% of the then aggregate
Outstanding Amount of the Principal Amount Notes.
(v) Notwithstanding any provision of this Indenture, the Issuer
may, without compliance with the other requirements of this Section, (A)
collect, liquidate, sell, or otherwise dispose of Collateral as and to
the extent permitted by the Transaction Documents, and (B) make cash
payments out of the Collection Account as and to the extent permitted by
the Transaction Documents, so long as the Issuer delivers to the
Indenture Trustee and the Credit Enhancer every six months, beginning
six months after the date of this Indenture, an Officer's Certificate of
the Issuer stating that all the dispositions of Collateral described in
clauses (A) and (B) that occurred during the preceding six months were
in the ordinary course of the Issuer's business and that their proceeds
were applied in accordance with the Transaction Documents.
Section 11.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified person, all the matters need not be
certified by, or covered by the opinion of, only one person, or be certified
or covered by only one document. One person may certify or give an opinion
with respect to some matters and one or more other persons as to other
matters, and any person may certify or give an opinion as to one matter in one
or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based on a certificate or opinion of counsel insofar as it relates to legal
matters, unless the officer knows, or in the exercise of reasonable care
should know, that with respect to the matters on which the officer's
certificate or opinion is based the certificate or opinion is erroneous. Any
certificate of an Authorized Officer or Opinion of Counsel may be based on a
certificate or opinion of officers of any appropriate party to any of the
Transaction Documents insofar as it relates to factual matters, stating that
the information with respect to the factual matters is in the possession of
the party, unless the person signing knows, or in the exercise of reasonable
care should know, that the certificate or opinion is erroneous.
Where any person is required to deliver two or more documents under this
Indenture, they may, but need not, be consolidated into one document.
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If the Issuer is required to deliver any document as a condition of the
granting of any request, or as evidence of its compliance with this Indenture,
the request may be denied or the certification of compliance will be
unacceptable if the document is inaccurate. This provision shall not, however,
affect the Indenture Trustee's right to rely on the accuracy of any statement
or opinion in any document as provided in Article VI.
Section 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver, or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by Noteholders in person or by agents duly
appointed in writing. Except as otherwise expressly provided in this Indenture
the action shall become effective when the instruments are delivered to the
Indenture Trustee and, if expressly required, to the Issuer. The instruments
(and the action embodied in them) are referred to as the "Act" of the
Noteholders signing the instruments. Proof of execution of any instrument or
of a writing appointing an agent for a Noteholder shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any instrument
may be proved by an affidavit of a witness to the execution or the certificate
of any notary public or other person authorized by law to acknowledge the
execution of deeds. Any certificate on behalf of a jural entity executed by a
person purporting to have authority to act on behalf of the jural entity shall
itself be sufficient proof of the authority of the person executing it to act.
The fact and date of the execution by any person of any instrument may also be
proved in any other manner that the Indenture Trustee deems sufficient.
(c) The Note Register shall prove the ownership of Notes.
(d) Any Act by the Holder of a Note shall bind every Holder of the same
Note and every Note issued on its transfer or in exchange for it or in lieu of
it, in respect of anything done, omitted, or suffered to be done by the
Indenture Trustee or the Issuer in reliance on the Act, whether or not
notation of the action is made on the Note.
Section 11.04 Notices.
Any request, demand, authorization, direction, notice, consent, waiver,
Act, or other action or other documents provided or permitted by this
Indenture to be given to:
(i) the Indenture Trustee by any Noteholder or by the Issuer shall
be sufficient for every purpose under this Indenture if given in writing
and delivered by first-class mail, postage prepaid, overnight courier,
personally delivered, or facsimile (followed by the original by any
other means authorized by this Section) to the Indenture Trustee at its
Corporate Trust Office, or
68
(ii) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose under this Indenture if given in
writing and delivered by first-class mail, postage prepaid, overnight
courier, personally delivered, or facsimile (followed by the original by
any other means authorized by this Section) to the Issuer addressed as
provided in the Adoption Annex or at any other address previously
furnished in writing to the Indenture Trustee by the Issuer; or
(iii) the Credit Enhancer by the Issuer, the Indenture Trustee, or
by any Noteholder shall be sufficient for every purpose under this
Indenture if given in writing and delivered by first-class mail, postage
prepaid, overnight courier, personally delivered, or facsimile (followed
by the original by any other means authorized by this Section) (unless
otherwise specifically provided) to the Credit Enhancer addressed as
provided in the Adoption Annex or at any other address previously
furnished in writing to the Indenture Trustee by the Credit Enhancer,
except that whenever a notice or other communication to the Credit
Enhancer refers to an Event of Default, Event of Servicing Termination,
a claim under the Policy, or with respect to which failure on the part
of the Credit Enhancer to respond would constitute consent or
acceptance, then a copy of the notice or other communication shall also
be sent to the attention of the General Counsel of the Credit Enhancer
and shall be marked to indicate "URGENT MATERIAL ENCLOSED"; or
(iv) to each Rating Agency by the Issuer or the Indenture Trustee
shall be sufficient for every purpose under this Indenture if given in
writing and delivered by first-class mail, postage prepaid, overnight
courier, personally delivered, or facsimile (followed by the original by
any other means authorized by this Section) to the parties at the
addresses as provided in the Adoption Annex or at any other address
previously furnished in writing to the Indenture Trustee and the Issuer.
Any consent or waiver under this Indenture or any other Transaction
Document by the Credit Enhancer must be in writing and signed by the Credit
Enhancer to be effective.
Section 11.05. Notices to Noteholders; Waiver.
Where this Indenture provides for notice to Noteholders of any event,
the notice shall be sufficiently given (unless otherwise expressly provided in
this Indenture) if in writing and mailed, first-class, postage prepaid to each
Noteholder affected by the event, at the Holder's address as it appears on the
Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of the notice. Whenever notice to
Noteholders is given by mail, neither the failure to mail the notice nor any
defect in a notice mailed to any particular Noteholder shall affect the
sufficiency of the notice with respect to other Noteholders. Any notice that
is mailed in the manner provided in this Indenture shall conclusively be
presumed to have been duly given.
69
Where this Indenture provides for notice in any manner, any person
entitled to receive it may waive the notice in writing, either before or after
the event, and the waiver shall be the equivalent of notice. Waivers of notice
by Noteholders shall be filed with the Indenture Trustee but the filing shall
not be a condition precedent to the validity of any action taken in reliance
on a waiver.
If it is impractical to mail notice of any event to Noteholders when the
notice is required to be given pursuant to this Indenture because of the
suspension of regular mail service as a result of a strike, work stoppage, or
similar activity, then any manner of giving the notice satisfactory to the
Indenture Trustee shall be considered to be a sufficient giving of the notice.
Where this Indenture provides for notice to each Rating Agency, failure
to give the notice shall not affect any other rights or obligations created
under this Indenture, and shall not under any circumstance constitute an
Incipient Default.
Section 11.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to
the contrary, the Issuer may enter into any agreement with any Holder of a
Note providing for a method of payment, or notice by the Indenture Trustee or
any Paying Agent to the Holder, that is different from the methods provided
for in this Indenture. The agreement may not accelerate the timing or increase
the amount of any payments to the Noteholder; cause any release of or other
change in any Collateral; or affect the timing, amount, or method of any
payments by the Credit Enhancer under the Policy. The Issuer will furnish to
the Indenture Trustee and the Credit Enhancer a copy of each such agreement
and the Indenture Trustee will cause payments to be made and notices to be
given in accordance with them.
Federal funds wire transfers to the Credit Enhancer shall be made with
the details provided in the Adoption Annex specifically stated on the wire
instructions, unless another account is designated by written notice from the
president or a managing director of the Credit Enhancer to the Indenture
Trustee and the Issuer at least five Business Days before the date on which
the funds are to be transferred to the Credit Enhancer.
Section 11.07. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision of this Indenture that is required to be included in this
Indenture by the Trust Indenture Act, the required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically included in this Indenture
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically in this Indenture.
70
Section 11.08. Effect of Headings and Table of Contents.
The Article and Section headings and the Table of Contents are for
convenience only and shall not affect the construction of this Indenture.
Section 11.09. Successors and Assigns.
All agreements in this Indenture and the Notes by the Issuer shall bind
its successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors, assigns,
co-trustees, and agents.
Section 11.10. Separability.
If any provision in this Indenture or in the Notes is invalid, illegal,
or unenforceable, the validity, legality, and enforceability of the remaining
provisions of this Indenture and the Notes shall not be affected in any way.
Section 11.11. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any person, other than the parties to this Indenture and their
successors under this Indenture, the Master Servicer (under Article VIII), the
Credit Enhancer, any person with an ownership interest in the Trust, and the
Noteholders, any benefit or any legal or equitable right under this Indenture.
The Credit Enhancer is a third party beneficiary of this Indenture.
Section 11.12. Legal Holidays.
If the date on which any payment is due is not a Business Day, then
(notwithstanding any other provision of the Notes or this Indenture) payment
need not be made on that date, but may be made on the next Business Day with
the same force as if made on the date on which nominally due, and no interest
shall accrue for the period after the nominal due date.
Section 11.13. Governing Law.
THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 11.14. Counterparts; Electronic Delivery.
This Indenture may be executed in any number of counterparts, each of
which so executed shall be considered an original, but all the counterparts
shall together constitute a single instrument. Any signature page to this
Indenture containing a manual signature may be delivered by facsimile
transmission or other electronic communication device capable of transmitting
or creating a printable written record, and when so delivered shall have the
effect of delivery of an original manually signed signature page.
Section 11.15. Recording of Indenture.
This Indenture is a Security Agreement under the UCC. If this Indenture
is subject to recording in any appropriate public recording offices, the
recording is to be effected by the Issuer but only at the request and expense
of Noteholders accompanied by an Opinion of
71
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that the
recording materially and beneficially affects the interests of the Noteholders
or any other person secured under this Indenture or the enforcement of any
right granted to the Indenture Trustee under this Indenture.
Section 11.16. No Petition.
The Indenture Trustee, by entering into this Indenture, any Paying
Agent, by accepting its appointment as such, the Issuer, and each Noteholder,
by accepting a Note, hereby covenant that they will not at any time institute
against the Issuer or the Depositor, or join in any institution against the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency, or
liquidation proceedings, or other proceedings under any United States federal
or State bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture, or any of the other Transaction Documents. This
Section shall survive the termination of this Indenture.
Section 11.17. Non-recourse.
The Issuer and each Noteholder, by its acceptance of its Note, agree
that the indebtedness represented by the Notes is non-recourse to the Issuer,
and is payable solely from the assets of the Trust.
Section 11.18. Act on Instructions from Credit Enhancer.
Notwithstanding any provision of this Indenture to the contrary other
than Section 9.01(b)(i), (ii), (iii), (iv), or (v), so long as no Credit
Enhancer Default exists, the Credit Enhancer shall at all times be treated as
if it were the exclusive owner of all Insured Notes Outstanding for the
purposes of all approvals, consents, waivers, and the institution of any
action and the direction of all remedies, and the Indenture Trustee shall act
in accordance with the directions of the Credit Enhancer so long as it is
indemnified therefor to its reasonable satisfaction. The Credit Enhancer shall
not be treated as if it were the exclusive owner of any Notes (other than
those it may actually own) for the purposes of Section 9.01(b)(i), (ii),
(iii), (iv), or (v).
Section 11.19. Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, or the Indenture Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection this Indenture, against (i) the Indenture Trustee, or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer, or (iii) any partner, owner, beneficiary, agent, officer,
director, employee, or agent of the Indenture Trustee or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Issuer,
the Owner Trustee or the Indenture Trustee or of any successor or assign of
the Indenture Trustee, or the Owner Trustee in its individual capacity. For
all purposes of this Indenture, in the performance of any obligations of the
Issuer under this Indenture, the Owner Trustee shall be subject to, and
entitled to the benefits of, Articles VI, VII, and VIII of the Trust
Agreement.
72
IN WITNESS WHEREOF, the parties to this Indenture have caused this
Indenture to be duly executed by their officers, thereunto duly authorized,
all as of the day and year first above written.
CWHEQ REVOLVING HOME EQUITY LOAN
TRUST, SERIES 2007-B
By: WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee
By: /s/ J. Xxxxxxxxxxx Xxxxxx
---------------------------------------
Name: J. Xxxxxxxxxxx Xxxxxx
Title: Financial Services Officer
THE BANK OF NEW YORK
Indenture Trustee,
By: /s/ Xxxxxxxx Xxxxxxxxxxx
---------------------------------------
Name: Xxxxxxxx Xxxxxxxxxxx
Title: Vice President
73
EXHIBIT A-1
FORM OF NOTES
Each transferee or purchaser of this Note that is a plan or is investing plan
assets, by acceptance of this Note or an interest in this Note, represents
that the investment and holding of this Note satisfy the conditions for
exemptive relief under XXXX 00-00, XXXX 00-0, XXXX 00-00, XXXX 00-00, XXXX
96-23, the service provider exemption provided under Section 408(b)(17) of
ERISA and Section 4975(d)(20) of the Code or a similar exemption. A "plan" is
an employee benefit plan (as defined in section 3(3) of ERISA) that is subject
to Title I of ERISA, a plan (as defined in and subject to section 4975 of the
Code) and any entity whose underlying assets include plan assets by reason of
a plan's investment in the entity or otherwise.
Unless this Note is presented by an authorized representative of the
Depository to the Issuer or its agent for registration of transfer, exchange,
or payment, and any Note issued in exchange for this Note is registered in the
name of the Depository or in another name requested by an authorized
representative of the Depository (and any payment on this Note is made to the
Depository or to another entity requested by an authorized representative of
the Depository), any transfer, pledge, or other use of this Note for value or
otherwise by or to any person is wrongful inasmuch as the registered owner of
this Note, the Depository, has an interest in this Note.
Solely for U.S. Federal Income Tax purposes, this note is a "regular
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.
Any transfer in violation of either of the foregoing will be void ab
initio, and will not operate to transfer any rights to the transferee,
notwithstanding any instructions to the contrary.
A-1-1
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200[?]-[?]
REVOLVING HOME EQUITY LOAN ASSET BACKED NOTE
SERIES 200[?]-[?]
-------------------------------------------------------------------------------
Registered Principal Amount: $[___________]
-------------------------------------------------------------------------------
No. [____] Percentage Interest: [__]%
-------------------------------------------------------------------------------
CUSIP No. [_______] Initial Payment Date: [___________]
-------------------------------------------------------------------------------
Class [_____] Note Rate: Variable
-------------------------------------------------------------------------------
The Issuer, CWHEQ Revolving Home Equity Loan Trust, Series 20[?]-[?], promises
to pay to CEDE & CO. or registered assigns the Principal Amount, payable on
each Payment Date in an amount equal to the Percentage Interest of the
aggregate amount payable from the Payment Account as principal on the Notes
pursuant to Section 8.03 of the Indenture, dated as of [?][?], 200[?] (the
"Indenture"), between the Issuer, The Bank of New York, as Indenture Trustee.
The entire remaining outstanding principal balance of this Note is payable on
the Payment Date in [INSERT MATURITY DATE]. Capitalized terms used in this
Note that are not otherwise defined have the meanings given to them in the
Indenture.
Interest will be paid on the 15th day of each month or if that is not a
Business Day, then on the next Business Day (the "Payment Date"), commencing
on the first Payment Date specified above, to the person in whose name this
Note is registered at the close of business on the last day preceding the
Payment Date (the "Record Date") at the Note Rate. Interest will be computed
on the basis of the actual number of days in the Interest Period and a 360-day
year.
The "Note Rate" is a per annum rate equal to the least of (i) for the first
Interest Period a per annum rate equal to the sum of the interpolated
one-month and two-month LIBOR and [INSERT SPREAD]%, and for any subsequent
Interest Period, a per annum rate equal to the sum of LIBOR as of the second
LIBOR Business Day before the first day of that Interest Period, (ii) the
Maximum Rate for the Class [INSERT CLASS DESIGNATION] Notes for that Interest
Period, and (iii) [INSERT FIXED CAP IF APPLICABLE TO THAT CLASS OF NOTES]%.
The interpolated one-month and two-month LIBOR shall be equal to one-month
LIBOR for the first Interest Period plus the product of
o the excess of two-month LIBOR for the first Interest Period over
one-month LIBOR for the first Interest Period, multiplied by
o a fraction whose numerator is the number of days from the
one-month anniversary of the Closing Date to the first Payment Date and
whose denominator is 30.
A-1-2
The "Maximum Rate" for any Interest Period is the Weighted Average Net Loan
Rate for the Mortgage Loans for the Collection Period during which an Interest
Period begins (adjusted to an effective rate reflecting accrued interest
calculated on the basis of the actual number of days in the Collection Period
commencing in the month in which that Interest Period commences and a year
assumed to consist of 360 days).
"LIBOR" for any day means the rate for United States dollar deposits for one
month that appears on the Moneyline Telerate Screen Page 3750 as of 11:00
A.M., London time that day. If LIBOR does not appear on that page (or a page
replacing that page on that service or, if that service is no longer offered,
any other service for displaying LIBOR or comparable rates reasonably selected
by the Depositor after consultation with the Indenture Trustee), the rate will
be the reference bank rate.
The reference bank rate for an Interest Period means the arithmetic mean
(rounded upwards to the nearest one sixteenth of a percent) of the offered
rates for United States dollar deposits offered by three major banks engaged
in transactions in the London interbank market, selected by the Depositor
after consultation with the Indenture Trustee, as of 11:00 A.M., London time,
on the second LIBOR Business Day before the first day of the Interest Period,
to prime banks in the London interbank market for a period of one month in
amounts approximately equal to the outstanding Note Principal Balance if at
least two of the banks provide an offered rate.
If fewer than two offered rates are quoted, the reference bank rate will be
the arithmetic mean of the rates quoted by one or more major banks in New York
City, selected by the Depositor after consultation with the Indenture Trustee,
as of 11:00 A.M., New York City time, on the second LIBOR Business Day before
the first day of the Interest Period, for loans in U.S. dollars to leading
European banks for a period of one month in amounts approximately equal to the
outstanding Note Principal Balance. If no such quotations can be obtained, the
reference bank rate shall be LIBOR for the preceding Interest Period.
"LIBOR Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in the State of New York or in the City of
London, England are required or authorized by law to be closed.
This Note is one of the Notes from a duly authorized issue of Notes issued by
CWHEQ Revolving Home Equity Loan Trust, Series 2007-B, designated as Revolving
Home Equity Loan Asset Backed Notes, Series 2007-B.
Payments on this Note will be made by the Indenture Trustee, or by the Paying
Agent appointed pursuant to the Indenture, by check mailed to the person
entitled thereto as its name and address appears on the Note Register or, upon
written request by the person delivered to the Indenture Trustee at least five
Business Days before the related Record Date, by wire transfer (but only if
the person owns of record Notes having principal denominations aggregating at
least
A-1-3
$1,000,000), or by any other means of payment the person and the Indenture
Trustee agree to. Notwithstanding the above, the final payment on this Note
will be made after due notice by the Indenture Trustee or the Paying Agent,
and only upon presentation and surrender of this Note at the office or agency
appointed by the Indenture Trustee for that purpose.
This Note does not purport to summarize the Indenture and reference is made to
the Indenture for the rights and obligations under it.
Solely for U.S. federal income tax purposes, this Note is a "regular interest
" in a "Real Estate Mortgage Investment Conduit," as those terms are defined
in sections 860G and 860D of the Internal Revenue Code of 1986.
Without the consent of the Holders of any Notes but with the consent of the
Credit Enhancer, the Issuer, and the Indenture Trustee may amend the Indenture
in certain limited ways. Without the consent of any of the Noteholders but
with satisfaction of the Rating Agency Condition, the Issuer, and the
Indenture Trustee, may amend the Indenture to change the Indenture in any
manner or to modify the rights of the Noteholders or the Credit Enhancer under
the Indenture except amendments that require the consent of each affected
Noteholder. No supplemental indenture may, without the consent of each
affected Noteholder:
change the date of payment of any installment of principal or interest on any
Note, or reduce its principal amount, its interest rate, or its redemption
price, or change any place of payment where, or the coin or currency in which,
any Note or its interest is payable;
impair the right to institute suit for the enforcement of the provisions of
the Indenture requiring the application of available funds to the payment of
any amount due on the Notes after their due dates (or, in the case of
redemption, after the redemption date);
reduce the percentage of the Outstanding Amount the consent of the Holders of
which is required for any supplemental indenture, or the consent of the
Holders of which is required for any waiver of compliance with certain
provisions of the Indenture or certain defaults under the Indenture and their
consequences or to direct the liquidation of the Collateral;
modify any provision of the Section of the Indenture covering indenture
supplements only with the consent of affected Noteholders except to increase
any percentage specified in the Indenture or provide that certain additional
provisions of the Indenture or the Transaction Documents cannot be modified or
waived without the consent of the Holder of each Note affected by it;
modify any of the provisions of the Indenture in a manner affecting the
calculation of the amount of any payment of interest or principal due on any
Note on any Payment Date (including the calculation of any of the individual
components of the calculation) or affect the
A-1-4
rights of the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes in the Indenture; or
permit the creation of any lien ranking before or on a parity with the lien of
the Indenture with respect to any part of the Collateral (except any change in
any mortgage's lien status in accordance with the Sale and Servicing
Agreement) or, except as otherwise permitted or contemplated in the Indenture,
terminate the lien of the Indenture on any property at any time subject to the
Indenture or deprive the Holder of any Note of the security provided by the
lien of the Indenture.
As provided in the Indenture, the transfer of this Note is registrable in the
Note Register of the Note Registrar on surrender of this Note for registration
of transfer at the office or agency maintained by the Note Registrar for that
purpose, accompanied by a written instrument of transfer in form satisfactory
to the Master Servicer, the Indenture Trustee, and the Note Registrar duly
executed by its Holder or the Holder's attorney duly authorized in writing,
and thereupon new Notes of the same Class and of authorized denominations and
evidencing the same aggregate Percentage Interest of the Notes will be issued
to the designated transferees. The Notes are issuable only as registered Notes
without coupons in denominations specified in the Indenture. As provided in
the Indenture, Notes are exchangeable for new Notes of like tenor in
authorized denominations and evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No service charge will be made for any registration of transfer or exchange,
but the Indenture Trustee or the Note Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Before due presentment for registration of transfer of this Note, the Issuer,
the Indenture Trustee, and any agent of the Issuer, or the Indenture Trustee
may treat the person in whose name this Note is registered as its owner for
all purposes, whether or not this Note is overdue, and none of the Issuer, the
Indenture Trustee, or any such agent shall be affected by notice to the
contrary.
The Issuer with the consent of the Credit Enhancer and the Master Servicer may
effect an early retirement of all Classes of Notes by paying the retransfer
price and accepting retransfer of the Trust Assets on any Payment Date after
the Note Principal Balance of all Classes of Notes is less than or equal to
10% of the Original Note Principal Balance of all Classes of Notes.
Each Holder or beneficial owner of this Note, by acceptance of a Note or, in
the case of a beneficial owner of this Note, a beneficial interest in this
Note, agrees by accepting the benefits of the Indenture that will not at any
time institute against the Depositor, the Sponsor, the Master Servicer, or the
Issuer, or join in any institution against any of them of, any bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceedings under any
United States
A-1-5
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture, or the Transaction Documents.
Anything in this Note to the contrary notwithstanding, none of Wilmington
Trust Company in its individual capacity, The Bank of New York, in its
individual capacity, any owner of a beneficial interest in the Issuer, or any
of their respective partners, beneficiaries, agents, officers, directors,
employees, or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on
this Note or performance of, or omission to perform, any of the obligations
under the Indenture. The holder of this Note by its acceptance of this Note
agrees that the holder shall have no claim against any of the foregoing for
any deficiency, loss, or claim. Nothing in this Note shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any
obligations under the Indenture or in this Note.
The Issuer and each Noteholder, by its acceptance of its Note, agree that the
indebtedness represented by the Notes is non-recourse to the Issuer, and is
payable solely from the assets of the Issuer and their proceeds.
This Note shall be governed by and construed in accordance with the laws of
the State of New York, without reference to its provisions that would result
in the application of the laws of another State.
Unless the certificate of authentication on this Note has been executed by or
on behalf of the Indenture Trustee, by manual or facsimile signature, this
Note shall not be entitled to any benefit under the Indenture, or be valid for
any purpose.
In Witness Whereof, the Issuer has caused this Note to be duly executed.
Dated:
Wilmington Trust Company
not in its individual capacity but solely
as Owner Trustee on behalf of the Trust
By: ____________________________
A-1-6
Certificate of Authentication:
This is one of the Notes referenced
in the within-mentioned Indenture.
THE BANK OF NEW YORK , not in its
individual capacity but solely as Indenture Trustee
By: ________________________
Authorized Officer
A-1-7
EXHIBIT B
FORM OF CUSTODIAL AGREEMENT
==============================================================================
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 2007-B
Issuer
COUNTRYWIDE HOME LOANS, INC.
Master Servicer
THE BANK OF NEW YORK
Indenture Trustee
TREASURY BANK, A DIVISION OF COUNTRYWIDE BANK, F.S.B.
Custodian
------------------------------
CUSTODIAL AGREEMENT
Dated as of [___________], 20[__]
20[__]-[_]
------------------------------
==============================================================================
B-1
CUSTODIAL AGREEMENT
This Custodial Agreement, dated as of [______________], 20[__] (this
"Agreement"), among CWHEQ, Inc. (the "Depositor"), Countrywide Home Loans,
Inc., as master servicer (the "Master Servicer"), CWHEQ Revolving Home Equity
Loan Trust, Series 200[o ]- [o ] (the "Issuer"), and Treasury Bank, a division
of Countrywide Bank, F.S.B., as agent, custodian, and bailee for the Owner
Trustee as owner and the Indenture Trustee as secured party (when acting for
the Issuer, the "Trust Custodian," and when acting for the Indenture Trustee,
the "Indenture Custodian," and when referring to both capacities, the
"Custodian"), and The Bank of New York, as indenture trustee (in that capacity
the "Indenture Trustee"),
WITNESSETH:
WHEREAS, the Depositor will sell all of its interest in the Mortgage
Loans to the Issuer pursuant to the Sale and Servicing Agreement; and
WHEREAS, the Issuer will Grant a Security Interest to the Indenture
Trustee for the benefit of the Secured Parties in all of the Issuer's interest
in the Collateral; and
WHEREAS, the Issuer wants to hold its assets through a custodian acting
as its agent and bailee under a custodial agreement, and authorize the
custodian to deliver the Collateral to the Indenture Trustee; and
WHEREAS, the Indenture Trustee wants to hold the Collateral through a
custodian acting as its agent and bailee under a custodial agreement in
connection with the Issuer's delivery of the Collateral to the Indenture
Trustee;
NOW, THEREFORE, the parties agree as follows.
Section 1. Defined Terms and Rules of Construction.
Capitalized terms used but not otherwise defined in this Agreement have
the meanings given to them in the Master Glossary of Defined Terms. In
addition, Section 1.04 (Rules of Construction) of the Indenture is
incorporated by reference with appropriate substitution of this Agreement for
references in that Section to the Indenture so that the language of that
Section will read appropriately as applying to this Agreement.
Section 2. Acknowledgment of Receipt and Certification;
Appointment as Custodian.
(a) Appointment as Custodian; Acknowledgment of Receipt.
The Issuer appoints the Trust Custodian to act as its agent, custodian,
and bailee to accept delivery of the items transferred to it under the Sale
and Servicing Agreement and to hold them for the Issuer, and deliver any of
them to the Indenture Trustee as called for under the Indenture. The Indenture
Trustee appoints the Indenture Custodian to act as its agent, custodian, and
bailee to maintain custody of the Mortgage Files for the Indenture Trustee for
the benefit of
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the Noteholders and the Credit Enhancer. Treasury Bank, a division of
Countrywide Bank, F.S.B. accepts both of these appointments. The Trust
Custodian will maintain custody of the items transferred to it under the Sale
and Servicing Agreement that are not delivered to the Indenture Trustee
subject to instructions from the Issuer. The Indenture Custodian will maintain
continuous custody of the Mortgage Files at its office identified in Section 3
until (i) the Indenture Trustee delivers to the Indenture Custodian an
Officer's Certificate to the effect that the conditions for the release of
Collateral have been satisfied or (ii) the conditions specified in Section
4(b) for the release of the Mortgage Files to the Master Servicer have been
met. In performing its duties under this Agreement, the Custodian agrees to
act with the degree of care and skill consistent with the degree of care and
skill that the Custodian exercises with respect to the loan files relating to
similar loans owned, serviced, or held as custodian by the Custodian, and the
Custodian agrees to follow its customary policies and procedures.
(b) Review and Certification.
In connection with the transfers under Sections 2.01(a) and 2.01(b) of
the Sale and Servicing Agreement by the Depositor, the Depositor is required
to effect certain deliveries to the Issuer and the Indenture Trustee under
Section 2.01(d) of the Sale and Servicing Agreement. The Trust Custodian shall
accept those deliveries for the Issuer, and shall make the deliveries to the
Indenture Trustee required of the Issuer. The Indenture Custodian acting as
custodian for the Indenture Trustee shall accept those deliveries.
On the Closing Date, the Custodian will execute and deliver to the
Depositor, the Master Servicer, the Sponsor, the Indenture Trustee, and the
Credit Enhancer (with a copy to the Issuer) an Initial Certification in the
form of Exhibit A. Based on its review and examination, the Custodian
will acknowledge that the documents identified in the Initial
Certification appear regular on their face (i.e. are not mutilated,
damaged, defaced, torn, or otherwise physically altered) and relate to
each Mortgage Loan. No later than thirty-two days after the Closing
Date, if Mortgage Loans have been delivered after the Closing Date
pursuant to Section 2.01(d) of the Sale and Servicing Agreement, the
Custodian will execute and deliver to the Depositor, the Master
Servicer, the Sponsor, the Indenture Trustee, and the Credit Enhancer
(with a copy to the Issuer) a Delay Delivery Certification in the form
of Exhibit B. Based on its review and examination, the Custodian will
acknowledge that the documents identified in the Delay Delivery
Certification appear regular on their face (i.e. are not mutilated,
damaged, defaced, torn, or otherwise physically altered) and relate to
each Mortgage Loan.
Not later than 180 days after the Closing Date, the Custodian
will deliver to the Depositor, the Master Servicer, the Sponsor, the
Indenture Trustee, and the Credit Enhancer (with a copy to the Issuer)
a Final Certification in the form of Exhibit C, noting any applicable
exceptions. For the purpose of the Final Certification, the title
policy required for the Mortgage File is any of the final original
title policy, a signed binder or commitment for a title policy, or a
preliminary title report (in those states in which preliminary title
reports are the customary form of title policy commitment). For any
Mortgage File whose Final Certification is based on a
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signed binder or commitment for a title policy or a preliminary title report
(in those states in which preliminary title reports are the customary form of
title policy commitment), the Custodian will deliver to the Depositor,
the Master Servicer, the Sponsor, the Indenture Trustee, and the Credit
Enhancer (with a copy to the Issuer), not later than the one year
anniversary of the Closing Date, a further Final Certification in the
form of Exhibit D, noting any applicable exceptions. For the purpose of
this further Final Certification, the title policy required for the
Mortgage File must be the final original title policy.
If, in the course of its review in connection with the Final
Certification, the Custodian finds any document constituting a part of a
Mortgage File that does not meet the requirements of Section 2.02 of the Sale
and Servicing Agreement, the Custodian shall list the defect as an exception
in the Final Certification.
The Custodian is not obligated to examine the documents delivered to it
to determine that they are genuine, enforceable, or appropriate for the
represented purpose, or that they have actually been recorded in the real
estate records, or that they are other than what they purport to be on their
face.
In reviewing any Mortgage File pursuant to this Section, the Custodian
is not responsible for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form (except, if applicable, to determine if the Issuer or the Indenture
Trustee is the assignee or endorsee), whether any document has been recorded
in accordance with the requirements of any applicable jurisdiction, or whether
a blanket assignment is permitted in any applicable jurisdiction, whether any
person executing any document is authorized to do so or whether any signature
on any document is genuine, but shall only be required to determine whether a
document has been executed, that it appears to be what it purports to be, and,
where applicable, that it purports to be recorded.
The Sponsor will deliver and the Indenture Custodian will maintain
continuous custody at its office identified in Section 3 of the documents
required to be held by the Indenture Trustee in accordance with Section 2.01
of the Sale and Servicing Agreement with respect to any Eligible Substitute
Mortgage Loans.
The Master Servicer shall promptly deliver to the Indenture Custodian,
and the Indenture Custodian will maintain continuous custody at its office
identified in Section 3 of the originals of any other documents constituting
the Mortgage File that come into the possession of the Master Servicer from
time to time.
Section 3. Maintenance of Office.
The Custodian agrees to maintain the items for which it acts as Trust
Custodian or Indenture Custodian at the Indenture Custodian's facilities.
Section 4. Duties of Custodian.
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(a) Safekeeping. The Indenture Custodian shall (i) segregate the
Mortgage Files from all other documents in the Indenture Custodian's
possession; (ii) identify the Mortgage Files as being held, and hold the
Mortgage Files, for the Indenture Trustee as secured party for the benefit of
all present and future Noteholders and the Credit Enhancer; (iii) maintain at
all times a current inventory of the Mortgage Files; and (iv) secure the
Mortgage Files in fire resistant facilities and conduct periodic physical
inspections of them in accordance with customary standards for custody of this
type. The Indenture Custodian will promptly report to the Issuer and the
Indenture Trustee any failure on its part to hold the Mortgage Files as
provided in this Agreement and promptly take appropriate action to remedy the
failure.
(b) Stamping Trigger Event. If a Stamping Trigger Event has occurred
in accordance with Section 2.02(e) of the Sale and Servicing Agreement and the
Credit Enhancer so instructs the Custodian in writing, the Custodian, within
30 days of such written instruction by the Credit Enhancer, will stamp on the
blank endorsement on each loan agreement the following: "CWHEQ Revolving Home
Equity Loan Trust, Series 200[o ]-[o ], The Bank of New York, as Indenture
Trustee." On the earlier of the completion of the stamping and 60 days after
the receipt by the Custodian of the notice mentioned above, the Credit
Enhancer shall have the right to inspect the loan agreements upon 5 day's
written notice to the Custodian, the Indenture Trustee and the Sponsor. If the
Custodian fails to stamp the loan agreements in accordance with the
requirements of this Section 4(b), the Custodian will make the Mortgage Loans
available for stamping by the Credit Enhancer or its agent under the
supervision (but not the direction) of the Custodian. All costs in connection
with any stamping in accordance with this Section 4(b) shall be at the sole
expense of the Credit Enhancer and shall not be charged to the Sponsor, the
Trust, or the Custodian. The fees for the stamping will be mutually agreed
between the Custodian and the Credit Enhancer before stamping the loan
agreements. If a Mortgage Loan is released from the lien of the Indenture in
accordance with the terms hereof the stamping shall be removed from the
related loan agreement at the sole expense of the Credit Enhancer.
(c) Release of Documents. On receipt by the Indenture Custodian of the
certification of the Master Servicer, in physical or electronic form,
substantially in the form of Exhibit D to the Sale and Servicing Agreement,
the Indenture Custodian shall release to the Master Servicer the related
Mortgage Files for the Mortgage Loan covered by the certification. The
certification may be delivered to the Indenture Custodian in a mutually agreed
electronic format, and to the extent the request originates on its face from a
servicing officer, need not be manually signed.
Section 5. Access to Records.
The Custodian shall permit the Indenture Trustee, the Issuer, the Master
Servicer, the Credit Enhancer, or their respective duly authorized officers,
attorneys, or auditors, and the supervisory agents and examiners of each of
them, to inspect the items delivered to it under this Agreement and the books
and records maintained by the Custodian pursuant to this Agreement,
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without charge but only after not less than two Business Days' prior notice
and during normal business hours at the offices of the Custodian.
Section 6. Instructions; Authority to Act.
The Indenture Custodian may follow any instructions with respect to the
Collateral received in the form of an Officer's Certificate of the Indenture
Trustee. The instructions may be general or specific in terms. An executed
incumbency certificate of the Indenture Trustee certifying the authority of
certain officers to take specified actions may be accepted by the Indenture
Custodian as conclusive evidence of the authority of the officers to act and
may be considered in full force until receipt of written notice to the
contrary by the Indenture Custodian from the Indenture Trustee.
The Trust Custodian may follow any instructions with respect to any
items held exclusively for the Issuer received in the form of an Officer's
Certificate of the Issuer. The instructions may be general or specific in
terms. An executed incumbency certificate of the Issuer certifying the
authority of certain officers to take specified actions may be accepted by the
Trust Custodian as conclusive evidence of the authority of the officers to act
and may be considered in full force until receipt of written notice to the
contrary by the Trust Custodian from the Issuer.
Section 7. Advice of Counsel.
The Custodian may rely and act on the advice of counsel, including
in-house counsel, with respect to its performance under this Agreement as
Custodian and shall not be liable for any action reasonably taken pursuant to
advice of counsel.
Section 8. Representations and Warranties.
The Custodian represents and warrants that on the Closing Date:
(a) it is a national association duly organized, validly existing, and
in good standing under the laws of its place of organization;
(b) it has full power and authority to execute, deliver, and perform
this Agreement, and has taken all necessary action to authorize the execution,
delivery, and performance by it of this Agreement;
(c) the consummation of the transactions contemplated by this Indenture
and the fulfillment of its terms do not conflict with, result in any breach
of, or constitute (with or without notice or lapse of time) a default under,
the charter or bylaws of the Custodian or any agreement or other instrument to
which it is a party or by which it is bound;
(d) to the Custodian's best knowledge, no proceedings or investigations
concerning the Custodian are pending or threatened before any court,
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over it or its properties:
(1) asserting the invalidity of this Agreement,
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(2) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or
(3) seeking any determination that might affect its performance of
its obligations under this Agreement or the validity or enforceability
of this Agreement; and
(e) it is acting solely as the agent for the Indenture Trustee.
Section 9. Effective Period, Termination, and Amendment, and Interpretive
and Additional Provisions.
This Agreement shall become effective as of its date and shall continue
in full force until terminated in accordance with its terms. This Agreement
may be terminated by either the Indenture Trustee with the consent of the
Issuer and the Credit Enhancer or by the Custodian in a writing delivered or
mailed, postage prepaid, to the other parties and the Credit Enhancer. The
termination shall take effect no sooner than sixty days after the date of
delivery or mailing. Concurrently with, or as soon as practicable after, the
termination of this Agreement, the Indenture Custodian shall deliver the
Collateral to the Indenture Trustee (or to a person designated by the
Indenture Trustee) anywhere the Indenture Trustee reasonably designates with
the consent of the Credit Enhancer, and the Trust Custodian shall deliver any
items held exclusively for the Issuer to the Issuer (or to a person designated
by the Issuer) anywhere the Issuer reasonably designates with the consent of
the Credit Enhancer.
Section 10. Limitation of Liability.
(a) The Custodian undertakes to perform only the obligations specified
in this Agreement. The Issuer, the Owner Trustee, Master Servicer, and
Indenture Trustee acknowledge that no implied obligations exist under this
Agreement. Neither the Custodian nor any of its affiliates, officers,
directors, employees, or agents shall be liable, directly or indirectly, for
any damages or expenses arising out of the services performed under this
Agreement other than damages that result from their gross negligence, willful
misconduct, or bad faith. The Custodian and its officers, directors,
employees, and agents will not be liable for any consequential, indirect,
punitive, or special damages.
(b) Except as provided in Section 2, the Custodian makes no warranty or
representation and has no responsibility for the completeness, validity,
sufficiency, value, genuineness, ownership, or transferability of the Mortgage
Loans or any of the documents in the Mortgage Files.
(c) The Custodian need not expend or risk its own funds or otherwise
incur financial liability in the performance of any of its duties under this
Agreement, or in the exercise of its rights, if the Custodian believes that
repayment of the funds or adequate indemnity against the risk or liability is
not reasonably assured to it.
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(d) Without limiting the generality of the foregoing, the Custodian may
rely on and shall be protected in acting in good faith on any notice or other
communication received by it that it reasonably believes to be genuine and
duly authorized with respect to all matters pertaining to this Agreement and
its duties under this Agreement.
(e) The Custodian shall not be responsible or liable for, and makes no
representation or warranty with respect to, the validity, adequacy, or
perfection of any lien on or security interest in any Mortgage Loan.
(f) Any other provision of this Agreement to the contrary
notwithstanding, the Custodian shall have no notice of, and shall not be bound
by, any other document or agreement executed or delivered in connection with,
or intended to control any part of, the transactions anticipated by or
referred to in this Agreement unless the Custodian is a signatory party to
that document or agreement. Notwithstanding the foregoing sentence, the
Custodian shall be deemed to have notice of the terms (including definitions
not otherwise set forth in full in this Agreement) of other documents and
agreements executed or delivered in connection with, or intended to control
any part of, the transactions anticipated by or referred to in this Agreement,
to the extent the terms are referenced, or are incorporated by reference, into
this Agreement only as long as the Indenture Trustee has provided a copy of
the document or agreement to the Custodian.
(g) The Custodian shall have only the obligations expressly set forth in
this Agreement or in a written amendment to this Agreement executed by the
parties to this Agreement or their successors and assigns. If any provision of
this Agreement implies or requires that action or forbearance be taken by a
party, but is silent as to which party has the duty to act or refrain from
acting, the parties agree that the Custodian shall not be the party required
to take the action or refrain from acting. In no event shall the Custodian
have any responsibility to ascertain or take action except as expressly
provided in this Agreement.
(h) Nothing in this Agreement shall impose on the Custodian any duty to
qualify to do business in any jurisdiction, other than (i) any jurisdiction
where any Mortgage File is or may be held by the Custodian from time to time
under this Agreement, and (ii) any jurisdiction where its ownership of
property or conduct of business requires such qualification and where failure
to qualify could have a material adverse effect on the Custodian or its
property or business or on the ability of the Custodian to perform its duties
under this Agreement.
(i) The Custodian may execute any of its duties under this Agreement
through any of its agents, attorneys-in-fact, or affiliates. Any agent,
attorney-in-fact, or affiliate of the Custodian (and any affiliate's
directors, officers, agents, and employees) that performs duties in connection
with this Agreement shall be entitled to the same benefits of the
indemnification, waiver, and other protective provisions to which the
Custodian is entitled under this Agreement, but the Custodian shall remain
responsible for the performance of those duties.
B-8
(j) The Custodian shall not be responsible for delays or failures in
performance resulting from acts beyond its control. Acts beyond its control
include acts of God, strikes, lockouts, riots, acts of war or terrorism,
epidemics, nationalization, expropriation, currency restrictions, governmental
regulations superimposed after the fact, fire, communication line failures,
computer viruses, power failures, earthquakes, or other disasters.
Section 11. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS
THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 12. Amendment.
This agreement may not be amended without the written consent of all the
parties.
Section 13. Notices.
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 when
personally delivered or sent by facsimile or overnight courier or three
Business Days after it was sent to its intended recipient if sent by first
class mail. Unless otherwise specified in a notice sent or delivered in
accordance with the provisions of this Section, notices, demands,
instructions, consents, and other communications in writing shall be given to
or made on the respective parties at their respective addresses indicated in
the Adoption Annex attached to the Indenture.
Section 14. Binding Effect.
This Agreement shall be binding on and inure to the benefit of the
parties to this Agreement and their respective successors and assigns. Except
as contemplated in this Agreement, none of the parties may assign any of its
rights and obligations under this Agreement or any interest in this Agreement
without the consent of the other parties and the Credit Enhancer. The
Custodian may assign its rights and obligations under this Agreement, in whole
or in part, to any affiliate with the consent of the Credit Enhancer. The
Custodian agrees to notify the other parties of any assignment. An affiliate
is any entity that directly or indirectly is under common control with the
Custodian, or is under contract to be under common control with the Custodian,
and includes a subsidiary or parent company of the Custodian.
Section 15. Counterparts.
B-9
This Agreement may be executed in one or more counterparts and by the
different parties to this Agreement on separate counterparts, each of which,
when so executed, shall be an original and all of which shall constitute one
agreement.
Section 16. Severability of Provisions.
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 or affecting the validity or enforceability of
the provision in any other jurisdiction.
Section 17. Third Party Beneficiary.
The Credit Enhancer is a third party beneficiary of this Agreement.
Section 18. Merger of Custodian.
Any entity into which the Custodian may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion, or consolidation to which the Custodian is a party, or any entity
succeeding to the business of the Custodian, shall be the successor of the
Custodian under this Agreement, without the execution or filing of any paper
or any further act on the part of any of the parties to this Agreement,
anything in this Agreement to the contrary notwithstanding.
Section 19. Indemnification.
The Issuer agrees to indemnify the Custodian and its affiliates,
directors, officers, agents, and employees, against any losses, claims,
damages, or liabilities of any kind, including reasonable attorneys' fees,
that may arise against Custodian or its affiliates, directors, officers,
agents, or employees, in any way arising out of this Agreement or any action
taken or not taken by Custodian or its permitted successors and assigns under
this Agreement unless they arise because of the breach by the Custodian of its
obligations under this Agreement, which breach was caused by the gross
negligence, lack of good faith, or willful misconduct on the part of Custodian
or any of its affiliates, directors, officers, agents, or employees.
The Custodian agrees to indemnify the Issuer against any losses, claims,
damages, or liabilities of any kind, including reasonable attorneys' fees, it
suffers arising out of the gross negligence, lack of good faith, or willful
misconduct on the part of Custodian or any of its affiliates, directors,
officers, agents, or employees.
The foregoing indemnifications shall survive any termination or
expiration of this Agreement or the resignation or removal of the Custodian.
Section 20. Dispute Resolution, Arbitration.
This Agreement evidences a transaction involving interstate commerce.
Any disputes arising from this Agreement shall be decided by binding
arbitration which shall be conducted, at the request of any party, in New
York, New York, before one arbitrator designated by the
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American Arbitration Association (the "AAA"), in accordance with the
Commercial Arbitration Rules of the AAA, and to the maximum extent applicable,
the United States Arbitration Act (Title 9 of the United States Code).
Notwithstanding anything in this Agreement to the contrary, any party may
proceed to a court of competent jurisdiction to obtain equitable relief at any
time. An arbitrator shall have no authority to award punitive damages or other
damages not measured by the prevailing party's actual damages. To the maximum
extent practicable, an arbitration proceeding under this Agreement shall be
concluded within 180 days of the filing of the dispute with the AAA. This
arbitration clause shall survive any termination, amendment, or expiration of
the Agreement and if any provision of this arbitration clause is found to be
unenforceable, the remaining parts of the arbitration clause shall not be
affected and shall remain fully enforceable.
Section 21. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of the Issuer, in the
exercise of the powers and authority conferred and vested in it under the
Trust Agreement, (b) each of the representations, undertakings and agreements
herein made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but
is made and intended for the purpose of binding only the Issuer and (c) under
no circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligations, representation, warranty or covenant
made or undertaken by the Issuer under this Agreement or the other related
documents.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
CWHEQ, INC.
By: _______________________________
Name:
Title:
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 200[O ]- [O ]
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee
By: _______________________________
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Indenture Trustee
By: _______________________________
Name:
Title:
TREASURY BANK,
A DIVISION OF COUNTRYWIDE BANK, F.S.B.,
as Custodian for the Indenture Trustee
By: _______________________________
Name:
Title:
TREASURY BANK,
A DIVISION OF COUNTRYWIDE BANK, F.S.B.,
as Custodian for the Issuer
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By: _______________________________
Name:
Title:
B-13
EXHIBIT A
TO CUSTODIAL AGREEMENT
FORM OF INITIAL CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Indenture Trustee]
[Credit Enhancer]
_____________________
_____________________
Re: Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer,
CWHEQ Revolving Home Equity Loan Trust, Series 200[o ]- [o], as
the Trust, and The Bank of New York, as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes, Series 200[o ]- [o]
------------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Custodian for the Indenture Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule delivered pursuant to
Section 2.01(d) of the Sale and Servicing Agreement (other than any Mortgage
Loan paid in full or any Mortgage Loan listed on the attached Document
Exception Report) it has received, among other things:
(i) the original Mortgage Note endorsed in blank or, if the
original Mortgage Note has been lost or destroyed and not replaced, an
original lost note affidavit from the Sponsor stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy of
the related Mortgage Note; and
B-A-1
(ii) unless the Mortgage Loan is registered on the MERS(R) System,
an original Assignment of Mortgage in blank in recordable form.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face (i.e. are not
mutilated, damaged, defaced, torn, or otherwise physically altered) and
related to such Mortgage Loan.
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectibility,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction,
or whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether
any signature on any document is genuine, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
Treasury Bank,
a division of Countrywide Bank, F.S.B.,
as Custodian for the Indenture Trustee
By:____________________________
Name:
Title:
cc: [Issuer]
B-A-2
EXHIBIT B
TO CUSTODIAL AGREEMENT
FORM OF DELAY DELIVERY CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Indenture Trustee]
[Credit Enhancer]
_____________________
Re: Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer,
CWHEQ Revolving Home Equity Loan Trust, Series 200[o ]- [o ], as
the Trust, and The Bank of New York, as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes, Series 200[o ]-[o ]
------------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Custodian for the Indenture Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule delivered pursuant to
Section 2.01(d) of the Sale and Servicing Agreement (other than any Mortgage
Loan paid in full or any Mortgage Loan listed on the attached Document
Exception Report) it has received, among other things:
(i) the original Mortgage Note endorsed in blank or, if the
original Mortgage Note has been lost or destroyed and not replaced, an
original lost note affidavit from the Sponsor stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy of
the related Mortgage Note; and
(ii) unless the Mortgage Loan is registered on the MERS(R) System,
an original Assignment of Mortgage in blank in recordable form.
B-B-1
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face (i.e. are not
mutilated, damaged, defaced, torn, or otherwise physically altered) and
related to such Mortgage Loan.
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectibility,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction,
or whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether
any signature on any document is genuine, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
Treasury Bank,
a division of Countrywide Bank, F.S.B.,
as Custodian for the Indenture Trustee
By:____________________________
Name:
Title:
cc: [Issuer]
B-B-2
EXHIBIT C
TO CUSTODIAL AGREEMENT
FORM OF FINAL CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Indenture Trustee]
[Credit Enhancer]
_____________________
Re: Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer,
CWHEQ Revolving Home Equity Loan Trust, Series 200[o ]-[o ], as
the Trust, and The Bank of New York, as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes, Series 200[o ]-[o ]
------------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Custodian for the Indenture Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attached Document Exception
Report) it has received:
(i) the original Mortgage Note endorsed in blank or, if the
original Mortgage Note has been lost or destroyed and not replaced, an
original lost note affidavit from the Sponsor stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy of
the related Mortgage Note;
(ii) unless the Mortgage Loan is registered on the MERS(R) System,
an original Assignment of Mortgage in blank in recordable form;
B-C-1
(iii) the original recorded Mortgage, noting the presence of the
MIN of the Mortgage Loan and language indicating that the Mortgage Loan
is a MOM Loan if the Mortgage Loan is a MOM Loan, or, if, in connection
with any Mortgage Loan, the original recorded Mortgage with evidence of
recording thereon cannot be delivered on or before the Closing Date or
Subsequent Closing Date, as applicable, because of a delay caused by the
public recording office where such original Mortgage has been delivered
for recordation or because such original Mortgage has been lost, an
accurate copy of such Mortgage, together with (i) in the case of a delay
caused by the public recording office, an Officer's Certificate of the
Sponsor which may be in the form of a blanket certificate of the Sponsor
covering more than one Mortgage stating that such original Mortgage has
been dispatched to the appropriate public recording official or (ii) in
the case of an original Mortgage that has been lost, a copy certified by
the appropriate county recording office where such Mortgage is recorded;
(iv) if applicable, the original of each intervening assignment
needed for a complete chain of title for the mortgage from its original
mortgagee or beneficiary to the Trust or in blank (or if the Mortgage
Loan is registered on the MERS(R) System to MERS and noting the presence
of a MIN) with evidence of recording thereon, or, if any such original
intervening assignment has not been returned from the applicable
recording office or has been lost, a true and correct copy thereof,
together with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Sponsor or the Depositor, which
may be a blanket certificate covering more than one intervening
assignment, stating that such original intervening assignment has been
dispatched to the appropriate public recording official for recordation
or (ii) in the case of an original intervening assignment that has been
lost, a copy certified by the appropriate county recording office where
such Mortgage is recorded;
(v) a title policy "(e.g., ALTA, FACT, PIRT, etc.)", a signed
binder or commitment for a title policy, or a preliminary title report
(in those states in which preliminary title reports are the customary
form of title policy commitment) for each Mortgage Loan with a Credit
Limit in excess of $100,000;
(vi) the original of any guaranty executed in connection with the
Mortgage Note;
(vii) the original of each assumption, modification, consolidation
or substitution agreement, if any, relating to the Mortgage Loan; and
(viii) any security agreement, chattel mortgage or equivalent
instrument executed in connection with the Mortgage.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face (i.e. are not
mutilated, damaged, defaced, torn, or otherwise physically altered) and
related to such Mortgage Loan, and (b) the information set
B-C-2
forth in items (ii), (iii), and (iv), of the itemization of contents of the
"Mortgage Loan Schedule" in the Master Glossary of Defined Terms to the
Indenture accurately reflects information set forth in the Mortgage File, and
(c) the information set forth in item (v) of the itemization of contents of
the "Mortgage Loan Schedule" in the Master Glossary of Defined Terms to the
Indenture was delivered to the Custodian.
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectibility,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction,
or whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether
any signature on any document is genuine, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
Treasury Bank,
a division of Countrywide Bank, F.S.B.,
as Custodian for the Indenture Trustee
By:____________________________
Name:
Title:
cc: [Issuer]
B-C-3
EXHIBIT D
TO CUSTODIAL AGREEMENT
FORM OF FURTHER FINAL CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Indenture Trustee]
[Credit Enhancer]
______________________
Re: Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer,
CWHEQ Revolving Home Equity Loan Trust, Series 200[o ]- [o ], as
the Trust, and The Bank of New York, as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes, Series 200[o ]- [o]
------------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Custodian for the Indenture Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attached Document Exception
Report) it has received:
(i) for each Mortgage Loan with a Credit Limit in excess of
$100,000, a final original title policy "(e.g., ALTA, FACT, PIRT,
etc.)".
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face (i.e. are not
mutilated, damaged, defaced, torn, or otherwise physically altered) and
related to such Mortgage Loan.
B-D-1
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectibility,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction,
or whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether
any signature on any document is genuine, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
Treasury Bank,
a division of Countrywide Bank, F.S.B.,
as Custodian for the Indenture Trustee
By: ________________________
Name:
Title:
cc: [Issuer]
X-X-0
XXXXX 0
XXXXXX XXXXXXXX OF DEFINED TERMS
===============================================================================
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2007-B
------------------------------------
MASTER GLOSSARY OF DEFINED TERMS
Dated as of March 30, 2007
------------------------------------
===============================================================================
MASTER GLOSSARY OF DEFINED TERMS..............................................1
ADOPTION ANNEX..............................................................A-1
i
MASTER GLOSSARY OF DEFINED TERMS
"Accelerated Principal Payment Amount" for each Payment Date
beginning with the fourth Payment Date means the amount of Available Interest
Collections applied on that Payment Date as a payment of principal to decrease
the Note Principal Balance of the Principal Amount Notes until the difference
between the Loan Pool Balance (reduced by Net Draws) and the Note Principal
Balance is an amount equal to the Required Transferor Subordinated Amount for
the Payment Date.
"Accountant's Attestation" as to any person means a report of a
registered public accounting firm reasonably acceptable to the Depositor that
attests to, and reports on, the Servicing Criteria Compliance Assessment
Report made by the person. The attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act, including that if an overall opinion cannot be expressed, the
registered public accounting firm shall state in the report why it was unable
to express an overall opinion. The report must be available for general use
and not contain restricted use language.
"Act" has the meaning specified in Section 11.03(a) of the
Indenture.
"Additional Balance" as to any Mortgage Loan means the aggregate
amount of all additional borrowings by the mortgagor under the relevant Credit
Line Agreement after the Cut-off Date or the related Subsequent Cut-off Date,
as applicable, for the Mortgage Loan.
"Additional Home Equity Loans" means the Mortgage Loans funded
after the Cut-off Date acquired by the Trust on a Subsequent Closing Date
pursuant to Section 2.01(b) of the Sale and Servicing Agreement.
"Additional Loan Account" means the trust account maintained by
the Indenture Trustee into which is deposited on the Closing Date the amount
specified in the Adoption Annex. The account will be an Eligible Account, and
will be available only for purchases of Additional Home Equity Loans for the
Trust.
"Adjustment Date" for any Interest Period commencing with the
second Interest Period, the second LIBOR Business Day preceding the first day
of the Interest Period.
"Administration Agreement" means the Administration Agreement,
dated as of the Closing Date, among the Administrator, the Trust, and the
Indenture Trustee.
"Administrator" means the person acting as such under the
Administration Agreement.
"Adoption Annex" means the Adoption Annex contained in this Master
Glossary of Defined Terms.
"Affiliate" of any person means any other person controlling,
controlled by or under common control with the person. For purposes of this
definition, "control" means the power to direct the management and policies of
a person, directly or indirectly, whether through
1
ownership of voting securities, by contract or otherwise and "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Aggregate Note Interest" for each Payment Date means the Note
Interest for the Principal Amount Notes for that Payment Date and the Unpaid
Investor Interest Shortfall (other than any Basis Risk Carryforward) for the
Payment Date
"Applicable Margin" has the meaning given to it in the Adoption
Annex.
"Appraised Value" for any Mortgaged Property means the value
established by any of the following: (i) with respect to Credit Line
Agreements with Credit Limits greater than $100,000, by a full appraisal, (ii)
with respect to Credit Line Agreements with Credit Limits equal to or less
than $100,000, by either a drive by inspection or electronic appraisal of the
Mortgaged Property made to establish compliance with the underwriting criteria
then in effect in connection with the application for the Mortgage Loan
secured by the Mortgaged Property, and (iii) with respect to any Mortgage Loan
as to which the Servicer consents to a new senior lien pursuant to Section
3.01(b) of the Sale and Servicing Agreement, in compliance with the
underwriting criteria then in effect in connection with the application for
the related senior mortgage loan.
"Asset Balance" on any day for any Mortgage Loan, other than a
Liquidated Mortgage Loan or a Charged-off Mortgage Loan, means its Cut-off
Date Asset Balance, plus any Additional Balance for the Mortgage Loan, minus
all collections credited as principal against the Asset Balance of the
Mortgage Loan in accordance with the related Credit Line Agreement. The Asset
Balance of a Liquidated Mortgage Loan is zero, and the Asset Balance of a
Charged-off Mortgage Loan after the related Charged-off Date is zero.
"Assets" means all assets and property of the Trust pursuant to
the Sale and Servicing Agreement.
"Assignment of Mortgage" for any mortgage means an assignment,
notice of transfer, or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the mortgage to the Trust, which assignment,
notice of transfer, or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged
Properties located in the same jurisdiction.
"Auction Period" with respect to a Charged-off Mortgage Loan means
the period commencing on the related Charge-off Date and ending one-year after
such date.
"Authorized Officer" for any corporation or other entity
establishing such designations means the Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, President, Executive Vice
President, any Vice President, the Secretary, or the Treasurer of the
corporation, for any partnership means any of its general partners, and for
any person means any person who
2
is identified on a list of Authorized Officers delivered by the person to the
Indenture Trustee on the Closing Date. These lists may be updated from time to
time.
"Available Interest Collections" for any Payment Date means the
Interest Shortfall Deposit plus the product of the Interest Collections for
that Payment Date and the Floating Allocation Percentage for that Payment
Date.
"Available Investor Interest" for any Payment Date means the sum
of the following amounts, but in each case only to the extent they will be
available to be applied to make payments to the Principal Amount Notes
pursuant to Section 8.03(a)(iii) of the Indenture on the Payment Date:
o Available Interest Collections on deposit in the
Collection Account or the Payment Account available to pay
interest on the Notes as of the close of business on the third
Business Day preceding the Payment Date, and
o the Subordinated Transferor Collections on deposit in the
Collection Account or the Payment Account on the third Business
Day preceding the Payment Date.
"Available Principal Collections" for any Payment Date are the
excess of Principal Collections for the Payment Date over the Additional
Balances for the related Collection Period.
"Basis Risk Carryforward" for any Payment Date and the Principal
Amount Notes means the sum of
o Basis Risk Carryforward for the Principal Amount Notes
remaining unpaid from prior Payment Dates,
o in any Interest Period in which the Note Rate is the
Maximum Rate, the excess of
(a) the amount of interest that would have accrued on the
Principal Amount Notes during the related Interest Period had interest been
determined pursuant to the Interest Formula Rate over
(b) the interest actually accrued at the Note Rate on the
Principal Amount Notes during the Interest Period, and
o interest at the Interest Formula Rate (as adjusted from
time to time) on Basis Risk Carryforward for the Principal Amount
Notes remaining unpaid from prior Payment Dates for the period
from the previous Payment Date to the current Payment Date.
"Basis Risk Carryforward Reserve Fund" means the Eligible Account
established and maintained by the Indenture Trustee on behalf of and for the
benefit of the Principal Amount Notes and the Class C Certificates pursuant to
Section 8.01(c) of the Indenture.
3
"Billing Cycle" for any Mortgage Loan and Collection Period means
the billing period specified in the related Credit Line Agreement and with
respect to which amounts billed are received during the Collection Period.
"Book-Entry Notes" means the Notes.
"Business Day" means any day other than a Saturday, a Sunday, or a
day on which banking institutions in New York, California, or Texas are
authorized or obligated by law, regulation, or executive order to remain
closed.
"Cap Contract" means the transaction relating to the Class A Notes
evidenced by the confirmation (as assigned to the Cap Contract Administrator
pursuant to the Cap Contract Assignment Agreement).
"Cap Contract Account" means the account established and
maintained on the Closing Date by the Indenture Trustee and in its name, in
trust for the benefit of the Class A Notes, pursuant to Section 8.01(c) of the
Indenture.
"Cap Contract Administration Agreement" means the cap contract
administration agreement dated as of the Closing Date among CHL, the Indenture
Trustee, and Cap Contract Administrator.
"Cap Contract Administrator" means The Bank of New York, in its
capacity as cap contract administrator under the Cap Contract Administration
Agreement.
"Cap Contract Assignment Agreement" means the assignment agreement
dated as of the Closing Date among CHL, the Cap Contract Administrator, and
the Cap Counterparty.
"Cap Contract Notional Balance" for each Payment Date means the
amount in the Cap Payment Schedule under "Notional Schedule ($)."
"Cap Contract Termination Date" is as identified in the Adoption
Annex.
"Cap Counterparty" is as identified in the Adoption Annex.
"Cap Payment" for any Payment Date through the Cap Contract
Termination Date means the product of:
(i) the excess of One-Month LIBOR (as determined by the Cap
Counterparty) for the Payment Date over the percentage specified
in the related Cap Payment Schedule for the Payment Date,
(ii) the lesser of the Note Principal Balance of the
Principal Amount Notes as of the related Determination Date and
the Cap Contract Notional Balance for the Payment Date, and
(iii) the actual number of days in the related Accrual
Period divided by 360.
4
"Cap Payment Entitlement" for any Payment Date means any
outstanding Basis Risk Carryforward on that Payment Date before the
application of Available Interest Collections to the payment of such Basis
Risk Carryforward under clause Section 8.03(a)(ix) of the Indenture.
"Cap Payment (Total)" for any Payment Date through the Cap Payment
Termination Date means the amount payable by the Cap Counterparty under the
Cap Contract equal to the product of:
(i) the excess of One-Month LIBOR (as determined by the Cap
Counterparty) for the Payment Date over the applicable Cap
Contract Strike Rate,
(ii) the Cap Contract Notional Balance, and
(iii) the actual number of days in the related Accrual
Period divided by 360.
"Certificate" has the meaning given to it in the Adoption Annex.
"Certificate of Trust" means the Certificate of Trust in the form
of Exhibit A of the Trust Agreement to be filed for the Trust pursuant to
Section 3810(a) of the Statutory Trust Statute.
"Certificate Register" means the register maintained by the
Indenture Trustee pursuant to Section 3.04 of the Trust Agreement.
"Certificateholder" means the registered holder of a Certificate
issued in connection with the creation of the Trust.
"Certification Party" means the entity for which a Certifying
Person acts as an officer, the Certifying Person, and each of the entity's
officers, directors, and Affiliates.
"Certifying Person" means the person who signs a Xxxxxxxx-Xxxxx
Certification.
"Charge-off Date" with respect to a Charged-off Mortgage Loan
means the close of business on the last day of the calendar month in which the
Mortgage Loan became 180 days delinquent.
"Charged-off Mortgage Loan Proceeds" means any Insurance Proceeds
and all other net proceeds received with respect to a Charged-off Mortgage
Loan after the related Charge-off Date in connection with the partial or
complete liquidation of that Charged-off Mortgage Loan, whether through a
trustee's sale, foreclosure sale, auction, or otherwise, or in connection with
any condemnation or partial release of the related Mortgaged Property,
together with the net proceeds received after the related Charge-off Date with
respect to any Mortgaged Property acquired by the Master Servicer by
foreclosure or deed in lieu of foreclosure in connection with that Charged-off
Mortgage Loan, less the sum of related unreimbursed optional advances and any
related Disposition Fee.
"Charged-off Mortgage Loan" means any Mortgage Loan that is 180
days delinquent.
"Class" means a Class of Notes listed in the Adoption Annex.
5
"Class A Notes" has the meaning given to it in the Adoption Annex.
"Class C Balance" on any day means the excess of the aggregate
Asset Balance of the Mortgage Loans on that day over the sum of the Note
Principal Balance of the Principal Amount Notes and the Class R-1 Balance.
"Class C Certificate" means any Class C Certificate executed by
the Owner Trustee and authenticated by the Indenture Trustee substantially in
the form of Exhibit B-1 of the Trust Agreement.
"Class C Share" on any day means a fraction whose numerator is the
Class C Balance and whose denominator is the sum of the Class C Balance and
the Class R-1 Balance, in each case on that day.
"Class E-P Certificate" means any Class E-P Certificate executed
by the Owner Trustee and authenticated by the Indenture Trustee substantially
in the form of Exhibit B-2 of the Trust Agreement.
"Class R-1 Balance" on any day means an amount equal to Net Draws
at the close of business on the previous day.
"Class R-1 Certificate" means any Class R-1 Certificate executed
by the Owner Trustee and authenticated by the Indenture Trustee substantially
in the form of Exhibit B-3 of the Trust Agreement.
"Class R-1 Share" on any day means a fraction whose numerator is
the Class R-1 Balance and whose denominator is the sum of the Class C Balance
and the Class R-1 Balance, in each case on that day.
"Class R-2 Certificate" means any Class R-2 Certificate executed
by the Owner Trustee and authenticated by the Indenture Trustee substantially
in the form of Exhibit B-3 of the Trust Agreement.
"Closing Date" means the Closing Date stated in the Adoption
Annex.
"Code" means the Internal Revenue Code of 1986 and Treasury
regulations promulgated under the Code.
"Collateral" has the meaning given to it in the Granting Clause of
the Indenture.
"Collection Account" means the Eligible Account or Eligible
Accounts created and maintained for the benefit of the Transferor and the
Secured Parties pursuant to Section 3.02(b) of the Sale and Servicing
Agreement.
"Collection Period" for any Payment Date and any Mortgage Loan
means the calendar month preceding the month of the Payment Date (or, in the
case of the first Collection Period, the period from the Cut-off Date through
the date specified in the Adoption Annex).
6
"Combined Loan-to-Value Ratio" for any Mortgage Loan as of any
date means a fraction:
o whose numerator is the sum of (i) the Credit Limit and
(ii) the outstanding principal balance as of the date of execution
of the related original Credit Line Agreement (or any subsequent
date as of which the outstanding principal balance may be
determined in connection with an increase in the Credit Limit for
the Mortgage Loan) of any mortgage loans that are senior or equal
in priority to the Mortgage Loan and that are secured by the same
Mortgaged Property and
o whose denominator is the Valuation of the related
Mortgaged Property.
"Confirmation" means the confirmation with a trade date of March
30, 2007 evidencing the transaction between the Cap Counterparty and the
Sponsor relating to the Cap Contract.
"Corporate Trust Office" means the principal office of the
Indenture Trustee at which at any particular time its corporate trust business
is administered specified in the Adoption Annex, or at any other address the
Indenture Trustee designates by notice to the Noteholders, the Credit
Enhancer, and the Issuer, or the principal corporate trust office of any
successor Indenture Trustee at the address designated by the successor
Indenture Trustee by notice to the Noteholders, the Credit Enhancer, and the
Issuer.
"Credit Enhancement Draw Amount" has the meaning given to it in
the Adoption Annex.
"Credit Enhancer" means the Credit Enhancer identified in the
Adoption Annex.
"Credit Enhancer Default" means the failure by the Credit Enhancer
to make a payment required under the Policy in accordance with its terms.
"Credit Limit" means the maximum Asset Balance for each Mortgage
Loan permitted under the terms of the related Credit Line Agreement.
"Credit Line Agreement" means the related credit line account
agreement for a Mortgage Loan executed by the related mortgagor and any
amendment or modification of it.
"Custodial Agreement" means the Custodial Agreement dated as of
the Closing Date, among the Indenture Trustee, the Issuer, the Master
Servicer, and Treasury Bank, a division of Countrywide Bank, F.S.B., as
custodian.
"Cut-off Date" means either the Initial Cut-off Date or Subsequent
Cut-off Date, as applicable.
"Cut-off Date Asset Balance" for any Initial Mortgage Loan
acquired by the Trust on the Closing Date means its unpaid principal balance
as of the close of business on the Initial Cut-off Date, and for any
Additional Home Equity Loan means its unpaid principal balance as of the close
of business on the relevant Subsequent Cut-off Date.
7
"Defective Mortgage Loan" means a Mortgage Loan subject to
retransfer pursuant to Section 2.02(b) or 2.04(d) of the Sale and Servicing
Agreement.
"Delay Delivery Certification" has the meaning given to it in the
Custodial Agreement.
"Depositor" means CWHEQ, Inc., a Delaware corporation, or its
successor in interest.
"Depository" means a financial institution or other person
maintaining ownership records and effecting book-entry transfers and pledges
of the Notes deposited with it pursuant to an agreement with the Issuer. The
Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(a)(5) of the UCC of the State of New York.
"Determination Date" for any Payment Date means the third Business
Day before the Payment Date.
"Disposition Fee" means the fee payable to the Master Servicer in
connection with the liquidation and sale or foreclosure of any Charged-off
Mortgage Loan, which shall be (i) for each Charged-off Mortgage Loan that is
secured by a junior lien, an amount equal to 10% of the gross proceeds from
such Charged-off Mortgage Loan, regardless of whether those proceeds arise as
a result of a sale, an auction, foreclosure or otherwise and (ii) for each
Charged-off Mortgage Loan that is secured by a first lien, an amount equal to
the master servicing fee that would have accrued on that Mortgage Loan after
the Charge-off Date had it not been charged-off.
"Due Date" for any Mortgage Loan means the twentieth day of the
month.
"XXXXX" means the Securities and Exchange Commission's Electronic
Data Gathering, Analysis and Retrieval system.
"Electronic Ledger" means the electronic master record of home
equity credit line mortgage loans maintained by the Master Servicer or by the
Sponsor, as appropriate.
"Eligible Account" means
(a) an account that is maintained with a depository institution
whose debt obligations throughout the time of any deposit in it have one of
the two highest short-term debt ratings by Standard & Poor's and the highest
short-term debt rating by Moody's,
(b) an account with a depository institution having a minimum
long-term unsecured debt rating of "AA-" by Standard & Poor's and "Baa3" by
Moody's, which accounts are fully insured by either the Savings Association
Insurance Fund or the Bank Insurance Fund of the Federal Deposit Insurance
Corporation,
(c) a segregated trust account maintained with the Indenture
Trustee or an affiliate of the Indenture Trustee in its fiduciary capacity, or
8
(d) an account otherwise acceptable to each Rating Agency and the
Credit Enhancer, as evidenced at closing by delivery of a rating letter by
each Rating Agency and thereafter by delivery of a letter from
(i) each Rating Agency to the Indenture Trustee, within 30
days of receipt of notice of the deposit, to the effect that the
deposit will not cause the Rating Agency to reduce or withdraw its
then-current rating of the Notes (without regard to the Policy),
and
(ii) the Credit Enhancer to the Indenture Trustee, within 30
days of receipt of notice of the deposit, to the effect that the
account is acceptable to it.
"Eligible Investments" means
(a) obligations of, or guaranteed as to principal and interest by,
the United States or any U.S. agency or instrumentality that is backed by the
full faith and credit of the United States;
(b) general obligations of or obligations guaranteed by any State
receiving the highest long-term debt rating of each Rating Agency, or any
lower rating that will not result in a downgrade or withdrawal of the rating
then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(c) commercial paper issued by Countrywide Home Loans, Inc. or any
of its affiliates if it is rated no lower than A-1 by Standard & Poor's and
P-2 by Moody's, and the long-term debt of Countrywide Home Loans, Inc. is
rated at least A3 by Moody's, or any lower ratings that will not result in a
downgrade or withdrawal of the rating then assigned to the Notes by any Rating
Agency (without regard to the Policy);
(d) commercial or finance company paper that is then receiving the
highest commercial or finance company paper rating of each Rating Agency, or
any lower ratings that will not result in a downgrade or withdrawal of the
rating then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(e) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company incorporated
under the laws of the United States or any State and subject to supervision
and examination by federal or State banking authorities, if the commercial
paper or long term unsecured debt obligations of the depository institution or
trust company (or in the case of the principal depository institution in a
holding company system, the commercial paper or long-term unsecured debt
obligations of the holding company, but only if Xxxxx'x is not a Rating
Agency) are then rated in one of the two highest long-term and the highest
short-term ratings of each Rating Agency for the securities, or any lower
ratings that will not result in a downgrade or withdrawal of the rating then
assigned to the Notes by any Rating Agency (without regard to the Policy);
9
(f) demand or time deposits or certificates of deposit issued by
any bank or trust company or savings institution to the extent that the
deposits are fully insured by the FDIC;
(g) guaranteed reinvestment agreements issued by any bank,
insurance company, or other corporation that, at the time of the issuance of
the agreements, will not result in a downgrade or withdrawal of the rating
then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(h) repurchase obligations with respect to any security described
in clauses (a) and (b) above, in either case entered into with a depository
institution or trust company (acting as principal) described in clause (e)
above;
(i) securities (other than stripped bonds, stripped coupons, or
instruments sold at a purchase price in excess of 115% of its face amount)
bearing interest or sold at a discount issued by any corporation incorporated
under the laws of the United States or any State that, at the time of the
investment, have one of the two highest ratings of each Rating Agency (except
if the Rating Agency is Moody's, the rating must be the highest commercial
paper rating of Moody's for the securities), or any lower ratings that will
not result in a downgrade or withdrawal of the rating then assigned to the
Notes by any Rating Agency (without regard to the Policy) as evidenced by a
signed writing delivered by each Rating Agency;
(j) interests in any money market fund that, at the date of
acquisition of the interests in the fund and throughout the time the interests
are held in the fund, have the highest applicable rating by each Rating
Agency, or any lower ratings that will not result in a downgrade or withdrawal
of the rating then assigned to the Notes by any Rating Agency (without regard
to the Policy);
(k) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the United States
or any State that, on the date of acquisition, have been rated by each Rating
Agency in their respective highest applicable rating category, or any lower
ratings that will not result in a downgrade or withdrawal of the rating then
assigned to the Notes by any Rating Agency (without regard to the Policy); and
(l) any other investments having a specified stated maturity and
bearing interest or sold at a discount acceptable to each Rating Agency that
will not result in a downgrade or withdrawal of the rating then assigned to
the Notes by any Rating Agency (without regard to the Policy), as evidenced by
a signed writing delivered by each Rating Agency and that is a cash flow
investment within the meaning of Section 860G(a)(5)(A) of the Code and Section
1.860G-2(g)(1) of the Treasury Regulations promulgated under the Code;
No Eligible Investment may evidence either the right to receive
(a) only interest on the obligations underlying these instruments or (b) both
principal and interest payments from obligations underlying these instruments
where the interest and principal payments on the
10
instruments provide a yield to maturity at par greater than 120% of the yield
to maturity at par of the underlying obligations. No Eligible Investment may be
purchased at a price greater than par if that instrument may be prepaid or
called at a price less than its purchase price before stated maturity.
In addition, no amount beneficially owned by any REMIC (including
any amounts collected by the Master Servicer but not yet deposited in the
Collection Account) may be invested in investments (other than money market
funds) treated as equity interests for federal income tax purposes, unless the
Master Servicer receives an Opinion of Counsel to the effect that the
investment will not adversely affect the status of any REMIC created under the
Trust Agreement as a REMIC under the Code or result in imposition of a tax on
it.
Notwithstanding the above, unless a Credit Enhancer Default has
occurred, each Eligible Investment shall have a rating of investment grade or
better.
"Eligible Substitute Mortgage Loan" means a Mortgage Loan
transferred to the Trust by the Sponsor in connection with the retransfer of a
Defective Mortgage Loan that must, on the date of its transfer to the Trust,
o have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective
Mortgage Loan, an aggregate Asset Balance) not greater than the
Transfer Deficiency relating to the Defective Mortgage Loan;
o have a Loan Rate not less than the Loan Rate of the
Defective Mortgage Loan and not more than 1.000% in excess of the
Loan Rate of the Defective Mortgage Loan;
o have a Loan Rate based on the same Index with adjustments
to the Loan Rate made on the same Interest Rate Adjustment Date as
that of the Defective Mortgage Loan;
o have a FICO score not less than the FICO score of the
Defective Mortgage Loan and not more than 50 points higher than
the Defective Mortgage Loan;
o have a Gross Margin that is not less than the Gross Margin
of the Defective Mortgage Loan and not more than 100 basis points
higher than the Gross Margin for the Defective Mortgage Loan;
o have a mortgage of the same or higher level of priority as
the mortgage relating to the Defective Mortgage Loan at the time
the mortgage was transferred to the Trust;
o have a remaining term to maturity not more than six months
earlier than the remaining term to maturity of the Defective
Mortgage Loan, not later than the
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maturity date of the Principal Amount Notes, and not more than 60
months later than the remaining term to maturity of the Defective
Mortgage Loan;
o comply with each representation and warranty in Section
2.04 of the Sale and Servicing Agreement (to be made as of the
date of transfer to the Trust); and
o have an original Combined Loan-to-Value Ratio not greater
than that of the Defective Mortgage Loan.
More than one Eligible Substitute Mortgage Loan may be substituted
for a Defective Mortgage Loan if the Eligible Substitute Mortgage Loans meet
the foregoing attributes in the aggregate and the substitution is approved in
advance by the Credit Enhancer. The procedures applied by the Sponsor in
selecting each Eligible Substitute Mortgage Loan shall not be materially
adverse to the interests of the Indenture Trustee, the Transferor, or the
Secured Parties.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Event of Default" has the meaning specified in Section 5.01 of
the Indenture.
"Event of Servicing Termination" has the meaning given to it in
Section 6.01 of the Sale and Servicing Agreement.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Act Reports" means any reports on form 10-D, Form 8-K,
and Form 10-K required to be filed by the Depositor with respect to the Trust
under the Exchange Act.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor to it.
"Floating Allocation Percentage" for any Payment Date and the
Principal Amount Notes means the lesser of 100% and a fraction whose numerator
is the Note Principal Balance of the Principal Amount Notes plus the
Transferor Interest and whose denominator is the Loan Pool Balance, calculated
as of the beginning of the related Collection Period.
"Foreclosure Profits" on a Liquidated Mortgage Loan (other than a
Charged-off Mortgage Loan) are the excess of
o its Net Liquidation Proceeds over
o its Asset Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was
last paid to the end of the Collection Period during which the
Mortgage Loan became a Liquidated Mortgage Loan).
"Form 10-D Disclosure Item" for any person means any litigation or
governmental proceedings material to the holders of the Notes pending against
it, or against any of the Trust, the Depositor, the Indenture Trustee, the
Owner Trustee, or the Master Servicer or any subservicer, if it (or in the
case of the Indenture Trustee, a Responsible Officer of the Indenture Trustee)
has actual knowledge thereof.
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"Form 10-K Disclosure Item" for any person means each Form 10-D
Disclosure Item, (a) any affiliations or (b) any relationships between it and
any Item 1119 Party that are either not in the ordinary course of business or
on other than an arms-length basis.
"Funding Period" has the meaning given to it in the Adoption Annex.
"Grant" means mortgage, pledge, bargain, warrant, alienate,
remise, release, convey, assign, transfer, create, and xxxxx x xxxx on and a
Security Interest in and a right of set-off against, deposit, set over, and
confirm pursuant to the Indenture. A Grant of the Collateral or of any other
agreement or instrument includes all rights (but none of the obligations) of
the granting party under the agreement or instrument, including the immediate
and continuing right after an Event of Default to claim for, collect, receive,
and give receipt for principal and interest payments on the Collateral and all
other moneys payable on the Collateral, to require the repurchase of Mortgage
Loans, to give and receive notices and other communications, to make waivers
or other agreements, to exercise all rights, to bring Proceedings in the name
of the granting party or otherwise, and generally to do and receive anything
that the granting party is or may be entitled to do or receive regarding the
Collateral.
"Gross Margin" for any Mortgage Loan means the percentage shown as
the "Gross Margin" for the Mortgage Loan on Exhibit A of the Sale and
Servicing Agreement.
"Guaranteed Payment" has the meaning given to it in the Adoption
Annex.
"Guaranteed Principal Payment Amount" has the meaning given to it
in the Adoption Annex.
"Holder" or "Noteholder" means the person in whose name a Note is
registered in the Note Register.
"Incipient Default" means any occurrence that is, or with notice
or lapse of time or both would become, an Event of Default.
"Indenture" means the Indenture, dated as of the Closing Date
between the Trust and the Indenture Trustee.
"Indenture Trustee" means the entity identified in the Adoption
Annex.
"Indenture Trustee Fee" means the amount specified in the Adoption
Annex.
"Independent" means that a person:
o is in fact independent of the Issuer, any other obligor on the
Notes, the Transferor, and any affiliate of any of them,
o does not have any direct financial interest or any material
indirect financial interest in the Issuer, any other obligor on the
Notes, the Transferor, or any affiliate of any of them, and
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o is not connected with the Issuer, any other obligor on the
Notes, the Transferor, or any affiliate of any of them as an officer,
employee, promoter, underwriter, trustee, partner, director, or person
performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee made by an Independent appraiser or other
expert appointed by an Issuer Order and approved by the Indenture Trustee in
the exercise of reasonable care, and the opinion or certificate states that
the Issuer has read the definition of "Independent" in the Indenture and that
the signer is Independent.
"Index" for each Interest Rate Adjustment Date for a Mortgage Loan
means the highest "prime rate" as published in the "Money Rates" table of The
Wall Street Journal as of the first business day of the month.
"Initial Cut-off Date" means the Initial Cut-off Date specified in
the Adoption Annex.
"Initial Mortgage Loan" means any Mortgage Loan transferred to the
Trust on the Closing Date and identified on Exhibit A.
"Insolvency Event" regarding a specified person means
(a) the person generally fails to pay its debts as they become due
or admits in writing its inability to pay its debts generally as they become
due;
(b) the person has a decree or order for relief by a court or
agency or supervisory authority having jurisdiction in the premises entered
against it or any substantial part of its property in an involuntary case
under any applicable bankruptcy, insolvency, or other similar law and the
decree or order remains unstayed and in effect for a period of 60 days;
(c) the person has a conservator, receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official appointed for it or for
all or any substantial part of its property in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities, or other similar
proceedings, and the decree or order remains unstayed and in effect for a
period of 60 days;
(d) the person's business is ordered to be wound-up or liquidated
or the person's business is subject to readjustment of debt, marshalling of
assets and liabilities, or other similar proceedings, and the decree or order
or the proceedings remain unstayed and in effect for a period of 60 days; or
(e) the person commences a voluntary case under any applicable
bankruptcy, insolvency, or other similar law, or consents to the entry of an
order for relief in an involuntary case under any such law, or consents to the
appointment of or taking possession by a conservator, receiver, liquidator,
assignee for the benefit of creditors, a custodian, trustee, sequestrator, or
similar official for the person or for all or any substantial part of its
property, or the person makes any general assignment for the benefit of
creditors.
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"Insurance Agreement" has the meaning given to it in the Adoption
Annex.
"Insurance Proceeds" means proceeds paid by any insurer (other
than the Credit Enhancer under the Policy) pursuant to any insurance policy
covering a Mortgage Loan net of any amount (i) covering any expenses of the
Master Servicer in connection with obtaining the proceeds, (ii) applied to the
restoration or repair of the related Mortgaged Property, (iii) released to the
mortgagor in accordance with the Master Servicer's normal servicing
procedures, or (iv) required to be paid to any holder of a mortgage senior to
the Mortgage Loan.
"Insured Notes" has the meaning given to it in the Adoption Annex.
"Interest Bearing Notes" has the meaning given to it in the
Adoption Annex.
"Interest Collections" for each Payment Date means
o the sum of all payments made by mortgagors of Mortgage Loans and
any other amounts constituting interest collected by the Master Servicer
under the Mortgage Loans during the related Collection Period plus
o any optional advance made by the Master Servicer pursuant to
Section 4.03 of the Sale and Servicing Agreement for which the Master
Servicer has not been reimbursed minus
o the Servicing Fee for the related Collection Period.
These amounts include any Net Liquidation Proceeds and net
proceeds from any other insurer pursuant to any insurance policy covering a
Mortgage Loan allocable to interest on the applicable Mortgage Loan. These
amounts exclude any fees (including annual fees) or late charges or similar
administrative fees paid by the mortgagors. The related Credit Line Agreement
shall determine the portion of each payment on the Mortgage Loan that
constitutes principal or interest.
"Interest Formula Rate" has the meaning given to it in the
Adoption Annex.
"Interest Period" for the first Payment Date means the period
beginning on the Closing Date and ending on the day preceding the first
Payment Date and for any other Payment Date means the period beginning on the
preceding Payment Date and ending on the day before the Payment Date.
"Interest Rate Adjustment Date" for each Mortgage Loan means any
date on which the Loan Rate is adjusted in accordance with the related Credit
Line Agreement.
"Interest Shortfall Deposit" means any deposit made by the Master
Servicer on the first and second Payment Dates into the Collection Account
pursuant to Section 3.03 of the Sale and Servicing Agreement to offset
shortfalls in interest payable to the Noteholders.
15
"Investor Loss Amount" for each Payment Date and the Principal
Amount Notes is the excess of the Note Principal Balance of the Principal
Amount Notes immediately before the Payment Date over the Loan Pool Balance as
of the last day of the related Collection Period.
"Investor Principal Collections" are for a Payment Date
o during the Managed Amortization Period, the lesser of
(A) the excess of the amount of Principal Collections
for the Payment Date, over the aggregate of the Additional
Balances created on the Mortgage Loans during the Collection
Period, minus the Net Draws Principal Payment for that
Payment Date, and
(B) the amount required to pay the Principal Amount
Notes to maintain the Transferor Interest at the Required
Transferor Subordinated Amount.
o during the Rapid Amortization Period and if no Rapid
Amortization Event has occurred, the lesser of
(A) the excess of the amount of Principal Collections
for the Payment Date over the Net Draws Principal Payment
for that Payment Date, and
(B) the amount required to pay the Principal Amount
Notes to maintain the Transferor Interest at the Required
Transferor Subordinated Amount.
o on or after which a Rapid Amortization Event has occurred, all
Principal Collections for the Payment Date.
"Issuer" means CWHEQ Revolving Home Equity Loan Trust, Series
2007-B until a successor replaces it and, after that, means its successor.
"Issuer Order" or "Issuer Request" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"Item 1119 Party" means the Depositor, any Seller, the Master
Servicer, the Indenture Trustee, the Owner Trustee, any subservicer, any
originator identified in the Prospectus Supplement, and any other material
transaction party identified in writing as such by the Master Servicer to each
of the Indenture Trustee and the Owner Trustee.
"Latest Possible Maturity Date" as provided in Section 3.11 of the
Trust Agreement.
"Latest Subsequent Closing Date" means the date specified in the
Adoption Annex.
"LIBOR" for any day means the rate for United States dollar
deposits for one month that appears on the Bloomberg monitor as of 11:00 A.M.,
London time that day. If LIBOR does not appear on that monitor (or a
replacement service or, if that service is no longer offered, any
16
other service for displaying LIBOR or comparable rates reasonably selected by
the Depositor after consultation with the Indenture Trustee and the Credit
Enhancer), the rate will be the Reference Bank Rate.
"LIBOR Business Day" means any day other than of a Saturday, a
Sunday, or a day on which banking institutions in the State of New York or in
the City of London, England are required or authorized by law to be closed.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority right, or interest or other
Security Agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of
the foregoing, and the filing of any Financing Statement under the UCC (other
than any Financing Statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing except
that any assignment pursuant to Section 5.02 is not a Lien.
"Lifetime Rate Cap" for each Mortgage Loan whose related Mortgage
Note provides for a lifetime rate cap means the maximum Loan Rate permitted
over the life of the Mortgage Loan under the terms of the related Credit Line
Agreement, as shown on the Mortgage Loan Schedule.
"Limited Exchange Act Reporting Obligations" means the obligations
of the Master Servicer under Section 3.09(b), Section 5.02, and Section 5.04
with respect to notice and information to be provided to the Depositor and
Article VII (except Section 7.07(a)(1) and (2)) of the Sale and Servicing
Agreement.
"Liquidated Mortgage Loan" for any Payment Date means any Mortgage
Loan that as of the end of the related Collection Period the Master Servicer
has determined in accordance with the servicing standards in the Sale and
Servicing Agreement that all liquidation proceeds that it expects to recover
on the Mortgage Loan or the related REO have been recovered.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of
overhead) that are incurred by the Master Servicer in connection with the
liquidation of any Mortgage Loan and not recovered under any insurance policy,
including legal fees and expenses, any unreimbursed amount expended pursuant
to Section 3.06 of the Sale and Servicing Agreement (including amounts
advanced to correct defaults on any mortgage loan which is senior to the
Mortgage Loan and amounts advanced to keep current or pay off a mortgage loan
that is senior to the Mortgage Loan) respecting the related Mortgage Loan and
any related and unreimbursed expenditures with respect to real estate property
taxes, water or sewer taxes, condominium association dues, property
restoration or preservation or insurance against casualty, loss or damage.
17
"Liquidation Loss Amount" for any Payment Date and any Mortgage
Loan that becomes a Liquidated Mortgage Loan during the related Collection
Period is the unrecovered Asset Balance of the Mortgage Loan at the end of the
Collection Period after reducing the Asset Balance for the Net Liquidation
Proceeds.
"Liquidation Proceeds" means proceeds (including Insurance
Proceeds) received in connection with the liquidation of any Mortgage Loan or
related REO, whether through trustee's sale, foreclosure sale, or otherwise
other than Charged-off Mortgage Loan Proceeds.
"Loan Pool Balance" for any Payment Date is the aggregate of the
Asset Balances of all Mortgage Loans as of the last day of the related
Collection Period plus all amounts on deposit in the Additional Loan Account.
"Loan Rate" for any Mortgage Loan and on any day means the per
annum rate of interest applicable under the related Credit Line Agreement to
the calculation of interest for the day on the Asset Balance of the Mortgage
Loan.
"Loan Rate Cap" for each Mortgage Loan means the lesser of (i) the
Lifetime Rate Cap or (ii) the applicable state usury ceiling.
"Loan-to-Value Ratio" for any date of determination for any first
lien mortgage loan means a fraction whose numerator is the outstanding
principal balance of the mortgage loan as of the date of determination and
whose denominator is the Valuation of the related Mortgaged Property.
"Managed Amortization Period" means the period from the Closing
Date to the Rapid Amortization Commencement Date.
"Master Servicer" means Countrywide Home Loans, Inc., a New York
corporation and any successor to it and any successor under the Sale and
Servicing Agreement.
The "Maximum Rate" for the Principal Amount Notes for any Interest
Period is the Weighted Average Net Loan Rate for the Mortgage Loans for the
Collection Period during which the Interest Period begins (adjusted to an
effective rate reflecting accrued interest calculated on the basis of the
actual number of days in the Collection Period commencing in the month in
which the Interest Period commences and a year assumed to consist of 360
days).
"MERS" means Mortgage Electronic Registration Systems, Inc., a
Delaware corporation, or any successor to it.
"MERS(R) System" means the system of recording transfers of
mortgages electronically maintained by MERS.
"MIN" means the Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
"Minimum Monthly Payment" for any Mortgage Loan and any month
means the minimum amount required to be paid by the related mortgagor in that
month.
18
"MOM Loan" means any Mortgage Loan as to which MERS is acting as
mortgagee, solely as nominee for the originator of the Mortgage Loan and its
successors and assigns.
"Moody's" means Xxxxx'x Investors Service, Inc. or its successor
in interest.
"Mortgage" means any conveyance to secure the performance of an
obligation including a deed of trust to secure debt and other comparable
security instruments.
"Mortgage File" for each of the Mortgage Loans means the following
documents:
(i) the original Mortgage Note endorsed in blank or, if the
original Mortgage Note has been lost or destroyed and not
replaced, an original lost note affidavit from the Sponsor stating
that the original Mortgage Note was lost, misplaced, or destroyed,
together with a copy of the Mortgage Note;
(ii) unless the Mortgage Loan is registered on the MERS(R)
System, an original Assignment of Mortgage for the Mortgage Loan
in blank in recordable form;
(iii) the original recorded mortgage with evidence of
recording on it (noting the presence of the MIN of the Mortgage
Loan and language indicating that the Mortgage Loan is a MOM Loan
if the Mortgage Loan is a MOM Loan) or, if the original recorded
mortgage with evidence of recording on it cannot be delivered by
the Closing Date because of a delay caused by the public recording
office where the original mortgage has been delivered for
recordation or because the original mortgage has been lost, an
accurate copy of the mortgage, together with (i) in the case of a
delay caused by the public recording office, an Officer's
Certificate of the Sponsor or the Depositor, which may be a
blanket certificate covering more than one mortgage, stating that
the original mortgage has been dispatched to the appropriate
public recording official for recordation or (ii) in the case of
an original mortgage that has been lost, a certificate by the
appropriate county recording office where the mortgage is
recorded;
(iv) if applicable, the original of each intervening
assignment needed for a complete chain of title for the mortgage
from its original mortgagee or beneficiary to the Trust or in
blank (or, if the Mortgage Loan is registered on the MERS(R)
System, to MERS and noting the presence of a MIN) with evidence of
recording on them, or, if any original intervening assignment has
not been returned from the applicable recording office or has been
lost, a true copy of it, together with in the case of a delay
caused by the public recording office, an Officer's Certificate of
the Sponsor or the Depositor, which may be a blanket certificate
covering more than one intervening assignment, stating that the
original intervening assignment has been dispatched to the
appropriate public recording official for recordation
(v) a title policy for each Mortgage Loan with a Credit
Limit in excess of $100,000 or a copy of the lender's title policy
or a printout of the electronic equivalent and all riders thereto;
19
(vi) the original of any guaranty executed in connection
with the Mortgage Note;
(vii) the original of each assumption, modification,
consolidation, or substitution agreement relating to the Mortgage
Loan; and
(viii) any security agreement, chattel mortgage, or
equivalent instrument executed in connection with the Mortgage
Loan;
An optical image or other representation of a document specified
in clauses (iii) through (viii) above for a Mortgage Loan may be held by the
Indenture Trustee or assignee in lieu of the physical documents specified if
(a) as evidenced by an Opinion of Counsel delivered to and in form
and substance satisfactory to the Indenture Trustee and the Credit Enhancer,
(x) an optical image or other representation of the related
documents specified in clauses (iii) through (viii) above are
enforceable in the relevant jurisdictions to the same extent as
the original of the document and
(y) the optical image or other representation does not
impair the ability of an owner of the Mortgage Loan to transfer
its interest in the Mortgage Loan, and
(b) written confirmation that the retention of the documents in
that format will not result in a reduction in the then current rating of the
Notes, without regard to the Policy. A copy of any Opinion of Counsel shall in
each case be addressed and delivered to the Credit Enhancer.
"Mortgage Loan" means each of the mortgage loans, including
Additional Balances for it, that are transferred to the Trust pursuant to
Section 2.01(a) and (b) of the Sale and Servicing Agreement, together with all
related Mortgage Files, exclusive of Mortgage Loans that are retransferred to
the Depositor, the Master Servicer, or the Sponsor or purchased by the Master
Servicer pursuant to Section 2.02, 2.04, 2.06, or 3.06 of the Sale and
Servicing Agreement, held as a part of the Trust. The Mortgage Loans
originally so held are identified in the Mortgage Loan Schedule delivered on
the Closing Date. The Mortgage Loans shall also include any Eligible
Substitute Mortgage Loan (as defined in the Sale and Servicing Agreement)
substituted by the Sponsor for a defective Mortgage Loan pursuant to Section
2.07(a) of the Sale and Servicing Agreement.
"Mortgage Loan Schedule" on any date means the schedule of
Mortgage Loans included in the Trust on the date identifying each Mortgage
Loan and specifying for each Mortgage Loan its (i) account number, (ii) Credit
Limit, (iii) Gross Margin, (iv) lifetime rate cap, (v) Cut-off Date Asset
Balance, (vi) current Loan Rate, (vii) combined loan-to-value ratio, (viii)
code specifying the property type, (ix) code specifying documentation type,
(x) code specifying lien position, and (xi) code specifying whether the
Mortgage Loan is a MOM Loan. The initial schedule of Mortgage Loans as of the
Cut-off Date is Exhibit A of the Sale and
20
Servicing Agreement. The Mortgage Loan Schedule will automatically include any
Additional Balances. The Indenture Trustee is not responsible for preparing the
Mortgage Loan Schedule.
"Mortgage Note" means the Credit Line Agreement for a Mortgage
Loan pursuant to which the related mortgagor agrees to pay the indebtedness
evidenced by it and secured by the related mortgage.
"Mortgaged Property" means the underlying property securing a
Mortgage Loan.
"Net Draws" on any day are the aggregate amount of advances of
funds made by the Holder of the Class R-1 Certificates to purchase Additional
Balances minus the aggregate amount of Principal Collections on the Mortgage
Loans previously paid to the Class R-1 Certificates with respect to the
advances minus any principal balances of Mortgage Loans removed by the holder
of the Class R-1 Certificates to reduce the Net Draws balance pursuant to the
Sale and Servicing Agreement minus any Liquidation Loss Amount allocated to
the Class R-1 Certificates.
"Net Draws Principal Payment" for a Payment Date is the amount of
Principal Collections applied on the Payment Date to the payment of Net Draws
to the Holder of the Class R-1 Certificates, determined as follows:
o During the Managed Amortization Period, the Net Draws
Principal Payment for a Payment Date will be the least of
(i) Net Draws,
(ii) the Available Principal Collections, and
(iii) the sum of (a) Available Principal Collections in an
amount equal to 3% of the Note Principal Balance of the Principal
Amount Notes for the Payment Date and (b) the remaining Available
Principal Collections (after that 3%) times a fraction whose
numerator is the Remaining Net Draws and whose denominator is the
sum of the Remaining Net Draws and the Note Principal Balance of
the Principal Amount Notes.
o During the Rapid Amortization Period if a Rapid Amortization
Event has not occurred, the Net Draws Principal Payment for a Payment
Date will be Principal Collections for the Payment Date times a fraction
whose numerator is the Net Draws and whose denominator is the sum of the
Net Draws and the Note Principal Balance of the Principal Amount Notes.
o After a Rapid Amortization Event has occurred, the Net Draws
Principal Payment for a Payment Date will be zero.
"Net Liquidation Proceeds" for any Liquidated Mortgage Loan means
Liquidation Proceeds net of Liquidation Expenses.
21
"Net Loan Rate" means for any Mortgage Loan on any day is the Loan
Rate less
o the Servicing Fee Rate and the Owner Trustee Fee and the
Indenture Trustee Fee, each expressed as a per annum rate on the
Floating Allocation Percentage of the Loan Pool Balance,
o the Premium Percentage defined in the Insurance Agreement,
and
o commencing with the Payment Date specified in the Adoption
Annex, 0.50% per annum.
"Non-Permitted Transferee" means any person other than a Permitted
Transferee.
"Note" has the meaning given to it in the Adoption Annex.
"Note Interest" for the Principal Amount Notes and any Payment
Date means interest for the related Interest Period at the Note Rate on the
Note Principal Balance as of the first day of the Interest Period (after
giving effect to the distributions made on the first day of the Interest
Period).
"Note Owner" means the beneficial owner of a Book-Entry Note, as
reflected on the books of the Indenture Trustee as agent for the Depository.
"Note Principal Balance" for any Payment Date and the Principal
Amount Notes means the Original Note Principal Balance less the aggregate of
amounts actually distributed as principal on the Principal Amount Notes before
the Payment Date.
"Note Rate" for the Principal Amount Notes is a per annum rate
equal to the lesser of
(i) for the first Interest Period a per annum rate equal to
the sum of the interpolated one-month and two-month LIBOR and the
Applicable Margin, and for any subsequent Interest Period, the sum
of one-month LIBOR as of the Adjustment Date for that Interest
Period and the Applicable Margin, and
(ii) the Maximum Rate for the Principal Amount Notes for
that Interest Period.
The interpolated one-month and two-month LIBOR shall be equal to one-month
LIBOR for the first Interest Period plus the product of
o the excess of two-month LIBOR for the first Interest
Period over one-month LIBOR for the first Interest Period,
multiplied by
o a fraction whose numerator is the number of days from
the one-month anniversary of the Closing Date to the first Payment
Date and whose denominator is 30.
"Note Register" and "Note Registrar" have the meanings specified
in Section 2.03.
"Noteholder" means a holder of one or more Notes.
22
"Officer's Certificate" means a certificate
(a) with respect to the Indenture, signed by any Authorized
Officer of the Issuer or other specified party under the circumstances
described in, and otherwise complying with, the applicable requirements of
Section 11.01 of the Indenture and delivered to the Indenture Trustee
(b) with respect to the Sale and Servicing Agreement,
o signed by the Chairman of the Board, the Vice
Chairman of the Board, the President, a Managing Director, a
Vice President (however denominated), an Assistant Vice
President, the Treasurer, the Secretary, or one of the
Assistant Treasurers or Assistant Secretaries of the
Depositor, the Sponsor, the Transferor, or the Master
Servicer, or
o if provided for in the Sale and Servicing Agreement,
signed by a Servicing Officer, or
o for any other person, signed by an authorized
officer of the person.
"Opinion of Counsel" means written opinions of counsel who may,
except as otherwise expressly provided in the Indenture, be an employee of or
counsel to the Issuer, the Depositor, the Sponsor, the Master Servicer, or the
Transferor (except that any opinion pursuant to Section 8.06 of the Indenture,
Section 5.04 of the Sale and Servicing Agreement, or relating to taxation must
be an opinion of independent outside counsel) and who is reasonably acceptable
to the parties to whom it is to be delivered.
Opinions provided pursuant to the Indenture (except for opinions
provided pursuant to Section 8.02(b)) shall be addressed to the Indenture
Trustee as Indenture Trustee, and any other designated party, shall comply
with any applicable requirements of Section 11.01 of the Indenture, and shall
be in form and substance reasonably satisfactory to the parties to whom it is
to be delivered.
In connection with any opinion of counsel concerning the
interpretation or application of the REMIC Provisions, the counsel must in
fact be independent of the Depositor and the Master Servicer, not have any
direct financial interest in the Depositor or the Master Servicer or in any
affiliate of either, and not be connected with the Depositor or the Master
Servicer as an officer, employee, promoter, underwriter, trustee, partner,
director, or person performing similar functions.
Copies of all Opinions of Counsel shall be delivered to the Credit
Enhancer.
"Optional Termination Date" means any Payment Date on or after
which the Note Principal Balance of the Principal Amount Notes is less than or
equal to 10% of the Original Note Principal Balance.
23
"Original Note Principal Balance" means the Note Principal Balance
of the Principal Amount Notes on the Closing Date as reflected in the Adoption
Annex.
"Outstanding" as of the date of determination means all Notes that
have been authenticated and delivered under the Indenture except:
(i) Notes that have been cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation or that by their
terms have expired;
(ii) Notes or portions thereof the payment for which money
in the necessary amount has been deposited with the Indenture
Trustee or any Paying Agent in trust for the Noteholders, and if
the Notes are to be redeemed, notice of the redemption has been
duly given pursuant to the Indenture or notice has been provided
for in a manner satisfactory to the Indenture Trustee; and
(iii) Notes in exchange for or instead of which other Notes
have been authenticated and delivered pursuant to the Indenture
unless proof satisfactory to the Indenture Trustee is presented
that those Notes are held by a Protected Purchaser.
In determining whether the Holders of the requisite Outstanding
Amount have Acted under the Indenture or under any Transaction Document, Notes
owned by the Issuer, the Depositor, a Seller, or the Transferor, or any of
their affiliates shall be disregarded and treated as not being Outstanding,
except that, in determining whether the Indenture Trustee shall, if the Notes
have first been transferred to a non-affiliate, be protected in relying on any
Act, only Notes that a Responsible Officer knows to be so owned shall be
disregarded. Notes so owned that have been pledged in good faith, or for whose
owner the Issuer, the Depositor, a Seller, or the Transferor, or any of their
affiliates is acting as trustee or nominee, may be regarded as Outstanding if
the pledgee or other person establishes to the satisfaction of the Indenture
Trustee the pledgee's or other person's right to Act for the Notes and that
the pledgee or other person is not the Issuer, the Depositor, or the
Transferor, or any of their affiliates.
To effectuate the Credit Enhancer's right of subrogation under
Section 4.03 of the Indenture, all Notes that have been paid with funds
provided under the Policy shall be Outstanding until the Credit Enhancer has
been paid all amounts due to it pursuant to the Insurance Agreement with
respect to those Notes.
"Outstanding Amount" means the principal amount of the Principal
Amount Notes that are Outstanding at the date of determination. For the
purposes of voting, the Outstanding Amount of notional amount securities
relative to Principal Amount Notes shall be as specified in the Adoption
Annex.
"Owner Trustee" is the entity identified in the Adoption Annex.
"Owner Trustee Fee" is the amount specified in the Adoption Annex.
24
"Paying Agent" means the Indenture Trustee or any other person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.08 of the Indenture and is authorized by the Issuer to make payments
to and distributions from the Payment Account, including payments of principal
or interest on the Notes on behalf of the Issuer.
"Payment Account" means the Eligible Account established and
maintained by the Indenture Trustee on behalf of and for the benefit of the
Secured Parties pursuant to Section 8.01 of the Indenture.
"Payment Date" has the meaning given to it in the Adoption Annex.
"Performance Certification" means a certification in the form of
Exhibit E-1 of the Sale and Servicing Agreement (in the case of any Reporting
Subcontractor of the Master Servicer or a subservicer) and the Owner Trustee)
and Exhibit E-2 of the Sale and Servicing Agreement (in the case of the
Indenture Trustee or any Reporting Subcontractor of the Indenture Trustee).
"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
25
decisions of the trust unless such person has furnished the
holder of the R-1 Certificates 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
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.
"Policy" means the financial guaranty insurance policy identified
in the Adoption Annex and all its endorsements, dated as of the Closing Date,
issued by the Credit Enhancer to the Indenture Trustee for the benefit of the
Holders of the Insured Notes.
"Policy Payments Account" means a separate special purpose trust
account that is an Eligible Account, for the benefit of Holders of the Insured
Notes and the Credit Enhancer over which the Indenture Trustee has exclusive
control and sole right of withdrawal.
"Preference Amount" has the meaning given to it in the Insurance
Agreement.
"Preference Claim" means any proceeding or the institution of any
action seeking the avoidance as a preferential transfer under applicable
bankruptcy, insolvency, receivership, or similar law of any distribution made
with respect to the Notes (other than Basis Risk Carryforward).
"Premium Letter" has the meaning given to it in the Adoption
Annex.
"Principal Amount Notes" has the meaning given to it in the
Adoption Annex.
"Principal Collections" for any Payment Date means the sum of all
payments made by the mortgagors and any other amounts constituting principal
collected by the Master Servicer under the Mortgage Loans during the related
Collection Period. These amounts include any Net Liquidation Proceeds and net
proceeds from any other insurer pursuant to any insurance policy covering a
Mortgage Loan allocable to principal of the applicable Mortgage Loan and
Transfer Deposit Amounts, but exclude Foreclosure Profits. The terms of the
related Credit Line Agreement shall determine the portion of each payment on a
Mortgage Loan that constitutes principal or interest.
"Principal Reserve Fund" means the Eligible Account established
and maintained by the Indenture Trustee pursuant to Section 8.01(d) of the
Indenture.
26
"Proceeding" means any suit in equity, action at law, or other
judicial or administrative proceeding.
"Purchase Agreement" means the Purchase Agreement dated as of the
Closing Date among Countrywide Home Loans, Inc., as a seller, the other
sellers named therein, as sellers, and the Depositor, as purchaser, with
respect to the Mortgage Loans.
"Purchase Price" with respect to any Mortgage Loan required to be
purchased by the Sponsor pursuant to Section 2.03 or 2.04 of the Sale and
Servicing Agreement or purchased at the option of the Master Servicer pursuant
to Section 3.01 or 3.06 of the Sale and Servicing Agreement means an amount
equal to the sum of
(i) 100% of the unpaid principal balance of the Mortgage Loan on
the date of such purchase,
(ii) accrued interest on the Mortgage Loan at the applicable Loan
Rate (or at the applicable Loan Rate reduced by amounts owed to the Master
Servicer with respect to that Mortgage Loan if (x) the purchaser is the Master
Servicer or (y) if the purchaser is Countrywide and Countrywide is an
affiliate of the Master Servicer) from the date through which interest was
last paid by the Mortgagor to the Due Date in the month in which the Purchase
Price is to be distributed to Noteholders, and
(iii) in the case of any Mortgage Loan required to be purchased by
the Sponsor because of, or that arises out of, a violation of any predatory or
abusive lending law with respect to the related Mortgage Loan, any costs and
damages incurred by the Trust relating to such violation of any predatory or
abusive lending law with respect to the related Mortgage Loan.
"Rapid Amortization Commencement Date" means the earlier of the
Payment Date in the month specified in the Adoption Annex and the Payment Date
after the Collection Period in which a Rapid Amortization Event occurs.
"Rapid Amortization Event" has the meaning given to it in Section
5.16 of the Indenture.
"Rapid Amortization Period" means the period beginning on the
Rapid Amortization Commencement Date until the termination of the Indenture.
"Rating Agency" means any statistical credit rating agency, or its
successor, that rated the Notes at the request of the Depositor at the time of
the initial issuance of the Notes. If a particular Rating Agency is no longer
in existence, "Rating Agency" will mean a statistical credit rating agency, or
other comparable person, designated by the Depositor and the Credit Enhancer.
The Indenture Trustee will be notified of any such designation. References to
the highest short-term unsecured rating category of a Rating Agency mean
"A-1+" or better in the case of Standard & Poor's and P-1 or better in the
case of Moody's and in the case of any other Rating Agency mean the ratings it
deems equivalent to these. References to the highest long-term rating category
of a Rating Agency mean "AAA" in the case of Standard & Poor's and
27
"Aaa" in the case of Moody's and in the case of any other Rating Agency, the
rating it deems equivalent to these.
"Rating Agency Condition" for any action means that each Rating
Agency has been given 10 days (or any shorter period acceptable to each Rating
Agency) notice of the action and that each of the Rating Agencies has notified
the Issuer in writing that the action, without taking the Policy into account,
will not result in a reduction or withdrawal of its then current rating of the
Notes and the Credit Enhancer has consented to the action.
"Record Date" for a Payment Date or redemption date for Book-Entry
Notes is the close of business on the day before the Payment Date or
redemption date. The record date for definitive Notes is the last day of the
preceding month before the Payment Date or redemption date.
"Reference Bank Rate" for an Interest Period means the arithmetic
mean (rounded upwards to the nearest one sixteenth of a percent) of the
offered rates for United States dollar deposits offered by three major banks
engaged in transactions in the London interbank market, selected by the
Depositor after consultation with the Indenture Trustee, as of 11:00 A.M.,
London time, on the Adjustment Date immediately preceding the Interest Period,
to prime banks in the London interbank market for a period of one month in
amounts approximately equal to the outstanding Note Principal Balance if at
least two of the banks provide an offered rate. If fewer than two offered
rates are quoted, the Reference Bank Rate will be the arithmetic mean of the
rates quoted by one or more major banks in New York City, selected by the
Depositor after consultation with the Indenture Trustee and the Credit
Enhancer, as of 11:00 A.M., New York City time, on the Adjustment Date
immediately preceding the Interest Period, for loans in U.S. dollars to
leading European banks for a period of one month in amounts approximately
equal to the outstanding Note Principal Balance. If no such quotations can be
obtained, the Reference Bank Rate shall be LIBOR for the preceding Interest
Period.
"Regulation AB" means Subpart 229.1100-Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, and subject to any
clarification and interpretation provided by the Securities and Exchange
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Securities and Exchange Commission, or as may be provided by the
Securities and Exchange Commission or its staff from time to time.
"Registered Holder" means the person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"Remaining Net Draws" means the Net Draws minus an amount equal to
3% of the Note Principal Balance of the Principal Amount Notes immediately
prior to that Payment Date.
"REMIC" means a "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code, and when referring to entities means
the real estate mortgage
28
investment conduits created under this Agreement as defined in Section 3.11 of
the Trust Agreement.
"REMIC Provisions" means Section 860A through 860G of the Code and
related provisions, and regulations and rulings promulgated under those
sections.
"REO" means a Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
"Reportable Event" means any event required to be reported on Form
8-K, and in any case, the following:
o entry into a definitive agreement related to the Trust,
the Notes, or the Mortgage Loans, or an amendment to a Transaction
Document, only if the Depositor is not a party to the agreement or
amendment (e.g., a servicing agreement with a servicer
contemplated by Item 1108(a)(3) of Regulation AB);
o termination of a Transaction Document (other than by
expiration of the agreement on its stated termination date or as a
result of all parties completing their obligations under the
agreement), if the Depositor is not a party to the agreement
(e.g., a servicing agreement with a servicer contemplated by Item
1108(a)(3) of Regulation AB);
o with respect to the Master Servicer only, if the Master
Servicer becomes aware of any bankruptcy or receivership with
respect to the Sponsor, the Depositor, the Master Servicer, any
subservicer, the Indenture Trustee, the Owner Trustee, any
enhancement or support provider contemplated by Items 1114(b) or
1115 of Regulation AB, or any other material party contemplated by
Item 1101(d)(1) of Regulation AB;
o with respect to the Indenture Trustee, the Master
Servicer, and the Depositor only, the occurrence of an early
amortization, performance trigger, or other trigger, including an
Event of Default under the Indenture, of which it (in the case of
the Indenture Trustee, a Responsible Officer of the Indenture
Trustee) has actual knowledge;
o the resignation, removal, replacement, or substitution of
the Master Servicer, any subservicer (with respect to the Master
Servicer only), the Indenture Trustee, or the Owner Trustee;
o with respect to the Master Servicer only, if the Master
Servicer becomes aware that (i) any material enhancement or
support specified in Item 1114(a)(1) through (3) of Regulation AB
or Item 1115 of Regulation AB that was previously applicable
regarding one or more Classes of the Notes has terminated other
29
than by expiration of the contract on its stated termination date
or as a result of all parties completing their obligations under
the agreement; (ii) any material enhancement specified in Item
1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation
AB has been added with respect to one or more Classes of the
Notes; or (iii) any existing material enhancement or support
specified in Item 1114(a)(1) through (3) of Regulation AB or Item
1115 of Regulation AB with respect to one or more Classes of the
Notes has been materially amended or modified; and
o with respect to the Indenture Trustee, the Master
Servicer, and the Depositor only, a required distribution to
Noteholders is not made as of the required Payment Date under the
Indenture.
"Reporting Subcontractor" with respect to the Master Servicer or
the Indenture Trustee means any Subcontractor determined by the Master
Servicer or the Indenture Trustee pursuant to section 7.08(b) of the Sale and
Servicing Agreement to be "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB. References to a Reporting Subcontractor
shall refer only to the Subcontractor of the Master Servicer or the Indenture
Trustee and shall not refer to Subcontractors generally.
"Required Amount" for a Payment Date means the amount by which the
sum of the amounts distributable pursuant to Sections 8.03(a)(i), (ii), (iii),
and (iv) of the Indenture on the Payment Date exceed Available Interest
Collections available for payment thereon for the Payment Date.
"Required Transferor Subordinated Amount" has the meaning given to
it in the Adoption Annex.
"Residual Certificates" means each of the Class R-1 and Class R-2
Certificates.
"Responsible Officer" any officer of the Indenture Trustee, or any
officer in the corporate trust department of the Owner Trustee, as applicable,
with direct responsibility for the administration of the Trust Agreement or
the Indenture and also, with respect to a particular matter, any other officer
to whom a matter is referred because of the officer's knowledge of and
familiarity with the particular subject. With respect to the Cap Contract
Administrator, any officer of the Indenture Trustee with direct responsibility
for the administration of the Cap Contract Administration Agreement.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement dated as of the Closing Date among the Sponsor, the Depositor, the
Trust, and the Indenture Trustee.
"Xxxxxxxx-Xxxxx Certification" means the certification required by
Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to Section 302
of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations of the
Securities and Exchange Commission promulgated
30
thereunder (including any interpretations thereof by the staff of the
Securities and Exchange Commission)).
"Scheduled Maturity Date" means the date specified in the Adoption
Annex.
"Secured Parties" means the Holders of the Class A Notes and the
Credit Enhancer.
"Securities Act" means the Securities Act of 1933.
"Seller" means any Seller of Mortgage Loans pursuant to the
Purchase Agreement.
"Servicing Certificate" means the certificate delivered each month
pursuant to Section 4.01 of the Sale and Servicing Agreement to the Indenture
Trustee completed and executed by any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee (with a copy to the Credit Enhancer) by the
Master Servicer on the Closing Date, as it may be amended from time to time.
"Servicing Criteria" means the "servicing criteria" in Item
1122(d) of Regulation AB.
"Servicing Criteria Compliance Assessment Report" for any person
means a report (in form and substance reasonably satisfactory to the
Depositor) regarding the person's assessment of compliance with the Servicing
Criteria during the preceding year, as required under Rules 13a-18 and 15d-18
of the Exchange Act and Item 1122 of Regulation AB.
"Servicing Fee" for any Payment Date means the product of
o the Servicing Fee Rate divided by 12, and
o the Loan Pool Balance (excluding any amounts on deposit in
the Additional Loan Account) as of the first day of the Collection
Period preceding the Payment Date (or as of the close of business
on the Cut-off Date for the first Payment Date).
The Servicing Fee will not accrue on any Charged-off Mortgage Loan after the
related Charge-off Date.
"Servicing Fee Rate" means 0.50% per annum.
"Servicing Officer" means any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name and specimen signature appear on a list of servicing
officers furnished to the Indenture Trustee and the Credit Enhancer by the
Master Servicer on the Closing Date, as the list may be amended from time to
time.
"Sponsor" means Countrywide Home Loans, Inc., a New York
corporation and any successor.
31
"Standard & Poor's" means Standard & Poor's, a division of The
XxXxxx-Xxxx Companies, Inc., or its successor in interest.
"State" means any one of the 00 xxxxxx xx xxx Xxxxxx Xxxxxx or the
District of Columbia.
"Statutory Trust Statute" means the Delaware Statutory Trust Act
(12 Del. Code, ss. 3801 et seq.).
"Stepdown Date" has the meaning given to it in the Adoption Annex.
"Subcontractor" means any vendor, subcontractor, or other person
that is not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgaged-backed securities market) of
Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to the Mortgage Loans under the
direction or authority of the Master Servicer or the Indenture Trustee or any
subservicer, as the case may be.
"Subordinated Transferor Collections" means for any Payment Date
the Principal Collections allocated to be paid with respect to the Transferor
Interest to the holders of the Certificates pursuant to the Trust Agreement.
"Subsequent Closing Date" means any date designated by the
Depositor on which the Trust acquires Additional Home Equity Loans pursuant to
Section 2.01(b) of the Sale and Servicing Agreement.
"Subsequent Cut-off Date" means the cut-off date designated by the
Depositor in a Transfer Document in connection with the acquisition of
Additional Home Equity Loans by the Trust pursuant to Section 2.01(b) of the
Sale and Servicing Agreement.
"Tax Matters Person Certificate" means the Class R-2 Certificate
with a Denomination of $0.01.
"Transaction Documents" means the Indenture, the Notes, the Sale
and Servicing Agreement, the Purchase Agreement, the Custodial Agreement, the
Administration Agreement, the Trust Agreement, the Insurance Agreement, the
Policy, and any other document or agreement entered into in connection with
the Trust, the Notes, the Certificates, or the Mortgage Loans.
"Transfer Date" has the meaning given to it in Section 2.06 of the
Sale and Servicing Agreement.
"Transfer Deficiency" means that the excess of the Loan Pool
Balance (minus Net Draws) over the Note Principal Balance of the Principal
Amount Notes after a retransfer of a Mortgage Loan pursuant to Section 2.02(b)
or 2.04(d) of the Sale and Servicing Agreement would be less than the Required
Transferor Subordinated Amount.
The amount of any Transfer Deficiency is the lesser of
32
o the Asset Balance of the Defective Mortgage Loan and
o the excess of
o the Required Transferor Subordinated Amount over
o the Transferor Interest.
In any computation involving a Mortgage Loan required to be
purchased by the Sponsor because of, or arising out of, a violation of any
predatory or abusive lending law with respect to the Mortgage Loan, the
Transferor Interest shall be reduced for any costs and damages incurred by the
Trust relating to the violation of any predatory or abusive lending law with
respect to the Mortgage Loan.
"Transfer Deposit Amount" has the meaning given to it in Section
2.07 of the Sale and Servicing Agreement.
"Transfer Document" means a document substantially in the form of
Exhibit C of the Sale and Servicing Agreement.
"Transfer Notice Date" has the meaning given to it in Section 2.06
of the Sale and Servicing Agreement.
"Transferor" means the Holder of the Class C Certificates executed
and authenticated by the Owner Trustee under the Trust Agreement.
"Transferor Certificates" has the meaning given to it in the
Adoption Annex.
"Transferor Interest" for each Payment Date is the excess of
o the Loan Pool Balance as of the close of business on the
day before the Payment Date (minus Net Draws) over
o the Note Principal Balance of the Principal Amount Notes
on that Payment Date (after giving effect to the payment of all
amounts actually paid on the Principal Amount Notes on that
Payment Date).
"Transferor Principal Collections" for any Payment Date means
Principal Collections received with respect to the Mortgage Loans during the
related Collection Period minus Additional Balances created on the Mortgage
Loans during the Collection Period minus the Net Draws Principal Payment minus
Investor Principal Collections.
"Trust" is the trust identified in the Adoption Annex.
"Trust Agreement" means the trust agreement dated as of March 28,
2007, among Countrywide Home Loans, Inc., the Depositor and the Owner Trustee
forming the Trust.
33
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of
1939 as in force on the date of the Indenture, unless otherwise specifically
provided.
"UCC" means the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction, unless the context otherwise requires.
"Unpaid Investor Interest Shortfall" for any Payment Date and the
Principal Amount Notes means the aggregate amount of Note Interest on the
Principal Amount Notes that was accrued for a prior Payment Date and has not
been paid to Noteholders.
"Valuation" of any Mortgaged Property means the lesser of (i) the
Appraised Value of the Mortgaged Property and (ii) in the case of a Mortgaged
Property purchased within one year of the origination of the related Mortgage
Loan, the purchase price of the Mortgaged Property.
"Weighted Average Net Loan Rate" for any Collection Period means
the average of the daily Net Loan Rate (specified in the Adoption Annex) for
each Mortgage Loan (assuming that each Mortgage Loan is fully indexed) for
each day during the related Billing Cycle, weighted on the basis of the daily
average of the Asset Balances outstanding for each day in the Billing Cycle
for each Mortgage Loan as determined by the Master Servicer in accordance with
the Master Servicer's normal servicing procedures.
34
ADOPTION ANNEX
ADOPTION ANNEX
The amount deposited in the "Additional Loan Account" on the
Closing Date is $7,128,919.90.
The "Applicable Margin" means, for the Class A Notes, 0.15%.
The "Cap Contract Termination Date" means the 67th Payment Date.
"Cap Counterparty" means Swiss Re Financial Products Corporation
and its successors.
The "Cap Payment Schedule" is as follows:
Notional
Payment Date Schedule ($) Cap Strike Payment Date Notional Schedule ($) Cap Strike
---------------- ------------- ----------------------- ------------------------ ------------------------------- ------------
1 950,000,000 8.605% 35 299,296,336 18.067%
2 918,712,833 16.208% 36 289,079,110 14.594%
3 888,456,072 17.342% 37 279,200,853 16.844%
4 859,195,784 16.208% 38 269,635,553 15.726%
5 830,899,150 16.774% 39 260,382,745 16.845%
6 803,534,433 17.342% 40 251,426,760 15.727%
7 777,070,943 16.208% 41 242,763,240 16.293%
8 751,478,997 17.342% 42 234,376,826 16.845%
9 726,729,892 16.208% 43 226,261,043 15.727%
10 702,795,871 16.774% 44 218,410,102 16.846%
11 679,650,090 17.950% 45 210,808,985 15.728%
12 657,266,589 15.642% 46 203,455,784 16.294%
13 635,620,263 16.842% 47 196,335,703 18.069%
14 614,421,992 15.724% 48 189,444,099 14.597%
15 593,918,240 16.842% 49 182,784,344 16.847%
16 574,085,826 15.724% 50 176,327,446 15.729%
17 554,903,093 16.290% 51 170,080,819 16.848%
18 536,347,846 16.842% 52 164,029,996 15.730%
19 518,399,722 15.724% 53 158,176,077 16.296%
20 501,039,419 16.843% 54 152,504,704 16.849%
21 484,246,064 15.725% 55 147,013,535 15.731%
22 468,002,616 16.290% 56 141,709,964 16.849%
23 452,289,006 18.066% 57 137,042,100 15.731%
24 437,088,624 14.593% 58 132,528,005 16.297%
25 422,388,461 16.843% 59 128,162,614 17.440%
26 408,164,322 15.725% 60 123,941,026 15.165%
27 394,405,725 16.843% 61 119,858,505 16.849%
A-1
Notional
Payment Date Schedule ($) Cap Strike Payment Date Notional Schedule ($) Cap Strike
---------------- ------------- ----------------------- ------------------------ ------------------------------- ------------
28 381,094,297 15.725% 62 115,910,468 15.731%
29 368,218,434 16.291% 63 112,092,486 16.849%
30 355,760,355 16.844% 64 108,400,273 15.731%
31 343,707,863 15.725% 65 104,829,687 16.297%
32 332,049,584 16.844% 66 101,376,719 16.849%
33 320,768,486 15.726% 67 98,037,496 15.731%
34 309,856,260 16.292%
"Certificate" means any of the Class C Certificates, the Class E-P
Certificates, the Class R-1 Certificates, and the Class R-2 Certificates
issued pursuant to the Trust Agreement.
"Class" is the Class A Notes.
"Class A Notes" is any note executed by the Owner Trustee and
authenticated by the Indenture Trustee substantially in the form of Exhibit
A-1 of the Indenture.
The "Closing Date" is March 30, 2007.
The last day of the first "Collection Period" is the last day of
April 2007.
The "Corporate Trust Office" of the Indenture Trustee at the date
of execution of the Indenture is located at 000 Xxxxxxx Xxxxxx, 0 Xxxx, Xxx
Xxxx, XX 00000 Attn: Corporate Trust MBS Administration.
"Credit Enhancement Draw Amount" for the Insured Notes and each
Payment Date or other applicable date in accordance with the Policy means an
amount equal to the sum of (a) the excess of the Guaranteed Payment over the
Available Investor Interest for that Payment Date, and (b) for each applicable
date in accordance with the Policy, any Preference Amount for the Insured
Notes to be paid pursuant to the terms of the Policy.
The "Credit Enhancer" is Financial Security Assurance Inc. and any
successor or replacement for the Credit Enhancer in accordance with Section
8.06 of the Indenture.
The "Funding Period" means the period from the Closing Date until
the earlier of the date on which amounts held in the Additional Loan Account
is less than $40,000 and the last day of April, 2007.
"Guaranteed Payment" for each Payment Date and the Insured Notes
means the sum of the Guaranteed Principal Payment Amount and the Aggregate
Note Interest for that Payment Date.
"Guaranteed Principal Payment Amount" for the Insured Notes means
o on the Scheduled Maturity Date, the outstanding Note
Principal Balance (after giving effect to all other allocations
and payments for the Insured Notes on that Payment Date),
o for any other Payment Date, if the Required Transferor
Subordinated Amount has been reduced to zero or below, the excess
of the Note Principal Balance of the Insured Notes
A-2
(after giving effect to all allocations and payments for the
Insured Notes on that Payment Date) over the Loan Pool Balance (at
the end of the related Collection Period), and
o for any other Payment Date, zero.
"Indenture Trustee" means The Bank of New York, as Indenture
Trustee under the Indenture, or any successor Indenture Trustee under the
Indenture.
"Indenture Trustee Fee" is an annual fee equal to $11,200, to be
paid on the Payment Date occurring in April of each year, commencing on the
Payment Date occurring in April 2008.
"Initial Cut-off Date" is the later of March 22, 2007 and the date
of origination of the relevant Initial Mortgage Loan.
The "Insurance Agreement" is the insurance and indemnity agreement
dated as of the Closing Date among the Sponsor, the Depositor, the Indenture
Trustee, and the Credit Enhancer.
The "Insured Notes" are the Class A Notes.
The "Interest Bearing Notes" are the Class A Notes.
The "Interest Formula Rate" for the Principal Amount Notes is the
rate in clause (i) of the definition of Note Rate.
The "Latest Subsequent Closing Date" is the last day of the
Funding Period.
The Payment Date referred to in the definition of "Net Loan Rate"
is the Payment Date in May 2008
"Note" means any Class A Note executed by the Issuer and
authenticated by the Indenture Trustee substantially in the form of Exhibit
A-1 to the Indenture.
"Original Note Principal Balance" means an aggregate principal
amount of $950,000,000.
"Owner Trustee" is Wilmington Trust Company, or any successor
owner trustee under the Trust Agreement.
"Owner Trustee Fee" is an annual fee equal to $3,000, to be paid
on the Payment Date occurring in April of each year, commencing on the
Payment Date occurring in April 2008.
"Payment Date" is the Business Day after the fourteenth day of
each month, beginning in May 2007.
The "Policy" is the Financial Guaranty Insurance Policy No.
51825-N issued by the Credit Enhancer.
The "Premium Letter" means the letter agreement among the Credit
Enhancer, the Indenture Trustee, the Sponsor, and the Depositor dated the date
of the Indenture in respect of the premium payable to the Credit Enhancer in
consideration of the issuance of the Policy.
"Principal Amount Notes" are the Class A Notes.
A-3
The Payment Date referred to in the definition of "Rapid
Amortization Commencement Date" is the Payment Date in April 2017. The
percentage of the aggregate Original Note Principal Balance of the Insured
Notes that the aggregate of all draws under the Policy would exceed to result
in a "Rapid Amortization Event" under Section 5.16(g) is 1.00%.
"Required Transferor Subordinated Amount" for any Payment Date,
means (x) prior to the Stepdown Date 2.95% of the Original Note Principal
Balance; and (y) after the Stepdown Date, the greater of (A) of 0.50% of the
Original Note Principal Balance and (B) (i) if the Stepdown Delinquency Test
and the Stepdown Cumulative Loss Test have each been met, 5.90% of the Loan
Pool Balance as of the last day of the related Collection Period or (ii) if
either the Stepdown Delinquency Test or the Stepdown Cumulative Loss Test has
not been met, the Required Transferor Subordinated Amount for the immediately
preceding Payment Date.
"Scheduled Maturity Date" is the Payment Date in February 2037.
The "Stepdown Cumulative Loss Test" is met on any date if the
percentage of the cumulative losses on the Mortgage Loans as of such date is
less than the applicable percentage listed below of the Loan Pool Balance as
of the Closing Date:
----------------------------- ----------------------------
Payment Date Percentage
----------------------------- ----------------------------
31 3.25%
----------------------------- ----------------------------
32 3.35%
----------------------------- ----------------------------
33 3.45%
----------------------------- ----------------------------
34 3.55%
----------------------------- ----------------------------
35 3.65%
----------------------------- ----------------------------
36 3.75%
----------------------------- ----------------------------
37 3.85%
----------------------------- ----------------------------
38 3.95%
----------------------------- ----------------------------
39 4.05%
----------------------------- ----------------------------
40 4.15%
----------------------------- ----------------------------
41 4.25%
----------------------------- ----------------------------
42 4.35%
----------------------------- ----------------------------
43 4.45%
----------------------------- ----------------------------
44 4.55%
----------------------------- ----------------------------
45 4.65%
----------------------------- ----------------------------
46 4.75%
----------------------------- ----------------------------
47 4.85%
----------------------------- ----------------------------
48 4.95%
----------------------------- ----------------------------
49 5.05%
----------------------------- ----------------------------
50 5.15%
----------------------------- ----------------------------
51 5.25%
----------------------------- ----------------------------
52 5.35%
----------------------------- ----------------------------
A-4
----------------------------- ----------------------------
53 5.45%
----------------------------- ----------------------------
54 5.55%
----------------------------- ----------------------------
55 5.65%
----------------------------- ----------------------------
56 5.75%
----------------------------- ----------------------------
57 5.85%
----------------------------- ----------------------------
58 5.95%
----------------------------- ----------------------------
59 6.05%
----------------------------- ----------------------------
60 6.15%
----------------------------- ----------------------------
61+ 6.25%
----------------------------- ----------------------------
The "Stepdown Date" is the later to occur of (i) the 31st Payment
Date and (ii) the Payment Date on which the Note Principal Balance is reduced
below 50% of the Original Note Principal Balance.
The "Stepdown Delinquency Test" is met on any date if the six
month (or if less, the number of months since the Closing Date) rolling
average 60-day or more delinquency rate of the Mortgage Loans in the Mortgage
Loan Pool plus mortgage loans that are in foreclosure or are REOs (but not
including mortgage loans that are in bankruptcy, unless such mortgage loans
are also in foreclosure, are REOs, or are 60 or more days delinquent), as of
such date of determination is less than 4.50%.
"Transferor Certificates" are the Class C Certificates and Class
R-1 Certificates issued pursuant to the Trust Agreement.
The "Trust" is the CWHEQ Revolving Home Equity Loan Trust, Series
2007-B, a Delaware statutory trust established pursuant to the Trust
Agreement.
The title of the Additional Loan Account is "The Bank of New York,
as Indenture Trustee, Additional Loan Account for the registered holders of
Revolving Home Equity Loan Asset Backed Notes, Series 2007-B and Financial
Security Assurance Inc."
The title of the Payment Account is "The Bank of New York, as
Indenture Trustee, Payment Account for the registered holders of Revolving
Home Equity Loan Asset Backed Notes, Series 2007-B and Financial Security
Assurance Inc."
The title of the Collection Account is "The Bank of New York, as
Indenture Trustee, Collection Account in trust for the registered holders of
Revolving Home Equity Loan Asset Backed Notes, Series 2007-B and Financial
Security Assurance Inc."
The title of the Cap Contract Account is "The Bank of New York, as
Indenture Trustee, Cap Contract Account in trust for the registered holders of
Revolving Home Equity Loan Asset Backed Notes, Series 2007-B, Class A Notes."
The date in each year by which the Issuer will furnish an Opinion
of Counsel pursuant to Section 3.06(b) of the Indenture is September 30,
beginning in 2007.
A-5
The date in each year by which an annual compliance statement
pursuant to Section 3.09 of the Indenture is due is March 15 beginning in
2008.
The wiring instructions for the Indenture Trustee are:
The Bank of New York
ABA # 000-000-000
G.L. Acct #: 211705
FFC TAS # 502241
Ref: CWHEQ 2007-B
Attn: Xxxxxx Xxxxxxxx (000) 000-0000
The wiring instructions for the Credit Enhancer are:
The Bank of New York, New York
ABA#: 000-000-000
Acct Number: 0000-000-000
Acct Name: Financial Security Assurance Inc.
Ref: Policy Number 51825-N
Revolving Home Equity Loan Asset-
Backed Notes, Series 2007-B,
Class A.
The date on which the Master Servicer delivers the Officer's
Certificate in each year is March 15 and the first Officer's Certificate
pursuant to Section 3.09 of the Sale and Servicing Agreement is March 15,
2008.
The date of the Prospectus Supplement is March 28, 2007.
Addresses for notices under any of the Transaction Documents
(unless otherwise specified therein) are:
o For the Issuer:
CWHEQ Revolving Home Equity Loan Trust, Series 2007-B
Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration
Telecopy: (000) 000-0000
o For the Depositor:
CWHEQ, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Legal Department (CWHEQ 2007-B)
Telecopy: (000) 000-0000
A-6
o For the Master Servicer:
Countrywide Home Loans, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Legal Department (CWHEQ 2007-B)
Telecopy: (000) 000-0000
o For Park Monaco:
Park Monaco Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Ref: CWHEQ 2007-B
o For the Indenture Trustee:
The Bank of New York
000 Xxxxxxx Xxxxxx, 0 Xxxx
Xxx Xxxx, XX 00000
Attn: Corporate Trust MBS Administration.
With a copy to:
The Bank of New York Trust Company. N.A.
600 Xxxxxx, 9th Fl
Xxxxxxx, XX 00000
Attn: Structured Finance Services.
o For the Custodian:
Treasury Bank, a division of Countrywide Bank, F.S.B.
0000 Xxxx Xxx Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Document Custodian.
o For the Credit Enhancer:
Financial Security Assurance Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Managing Director - Transaction Oversight
Re: Revolving Home Equity Loan Asset-Backed Notes,
Series 2007-B
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
A-7
and in the case of a notice of Credit Enhancer Default sent
pursuant to Section 8.08 of the Indenture, with a copy to:
Financial Security Assurance Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX, 00000
Attention: General Counsel
Re: Revolving Home Equity Loan Asset-Backed Notes,
Series 2007-B
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
o For Standard & Poor's:
Standard & Poor's
a division of The McGraw Hill Companies, Inc.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
o For Moody's:
Xxxxx'x Investors Service, Inc.
Residential Loan Monitoring Group
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
A-8
