EXHIBIT 4.3(a)
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CWHEQ, INC.
Depositor
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Owner Trustee
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TRUST AGREEMENT
Dated as of _______, 200_
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CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 200_-_
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Table of Contents
Page
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ARTICLE 1
DEFINITIONS AND CONSTRUCTION
Section 1.01 Definitions................................................................4
Section 1.02 Rules of Construction......................................................8
ARTICLE 2
ORGANIZATION
Section 2.01 Name......................................................................11
Section 2.02 Office....................................................................11
Section 2.03 Purposes and Powers.......................................................11
Section 2.04 Appointment of Owner Trustee..............................................11
Section 2.05 Initial Capital Contribution of Assets....................................12
Section 2.06 Declaration of Trust......................................................12
Section 2.07 Liability of a Certificateholder..........................................12
Section 2.08 Title to Trust Property...................................................12
Section 2.09 Location of Trust.........................................................12
Section 2.10 Representations and Warranties of Depositor...............................12
ARTICLE 3
THE CERTIFICATES
Section 3.01 Initial Beneficiary of Trust..............................................14
Section 3.02 Issuance of the Certificates..............................................14
Section 3.03 Authentication of Certificates............................................14
Section 3.04 Registration of and Transfer and Exchange of Certificates.................15
Section 3.05 Mutilated, Destroyed, Lost, or Stolen Certificate.........................16
Section 3.06 Maintenance of Office or Agency...........................................16
Section 3.07 Persons Considered Certificateholders.....................................16
Section 3.08 Access to List of Certificateholders' Names and Addresses.................16
Section 3.09 Appointment of Certificate Paying Agent...................................17
Section 3.10 Restrictions on Transfer; Legends.........................................17
Section 3.11 REMIC Provisions..........................................................21
Section 3.12 Tax Matters...............................................................21
ARTICLE 4
ACTIONS BY OWNER TRUSTEE
Section 4.01 Prior Notice to Certificateholders Regarding Certain Matters..............28
Section 4.02 Action by Certificateholders Regarding Certain Matters....................29
Section 4.03 Action by Certificateholders Regarding Bankruptcy.........................29
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Section 4.04 Restrictions on Certificateholder's Power.................................29
Section 4.05 Majority Interest.........................................................30
ARTICLE 5
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01 Application of Trust Funds................................................30
Section 5.02 Method of Payment.........................................................31
ARTICLE 6
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01 General Authority.........................................................31
Section 6.02 General Duties............................................................31
Section 6.03 Action on Instruction.....................................................32
Section 6.04 No Duties Except as Specified in the Agreement or in Instructions.........33
Section 6.05 No Action Except Under Specified Documents or Instructions................33
Section 6.06 Restrictions..............................................................33
ARTICLE 7
CONCERNING OWNER TRUSTEE
Section 7.01 Acceptance of Trusts and Duties...........................................34
Section 7.02 Furnishing Documents......................................................35
Section 7.03 Representations and Warranties............................................35
Section 7.04 Reliance; Advice of Counsel...............................................35
Section 7.05 Not Acting in Individual Capacity.........................................36
Section 7.06 Owner Trustee Not Liable for Certificates or Payment Obligations..........36
Section 7.07 Owner Trustee May Own Notes...............................................37
ARTICLE 8
COMPENSATION OF OWNER TRUSTEE
Section 8.01 Owner Trustee's Fees......................................................37
Section 8.02 Reimbursement and Indemnification.........................................37
Section 8.03 Payments to Owner Trustee.................................................38
ARTICLE 9
TERMINATION OF AGREEMENT
Section 9.01 Termination of Agreement..................................................38
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ARTICLE 10
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01 Resignation or Removal of Owner Trustee...................................39
Section 10.02 Successor Owner Trustee...................................................39
Section 10.03 Merger or Consolidation of Owner Trustee..................................40
Section 10.04 Appointment of Co-Trustee or Separate Trustee.............................40
ARTICLE 11
MISCELLANEOUS
Section 11.01 Supplements and Amendments................................................41
Section 11.02 Limitations on Rights of Others...........................................42
Section 11.03 Notices...................................................................43
Section 11.04 Severability..............................................................43
Section 11.05 Separate Counterparts.....................................................43
Section 11.06 Successors and Assigns....................................................44
Section 11.07 Nonpetition Covenant......................................................44
Section 11.08 No Recourse...............................................................44
Section 11.09 Headings..................................................................44
Section 11.10 GOVERNING LAW.............................................................44
Section 11.11 Rule 144A Information.....................................................44
EXHIBITS
EXHIBIT A Form of Certificate of Trust of Revolving
Home Equity Loan Trust, Series 200_-_.........................................A-1
EXHIBIT B-1 Form of Class C Certificates..................................................B-1
EXHIBIT B-2 Form of Residual Certificates.................................................B-2
EXHIBIT C-1 Form of Representation Letter.................................................C-1
EXHIBIT C-2 Form of Transfer Affidavit....................................................C-2
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This TRUST AGREEMENT, dated as of _______, 200_, between CWHEQ, INC., a
Delaware corporation, as Depositor, and ________________, a ________________,
as Owner Trustee,
WITNESSETH:
WHEREAS, the parties to this Agreement will create the CWHEQ Revolving
Home Equity Loan Trust, Series 200_-_ and provide for, among other things, the
issuance of the Class C Certificates, the Class R-[1] Certificates, and the
Class R-[2] Certificates;
NOW, THEREFORE, the parties to this Agreement agree as follows.
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
Section 1.01 Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Agreement as defined below. Capitalized terms used in this
Agreement that are not otherwise defined have the meanings given to them in
the Indenture.
"Administration Agreement" means the Administration Agreement, dated as
of _______, 200_, between the Administrator, the Indenture Trustee, and the
Trust.
"Administrator" means Countrywide Home Loans, Inc. and its permitted
successors and assigns.
"Agreement" means this trust agreement.
"Assets" means all assets and property of the Trust pursuant to the Sale
and Servicing Agreement.
"Certificate" means any of the Class C Certificates, the Class R-[1]
Certificates, and the Class R-[2] Certificates.
"Certificate of Trust" means the Certificate of Trust in the form of
Exhibit A 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.
"Certificateholder" means the registered holder of a Certificate issued
in connection with the creation of the Trust.
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"Class A-IO Rate" means [a rate equal to the greater of the LIBOR rate
plus the margin on the Class A Note and Class MT Weighted Average Rate].
"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.
"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 MT Weighted Average Rate" means [the weighted average of the pass
through rates of the MT-1 Interest, the MT-2 Interest, the MT-3 Interest, the
MT-4 Interest, the MT-5 Interest and the MT-6 Interest subject to the
following adjustments: (i) for the Second Payment Date the MT-1 Interest rate
shall be reduced by 4% per annum, (ii) for the second and third Payment Dates
the rate on the MT-2 shall be reduced by 4% per annum, (iii) for the second
through the fourth Payment Dates the rate on the MT-3 shall be reduced by 4%
per annum, (iv) for the second through the fifth Payment Dates the rate on the
MT-4 shall be reduced by 4% per annum, and (v) for the second through the
sixth Payment Dates the rate on the MT-5 shall be reduced by 4% per annum].
"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-2.
"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-2.
"Closing Date" means _______, 200_.
"Co-Trustee" means ________________ and its permitted successors and
assigns.
"Code" means the Internal Revenue Code of 1986.
"Distribution Date" means the Business Day after the 14th day of each
month beginning in ____ 200_.
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"ERISA" means the Employee Retirement Income Security Act of 1974.
"Indenture" means the Indenture, dated as of _______, 200_, between the
Trust, the Indenture Trustee, and the Co-Trustee, specifying the principal
terms pursuant to which the Notes are issued.
"Indenture Trustee" means ________________ and its permitted successors
and assigns.
"Latest Possible Maturity Date" as provided in Section 3.11.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other), preference, participation
interest, priority, or other security agreement or preferential arrangement of
any kind or nature whatsoever resulting in an encumbrance against real or
personal property of a person, including any conditional sale or other title
retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and any evidence of any of the
foregoing.
"Lower Tier REMIC" as provided in Section 3.11.
"Lower Tier REMIC Regular Interests" as provided in Section 3.11.
"Master REMIC " as provided in Section 3.11.
"Mortgage Loan" has the meaning given to it in the Sale and Servicing
Agreement.
"Net Draws" on any day means 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 minus the fractional
share of each liquidation loss amount equal to the amount of Net Draws at the
time of the incurrence of the liquidation loss amount divided by the aggregate
Asset Balance of the Mortgage Loans at the time of the incurrence of the
liquidation loss amount.
"Non-Permitted Transferee" means any person other than a Permitted
Transferee.
"Noteholder" means a holder of one or more Notes.
"Opinion of Counsel" means a written opinion of counsel acceptable to the
Owner Trustee and the counsel may be in-house counsel for the Depositor, its
Affiliates, or the holder of the R-[1] Certificates. With respect to the
interpretation or application of the REMIC Provisions, the counsel must
o in fact be independent of a Seller, the Depositor, and the
Master Servicer;
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o not have any direct financial interest in a Seller, the
Depositor, or the Master Servicer or in any of their Affiliates; and
o not be connected with a Seller, the Depositor, or the Master
Servicer as an officer, employee, promoter, underwriter, trustee,
partner, director, or person performing similar functions.
"Permitted Transferee" means any person other than
o the United States, any State or political subdivision
thereof, or any agency or instrumentality of any of them,
o a foreign government, International Organization, or any
agency or instrumentality of either of them,
o an organization (except certain farmers' cooperatives
described in Section 521 of the Code) that is exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by
Section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in Section 860E(c)(1) of the Code)
with respect to any Residual Certificate,
o rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code,
o an "electing large partnership" as defined in Section 775 of
the Code,
o a person that is not a citizen or resident of the United
States, a corporation, partnership, or other entity created or
organized in or under the laws of the United States, any state of
the United States, or the District of Columbia, or an estate or
trust whose income from sources without the United States is
includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or
business within the United States or a trust if a court within the
United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons
have the authority to control all substantial decisions of the trust
unless such person has furnished the 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
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Loan Mortgage Corporation, a majority of its board of directors is not
selected by such government unit.
"Rating Agency Condition" has the meaning given to it in the Indenture.
"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 investment conduits created under this Agreement as
defined in Section 3.11.
"REMIC Provisions" means sections 860A through 860G of the Code and
related provisions, and regulations and rulings promulgated under those
sections.
"Residual Certificates" means each of the Class R-[1] and Class R-[2]
Certificates.
"Responsible Officer" means any officer in the corporate trust department
of the Owner Trustee, including any vice president, assistant vice president,
managing director, treasurer, assistant treasurer, trust officer, or any other
officer of the Owner Trustee who customarily performs functions similar to
those performed by the persons who at the time are those officers, or to whom
any corporate trust matter is referred because of the officer's knowledge of
and familiarity with the particular subject and who has direct responsibility
for the administration of this Agreement or the Indenture.
"Sale and Servicing Agreement" means the sale and servicing agreement,
dated as of _______, 200_, entered into between the Depositor, Countrywide
Home Loans, Inc., as sponsor and master servicer, the Trust and the Indenture
Trustee, pursuant to which, among other things, the Depositor transfers all
its interests in the Mortgage Loans to the Trust.
"Statutory Trust Statute" means the Delaware Statutory Trust Act (12 Del.
Code, ss. 3801 et seq.).
"Tax Matters Person Certificate" means the Class R-[2] Certificate with a
Denomination of $0.01.
"Transaction Documents" means collectively the Indenture and any other
document designated in the Indenture as a "Transaction Document" for the
purposes of this Agreement.
"Trust" means the trust formed pursuant to this Agreement.
Section 1.01 Rules of Construction.
Except as otherwise expressly provided in this Agreement or unless the
context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural as
well as the singular.
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(b) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Agreement, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Agreement as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Agreement are a part of this Agreement. The words
"herein," "hereof," "hereto," "hereunder," and other words of similar import
refer to this Agreement as a whole and not to any particular article, section,
exhibit, or other subdivision of this Agreement.
(c) The recitals located before Article I are not a part of the agreement
of the parties. Whether or not they are correct, the recitals shall not affect
the agreement of the parties or the interpretation of this Agreement, and they
shall not be interpreted as representations, warranties, covenants, or any
other matter of substance. The headings of the various Articles and Sections
in this Agreement are for convenience of reference only and shall not define
or limit any of the provisions of this Agreement.
(d) Any term that relates to a document or a statute, rule, or regulation
includes any amendments, modifications, supplements, or any other changes that
may have occurred since the document, statute, rule, or regulation came into
being, including changes that occur after the date of this Agreement.
References to law are not limited to statutes. References to statutes include
any rules or regulations promulgated under them by a governmental authority
charged with the administration of the statute. Any reference to any person
includes references to its successors and assigns.
(e) Any party may execute any of the requirements under this Agreement
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under
this Agreement. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Agreement are implicitly available from
time to time.
(f) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or
B or both," not "either A or B but not both").
(g) A reference to "a [thing]" or "any [of a thing]" does not imply the
existence or occurrence of the thing referred to even though not followed by
"if any," and "any [of a thing]" is any and all of it. A reference to the
plural of anything as to which there could be either one or more than one does
not imply the existence of more than one (for instance, the phrase "the
obligors on a note" means "the obligor or obligors on a note"). "Until
[something occurs]" does not imply that it must occur, and will not be
modified by the word "unless." The word "due" and the word "payable" are each
used in the sense that the stated time for payment has passed. The word
"accrued" is used in its accounting sense, i.e., an amount paid is no longer
accrued. In the calculation of amounts of things, differences and sums may
generally result in negative
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numbers, but when the calculation of the excess of one thing over another
results in zero or a negative number, the calculation is disregarded and an
"excess" does not exist. Portions of things may be expressed as fractions or
percentages interchangeably. The word "shall" is used in its imperative sense,
as for instance meaning a party agrees to something or something must occur or
exist.
(h) All accounting terms used in an accounting context and not otherwise
defined, and accounting terms partly defined in this Agreement, to the extent
not completely defined, shall be construed in accordance with generally
accepted accounting principles in the United States. To the extent that the
definitions of accounting terms in this Agreement are inconsistent with their
meanings under generally accepted accounting principles, the definitions in
this Agreement shall control. Capitalized terms used in this Agreement without
definition that are defined in the Uniform Commercial Code of the relevant
jurisdiction are used in this Agreement as defined in that Uniform Commercial
Code.
(i) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means
"to and including." Likewise, in setting deadlines or other periods, "by"
means "on or before." The words "preceding," "following," and words of similar
import, mean immediately preceding or following. References to a month or a
year refer to calendar months and calendar years.
(j) Any reference to the enforceability of any agreement against a party
means that it is enforceable against the party in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(k) Generally only the registered holder of a Security is recognized,
such as in Section 3.07. Persons Considered Owner and payment provisions.
However, for the purposes of the transfer restrictions and related provisions,
such as agreements, representations, and warranties by holders of Securities,
references to Securityholders, holders, and the like refer equally to
beneficial owners who have an interest in a Security but are not reflected in
the applicable register as the owner and references to transfers of Securities
include transfers of interests in a Security.
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ARTICLE 2
ORGANIZATION
Section 2.01 Name.
This Trust shall be known as "CWHEQ Revolving Home Equity Loan Trust,
Series 200_-_," in which name the Owner Trustee may issue Notes and otherwise
conduct the business of the Trust.
Section 2.02 Office.
The office of the Trust shall be in care of the Owner Trustee at
"________________________________, Attention: ________________" or at any
other address in the State of Delaware that the Owner Trustee may designate by
notice to the Depositor.
Section 2.03 Purposes and Powers.
(a) The Trust is authorized to engage in the following activities:
(1) to issue the Notes pursuant to the Indenture;
(2) to issue the Certificates pursuant to this Agreement;
(3) to Grant the Assets to the Indenture Trustee pursuant to the
Indenture;
(4) to distribute to the Holders of the Certificates pursuant to
this Agreement and the Transaction Documents distributions to the Issuer
under the Indenture and any portion of the Assets released from the Lien
of the Indenture and any other amounts provided for in the Sale and
Servicing Agreement;
(5) to enter into and perform its obligations under the Transaction
Documents to which it becomes a party;
(6) to engage in those activities, including entering into
agreements, that are appropriate to accomplish any of the foregoing or
are incidental to them; and
(7) subject to compliance with the Transaction Documents, to engage
in any other activities appropriate to conserve the Assets and make
distributions to any Certificateholder and the holders of Notes.
The Trust shall not engage in any activity other than in connection with
the foregoing activities or other than as required or authorized by this
Agreement or the other Transaction Documents.
Section 2.04 Appointment of Owner Trustee.
The Depositor appoints the Owner Trustee as trustee of the Trust
effective as of the date of this Agreement to have all the rights and
obligations in this Agreement.
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Section 2.05 Initial Capital Contribution of Assets.
The Depositor hereby remits to the Owner Trustee the sum of $1. The Owner
Trustee hereby acknowledges receipt in trust from the Depositor of the
foregoing contribution. The Depositor shall pay organizational expenses of the
Trust as they may arise or shall promptly reimburse the Owner Trustee on
request for any such expenses paid by the Owner Trustee.
Section 2.06 Declaration of Trust.
The Owner Trustee hereby declares that it will hold the Assets on the
terms of this Agreement, for the benefit of the Certificateholders, subject to
the obligations of the Trust under the Transaction Documents. The Trust is a
statutory trust under the Statutory Trust Statute and this Agreement is the
governing instrument of the statutory trust. The Owner Trustee shall have all
rights and obligations in this Agreement and in the Statutory Trust Statute
for accomplishing the purposes of the Trust. The Owner Trustee shall file with
the Secretary of State of the State of Delaware a Certificate of Trust of the
Trust.
Section 2.07 Liability of a Certificateholder.
Except to the extent otherwise provided in this Agreement or in the other
Transaction Documents, the Certificateholders shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the general corporation law of the
State of Delaware.
Section 2.08 Title to Trust Property.
Legal title to all the Assets shall be vested in the Trust as a separate
legal entity except where applicable law in any jurisdiction requires title to
any part of the Assets to be vested in a trustee, in which case title shall be
vested in the Owner Trustee or any co-trustee or separate trustee, as the case
may be.
Section 2.09 Location of Trust.
The Trust will be located in Delaware and administered in Delaware. Any
bank accounts maintained by the Owner Trustee on behalf of the Trust shall be
located in Delaware or Illinois. The Trust shall not have any employees in any
State other than Delaware. Nothing in this Agreement shall restrict the Owner
Trustee from having employees within or without Delaware. Payments will be
received by the Trust only in Delaware, Illinois, or California, and payments
will be made by the Trust only from Delaware or Illinois.
Section 2.10 Representations and Warranties of Depositor.
The Depositor represents and warrants to the Owner Trustee as of the date
of this Agreement, and as to any Transaction Document, as of its date that:
(a) Organization and Good Standing. The Depositor is a corporation duly
organized and validly existing under the laws of Delaware, with full power and
authority to own its properties and to conduct its business as presently owned
or conducted and to execute, deliver, and perform this Agreement and any other
document related to this Agreement to which it is a party and to perform its
obligations as contemplated by them.
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(b) Due Qualification. The Depositor is duly qualified to do business as
a Delaware corporation in good standing and has obtained all necessary
licenses and approvals in each jurisdiction in which failure to so qualify or
to obtain required licenses or approvals would have a material adverse effect
on its ability to perform its obligations under this Agreement and the
Transaction Documents to which the Depositor is a party.
(c) Due Authorization; Enforceability. The Depositor has full power and
authority to execute, deliver, and perform this Agreement and the Transaction
Documents to which it is a party and to carry out their respective terms. The
Depositor has full power and authority to sell and assign the Assets. The
execution, delivery, and performance by the Depositor of this Agreement and
the Transaction Documents to which the Depositor is a party have been duly
authorized by the Depositor by all necessary action. This Agreement and the
Transaction Documents executed by the Depositor have been duly executed and
delivered and constitute the valid and legally binding obligations of the
Depositor enforceable against the Depositor in accordance with their terms.
(d) No Conflict. The Depositor's execution and delivery of this Agreement
and the Transaction Documents to which the Depositor is a party, performance
of the transactions contemplated by them, and fulfillment of their terms
applicable to the Depositor do not conflict with any requirements of law
applicable to the Depositor or conflict with, result in any breach of any of
the provisions of, or with or without notice or lapse of time constitute a
default under, any indenture, contract, or other instrument to which the
Depositor is a party or by which it or its properties are bound.
(e) Consents. No authorization, consent, license, order, or approval of
or registration or declaration with, any governmental authority is required to
be obtained, effected, or given by the Depositor in connection with the
execution and delivery of this Agreement or the Transaction Documents by the
Depositor or its performance of its obligations under any of them or the
transactions contemplated by any of them, or the transfer of the Assets to the
Trust.
(f) Litigation. No actions, proceedings, or investigations are pending
or, to the best of the Depositor's knowledge, threatened against the Depositor
before any governmental authority having jurisdiction over the Depositor
(1) asserting the invalidity of this Agreement or any other
Transaction Documents to which the Depositor is a party,
(2) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any other Transaction Documents to
which the Depositor is a party,
(3) seeking any determination that might materially and adversely
affect the performance by the Depositor of its obligations under, or the
validity or enforceability of, this Agreement or any other Transaction
Documents to which the Depositor is a party, or
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(4) seeking to affect adversely the income tax attributes of the
Trust under the United States federal or New York State or Delaware
income tax law.
ARTICLE 3
THE CERTIFICATES
Section 3.01 Initial Beneficiary of Trust.
Upon the formation of the Trust by the contribution by the Depositor
pursuant to Section 2.05 and until the issuance of the Certificates, the
Depositor shall be the sole beneficiary of the Trust.
Section 3.02 Issuance of the Certificates.
(a) On the Closing Date, the Trust will issue three classes of
Certificates designated as the "Revolving Home Equity Loan Asset Backed
Certificates, Series 200_-_, Class R-[1]," "Revolving Home Equity Loan Asset
Backed Certificates, Series 200_-_, Class R-[2]," and "Revolving Home Equity
Loan Asset Backed Certificates, Series 200_-_, Class C" pursuant to this
Agreement and deliver them to the order of the Depositor when authenticated.
(b) The Certificates will be issued in definitive, fully registered form
and will be substantially in the form of Exhibit B-1 and B-2. The Certificates
will, on the Closing Date, be executed, authenticated, and delivered by the
Owner Trustee to the order of the Depositor concurrently with the transfer of
the Mortgage Loans to the Trust.
(c) The Certificates will be executed by manual or facsimile signature on
behalf of the Owner Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time their
signatures were affixed, authorized to sign on behalf of the Owner Trustee
shall bind the Trust, notwithstanding that any of them have ceased to be so
authorized before the authentication and delivery of the Certificates or did
not hold such offices at the date of the Certificate. The Certificates will
not be book-entry certificates.
Section 3.03 Authentication of Certificates.
No Certificate shall be entitled to any benefit under this Agreement, or
be valid for any purpose, unless the Certificate is manually authenticated by
the Owner Trustee substantially in the form provided in this Agreement, and
the authentication on any Certificate will be conclusive evidence, and the
only evidence, that the Certificate has been duly authenticated and delivered.
All Certificates shall be dated the date of their authentication.
The Trust initially appoints the Indenture Trustee to act as the
authentication agent of the Owner Trustee. All references to the
authentication of the Certificates shall be considered to include the
authentication agent.
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Section 3.04 Registration of and Transfer and Exchange of Certificates.
The Trust shall keep a certificate register (the "Certificate Register")
in which, subject to any reasonable regulations it may prescribe, the Trust
shall provide for the registration of the Certificates and, to the extent
permitted by this Agreement, of transfers and exchanges of the Certificates.
The certificate registrar (the "Certificate Registrar") is initially the
Indenture Trustee.
Whenever any Certificate is surrendered for registration of transfer at
the office or agency of the Certificate Registrar maintained for that purpose
and the conditions of this Section have been satisfied, the Owner Trustee, on
behalf of the Trust, shall execute, authenticate, and deliver in the name of
the designated transferees, one or more new Certificates in authorized
denominations of a like aggregate amount dated the date of authentication by
the Owner Trustee or any authenticating agent.
At the option of its Holder, each Certificate may be exchanged for other
Certificates, in authorized denominations of a like aggregate amount, by
surrendering the Certificate to be exchanged at the office or agency of the
Certificate Registrar maintained for that purpose.
Every Class C Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a fully completed representation
letter, substantially in the form of Exhibit C-1, and every Residual
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by fully completed representation letter and transfer
affidavit, substantially in the forms of Exhibit C-1 and Exhibit C-2,
respectively, each delivered at the expense of the Certificateholder, and duly
executed by the Certificateholder or an attorney-in-fact for the
Certificateholder duly authorized in writing. Each Holder of a Certificate
must satisfy the transfer restrictions in the representation letter. Each
Certificate surrendered for registration of transfer or exchange shall be
cancelled and subsequently disposed of by the Owner Trustee in accordance with
its customary practice.
No service charge shall be made for the registration of transfer or
exchange of any Certificate, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of the Certificate.
The preceding provisions of this Section notwithstanding, the Owner
Trustee need not transfer or exchange, and the Certificate Registrar need not
register transfers or exchanges, of Certificates during the fifteen days
preceding the due date for any payment on the Certificates.
The Certificate Registrar shall at all times maintain an office or agency
where Certificates may be surrendered for registration of transfer or
exchange.
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Section 3.05 Mutilated, Destroyed, Lost, or Stolen Certificate.
If any mutilated Certificate is surrendered to the Certificate Registrar,
then the Owner Trustee shall execute and the Certificate Registrar shall
authenticate and deliver, in exchange for or in lieu of the mutilated
Certificate, a new Certificate of like tenor and denomination.
If the Certificate Registrar receives evidence to its satisfaction of the
destruction, loss, or theft of a Certificate and the Certificate Registrar
receives the security or indemnity it requires to hold it harmless, then in
the absence of notice to the Issuer, the Certificate Registrar, or the
Certificate Registrar that the Certificate has been acquired by a Protected
Purchaser, and if the requirements of Section 8-406 of the UCC are met and
subject to Section 8-405 of the UCC, then the Owner Trustee shall execute and
the Certificate Registrar shall authenticate and deliver, in exchange for or
in lieu of the destroyed, lost, or stolen Certificate, a new Certificate of
like tenor and denomination. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen, or destroyed Certificate
is found.
The Certificate Registrar may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed on the issuance
of the new Certificate under this Section.
Section 3.06 Maintenance of Office or Agency.
The Trust shall maintain an office or agency where notices and demands on
the Trust regarding the Certificates and the Transaction Documents may be
served. The Trust initially designates Indenture Trustee as its office for
those purposes. The Owner Trustee shall give prompt written notice to the
Certificateholders of the location, and any change in the location, of this
office or agency. If the Trust ever fails to maintain this office or agency,
then presentations, surrenders, notices, and demands may be made or served at
the Corporate Trust Office of the Owner Trustee.
Section 3.07 Persons Considered Certificateholders.
Before due presentation of a Certificate for registration of transfer,
the Owner Trustee, the Certificate Registrar, and any paying agent for the
Certificates shall treat the person in whose name any Certificate is
registered in the Certificate Register as the owner of the Certificate for the
purpose of receiving distributions pursuant to Section 5.02 and for all other
purposes whatsoever, and none of the Owner Trustee, the Certificate Registrar,
and any paying agent for the Certificates shall be bound by any notice to the
contrary.
Section 3.08 Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar shall furnish to the Depositor or the Owner
Trustee a list of the names and addresses of the Certificateholders as of the
most recent Record Date within fifteen days after receipt by the Certificate
Registrar of a written request for it from the Depositor or the Owner Trustee.
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Section 3.09 Appointment of Certificate Paying Agent.
The paying agent for the Certificates shall make distributions to the
Holder of each Certificate pursuant to this Agreement and shall report the
amounts of those distributions to the Owner Trustee. The Administrator, on
behalf of the Trust, may remove the Certificate Paying Agent if the
Administrator determines in its sole discretion that the Certificate Paying
Agent has failed to perform its obligations under this Agreement in any
material respect. The Certificate Paying Agent initially shall be the
Indenture Trustee. The Certificate Paying Agent shall be permitted to resign
as Certificate Paying Agent on thirty days' written notice to the Owner
Trustee. If the Indenture Trustee is no longer the Certificate Paying Agent,
the Administrator shall appoint a bank or trust company as successor to act as
Certificate Paying Agent. The Administrator shall cause the successor
Certificate Paying Agent or any additional Certificate Paying Agent appointed
by the Administrator to execute and deliver to the Trust an instrument in
which the successor Certificate Paying Agent or additional Certificate Paying
Agent agrees with the Trust that, as Certificate Paying Agent, the successor
Certificate Paying Agent or additional Certificate Paying Agent will hold any
sums held by it for payment to the Certificateholders in trust for the benefit
of the Certificateholders entitled to them until those sums are paid to the
appropriate Certificateholders. The Certificate Paying Agent shall return all
unclaimed funds to the Trust, and upon removal of a Certificate Paying Agent,
the Certificate Paying Agent shall also return all funds in its possession to
the Trust. Any reference in this Agreement to the Certificate Paying Agent
shall include any co-Certificate Paying Agent unless the context requires
otherwise.
Section 3.10 Restrictions on Transfer; Legends.
(a) The Certificates shall be assigned, transferred, exchanged, pledged,
financed, hypothecated, or otherwise conveyed (collectively, for purposes of
this Section and any other Section referring to the Certificates,
"transferred" or a "transfer") only in accordance with this Section.
(b) No transfer of a Certificate will be made unless the transfer is
exempt from the registration requirements of the Securities Act of 1933 (the
"Act") and any applicable state securities laws or is made in accordance with
the Act and those laws. Except for the initial issuance of a Certificate to
the Master Servicer or the Depositor (or an affiliate of any of them) (and any
subsequent transfer by any of them to one of its Affiliates), the Owner
Trustee will require either:
(1) the transferee to execute an investment letter acceptable to and
in form and substance satisfactory to the Owner Trustee certifying to the
Owner Trustee the facts surrounding the transfer, which investment letter
shall not be an expense of the Owner Trustee or
(2) an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Owner Trustee and the Depositor that the transfer may
be made pursuant to an exemption from the Act, describing the applicable
exemption and its
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basis, or is being made pursuant to the Act, which Opinion of Counsel
shall not be an expense of the Owner Trustee or the Depositor.
The Holder of a Certificate desiring to effect a transfer shall indemnify
the Trust against any liability that may result if the transfer is not so
exempt or is not made in accordance with any federal and state laws.
(c) No transfer of an interest in a Certificate will be made unless the
Owner Trustee has received either:
(1) a representation letter from the proposed transferee, acceptable
to and in form and substance satisfactory to the Owner Trustee, to the
effect that the proposed transferee is not an employee benefit plan
subject to Section 406 of ERISA or a plan subject to Section 4975 of the
Code, or a person acting on behalf of, or investing plan assets of, any
such plan, which representation letter shall not be an expense of the
Owner Trustee; or
(2) an Opinion of Counsel acceptable to the Owner Trustee to the
effect that the purchase or holding of the Certificate will not result in
a non-exempt prohibited transaction under ERISA or Section 4975 of the
Code and will not subject the Owner Trustee to any obligation in addition
to those undertaken in this Agreement, which Opinion of Counsel shall not
be an expense of the Owner Trustee or the Depositor;
except that, in the case of the initial issuance of a Certificate to the
Master Servicer or the Depositor (or an affiliate of any of them) (and any
subsequent transfer by any of them to one of its Affiliates), the
representation in clause (i) shall be deemed to have been made.
(d) No transfer of an interest in a Class R-[1] Certificate after its
initial issuance will be made unless:
(1) the proposed Holder expressly assumes the performance of every
obligation of the existing Holder under this Agreement and the other
Transaction Documents pursuant to an agreement acceptable to the Owner
Trustee, including the obligation to advance funds to the Trust as
necessary so that the Trust is able to pay the purchase price for
Additional Home Equity Loans;
(2) the existing Holder delivers to the Owner Trustee an Officer's
Certificate stating that the transfer complies with this Section 3.10 and
that all the conditions in this Section 3.10 have been complied with, and
an Opinion of Counsel stating that all the conditions in this Section
3.10 have been complied with; and
(3) the Rating Agency Condition is satisfied with respect to the
transfer.
(e) Each person who has or who acquires any ownership interest in a
Residual Certificate by accepting its ownership interest agrees to the
following provisions, and the rights of each person acquiring any ownership
interest in a Residual Certificate are subject to the following provisions:
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(1) Only Permitted Transferee may hold an ownership interest in a
Residual Certificate and each person holding or acquiring any ownership
interest in a Residual Certificate shall promptly notify the Indenture
Trustee of any change or impending change in its status as a Permitted
Transferee.
(2) No ownership interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the
Indenture Trustee shall not register the transfer of any Residual
Certificate unless the Indenture Trustee has received a Transfer
Affidavit from the initial owner or the proposed transferee, except in
connection with the registration of the Tax Matters Person Certificate in
the name of the Indenture Trustee or any registration in the name of, or
transfer of a Residual Certificate to, an Affiliate of the Depositor
(either directly or through a nominee).
(3) Each person holding or acquiring any ownership interest in a
Residual Certificate shall
(A) obtain a Transfer Affidavit from any other person it
attempts to transfer its ownership interest in a Residual
Certificate to,
(B) obtain a Transfer Affidavit from any person for whom it is
acting as nominee, trustee, or agent in connection with any transfer
of any ownership interest in a Residual Certificate, and
(C) not transfer its ownership interest in a Residual
Certificate to any other person if it has actual knowledge that such
person is not a Permitted Transferee.
(4) Any attempted transfer of any ownership interest in a Residual
Certificate in violation of this Section 3.10(e) shall be void ab initio
and shall vest no rights in the purported transferee. If any purported
transferee becomes a Holder of a Residual Certificate in violation of
this Section 3.10(e), then the last preceding Permitted Transferee shall
be restored to all rights as Holder of the Residual Certificate
retroactive to the date of registration of transfer of the Residual
Certificate. The Indenture Trustee shall be under no liability to any
person for any registration of transfer of a Residual Certificate that is
in fact not permitted by this Section 3.10(e) or for making any payments
due on the Residual Certificate to its Holder or taking any other action
with respect to the Holder under this Agreement so long as the transfer
was registered after receipt of the related Transfer Affidavit and any
other required documents. The Indenture Trustee shall be entitled but not
obligated to recover from any Holder of a Residual Certificate that was
in fact not a Permitted Transferee at the time it became a Holder or, at
such subsequent time as it became other than a Permitted Transferee, all
payments made on the Residual Certificate at and after either such time.
Any such payments so recovered by the Indenture Trustee shall be paid and
delivered by the Indenture Trustee to the last preceding Permitted
Transferee of the Residual Certificate.
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(5) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Indenture Trustee, all information
necessary to compute any tax imposed under Section 860E(e) of the Code as
a result of a transfer of an ownership interest in a Residual Certificate
to any Holder who is not a Permitted Transferee.
(f) Each Certificate shall bear a legend substantially in the following
form:
This certificate has not been and will not be registered under the Securities
Act of 1933, as amended, or the securities laws of any state and may not be
resold or transferred unless it is registered pursuant to the Securities Act
of 1933 and the securities laws of any state or is sold or transferred in
transactions that are exempt from registration under the Securities Act of
1933 and under applicable state law and is transferred in accordance with
Section 3.10 of the Trust Agreement related to CWHEQ Revolving Home Equity
Loan Trust, Series 200_-_. Neither this certificate nor any interest in it may
be transferred unless the transferee delivers to the trustee either a
representation letter to the effect that the transferee is not an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974,
as amended, a plan subject to Section 4975 of the Code, as amended, or a
person acting on behalf of or using the assets of any such plan; or an opinion
of counsel in accordance with Section 3.10(c) of the Trust Agreement related
to CWHEQ Revolving Home Equity Loan Trust, Series 200_-_. Notwithstanding
anything else to the contrary herein, any purported transfer of this
certificate to or on behalf of an employee benefit plan subject to ERISA or to
the Code without the opinion of counsel satisfactory to the trustee as
described above shall be void.
(g) No Certificate shall be transferred except to (i) the Master
Servicer, the Depositor, or the Trust (or an affiliate of any of them) or (ii)
a qualified institutional buyer (as defined in Rule 144A under the Securities
Act). Each person (other than the Master Servicer, or the Trust (or an
affiliate of them)) to whom a Certificate is proposed to be transferred will
be required to certify to the holder of the R-[1] Certificates, the Trust, and
the Certificate Registrar that it is a qualified institutional buyer.
The Class R-[1] Certificates may not be transferred except to the Master
Servicer, the Depositor, or the Trust (or an affiliate of any of them).
(h) Notwithstanding anything in this Agreement to the contrary, the
Depositor, without the consent of any Noteholder or Certificateholder, may
amend this Section 3.10 if it receives an Opinion of Counsel to the effect
that the amendment will not cause the imposition of any tax on any REMIC or
the Certificateholders or Noteholders, or cause any REMIC to fail to qualify
as a REMIC at any time that any Certificates or Notes are outstanding.
(i) The restrictions on transfers of a Residual Certificate in this
Section 3.10 shall cease to apply (and the applicable portions of the legend
on a Residual Certificate may be deleted) with respect to transfers occurring
after delivery to the Owner Trustee of an Opinion of Counsel to the effect
that the elimination of the restrictions will not cause any REMIC to fail to
20
qualify as a REMIC at any time that the Certificates are outstanding or result
in the imposition of any tax on the Trust, a Certificateholder, Noteholder, or
another person. Each person holding or acquiring any ownership interest in a
Residual Certificate consents to any amendment of this Agreement that, based
on an Opinion of Counsel furnished to the Owner Trustee, is reasonably
necessary
(1) to ensure that the record ownership of, or any beneficial
interest in, a Residual Certificate is not transferred, directly or
indirectly, to a person that is not a Permitted Transferee or
(2) to provide for a means to compel the transfer of a Residual
Certificate that is held by a person that is not a Permitted Transferee
to a Holder that is a Permitted Transferee.
(j) Pursuant to the Sale and Servicing Agreement, Principal Collections
may be applied to purchase Additional Balances for the Trust during a
Collection Period. If on any Collection Period Principal Collections are
insufficient to purchase all Additional Balances, the Holder of the Class
R-[1] Certificates will advance funds to the Trust to purchase the Additional
Balances that were not funded by Principal Collections. The Class R-[1]
Balance will be repaid to the Class R-[1] Certificates from Principal
Collections on the Mortgage Loans allocated to the Certificates on future
Payment Dates and will be entitled to allocation of Interest Collections on
the Mortgage Loans.
If the Holder of the Class R-[1] Certificates fails to advance to the
Trust amounts specified in the previous paragraph, the Sponsor will be
required to purchase, and the Holder of the Class R-[1] Certificates will be
required to sell, the Class R-[1] Certificates and the Sponsor will assume all
of the obligations of the Holder of the R-[1] Certificates, including the
obligation to make advances as provided in the preceding paragraph.
Section 3.11 REMIC Provisions.
The Owner Trustee will elect as provided in this Section that the Trust,
other than the Basis Risk Carryforward Reserve Fund and the Additional Loan
Account, be treated for federal income tax purposes as comprising three real
estate mortgage investment conduits (each a "REMIC" or, in the alternative,
the "Lower Tier REMIC," the "Middle Tier REMIC" and the "Master REMIC"). The
Lower Tier REMIC will hold as assets all property of the Trust, other than the
Basis Risk Carryforward Reserve Fund and the Additional Loan Account, and will
be evidenced by (i) the Lower Tier REMIC Regular Interests, which will be
uncertificated and will represent the "REMIC regular interests" in the Lower
Tier REMIC, and (ii) the Class LT-R Interest, which will represent the "REMIC
residual interest" in the Lower Tier REMIC. The Middle Tier REMIC will hold as
assets the Lower Tier REMIC Regular Interests and will be evidenced by Middle
Tier REMIC Regular Interests, which will be uncertificated and will represent
the REMIC regular interests in the Middle Tier REMIC, and the Class MT-R
Interest, which will represent the REMIC residual interest in the Middle Tier
REMIC. The Master REMIC will hold as assets the Middle Tier REMIC Regular
Interests and will be evidenced by
21
the Notes and the Certificates, each of which (other than the Class R-[2]
Certificate) will represent ownership of one or more REMIC regular interests
in the Master REMIC. The Class R-[1] Certificate will represent ownership of
the sole Class of the REMIC residual interest in each of the Lower Tier REMIC
and the Middle Tier REMIC. The Class R-[2] Certificate will represent
ownership of the sole Class of the REMIC residual interest in the Master
REMIC. The latest possible maturity date, for federal income tax purposes, of
all REMIC regular interests created herein shall be the Latest Possible
Maturity Date.
The Lower Tier REMIC
The Lower Tier REMIC Regular Interests will have the principal balances
and pass-through rates as set forth in the following table:
--------------------------------------- --------------------------------------- ----------------------------------
Lower Tier REMIC Interests Initial Principal Balance Pass-Through Rate
--------------------------------------- --------------------------------------- ----------------------------------
LT-1............................... (1) (2)
--------------------------------------- --------------------------------------- ----------------------------------
LT-2............................... (3) (4)
--------------------------------------- --------------------------------------- ----------------------------------
LT-IO.............................. N/A (5)
--------------------------------------- --------------------------------------- ----------------------------------
R-[1].............................. (6) (6)
--------------------------------------- --------------------------------------- ----------------------------------
(1) The LT-1 Interest shall have a principal balance equal to the initial
Mortgage Loan Balance as of the Cut-off Date.
(2) During the first Collection Period, the LT-1 Interest shall accrue an
amount of interest equal to the interest accruing on the Mortgage Loan
Balance from the Cut-off Date through _______, 200_. Thereafter, interest
shall accrue on the LT-1 interest equal to a per annum rate equal to the
weighted average of the Loan Rates of the Mortgage Loans (weighted on the
basis of the daily average Asset Balance of each Mortgage Loan during the
related billing cycle before the Collection Period relating to the
Payment Date) net of (i) the Servicing Fee Rate, and (ii) the rate at
which the premium payable to the Note Insurer is calculated (adjusted to
reflect the difference between the Mortgage Loan Balance as of the
beginning of the Collection Period and the Note Principal Balance of the
Class A Notes).
(3) The LT-2 Interest shall have a principal balance equal to the amount
deposited in the Trust Fund on the Closing Date to purchase Additional
Home Equity Loans.
(4) During the first Collection Period, the LT-2 Interest shall not accrue
any interest. Thereafter, interest shall accrue on the LT-2 interest
equal to a per annum rate equal to the weighted average of the Loan Rates
of the Mortgage Loans (weighted on the basis of the daily average Asset
Balance of each Mortgage Loan during the related billing cycle before the
Collection Period relating to the Payment Date) net of (i) the Servicing
Fee Rate and (ii) the rate at which the premium payable to the Note
Insurer is calculated (adjusted to reflect the difference between the
Mortgage Loan Balance as of the beginning of the Collection Period and
the Note Principal Balance of the Class A Notes).
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(5) The LT-IO shall be entitled to all interest accruing on Additional Home
Equity Loans acquired from the date after the Closing Date through
_______, 200_, and nothing thereafter.
(6) The Class R-[1] Certificates shall not have any initial principal
balance. If there are any Net Draws, the Class R-[1] Certificates shall
contribute an amount equal to such Net Draws to a reserve fund in the
Lower Tier REMIC established to acquire such Net Draws. After the first
Collection Period the Class R-[1] Certificates shall be entitled to its
proportionate amount of interest accruing based on the outstanding Net
Draws. For the first Collection Period, if there are any Net Draws, the
Class R-[1] Certificates shall be entitled to the excess of the interest
accruing on the Mortgage Loans over the interest that accrues on the
Lower Tier REMIC regular interests.
The Middle Tier REMIC
The Middle Tier REMIC Regular Interests will have the principal balances,
pass-through rates and Corresponding Classes of Certificates as set forth in
the following table:
Middle Tier REMIC Initial Principal Pass-Through Corresponding
Regular Interests Balance Rate Class of Notes
MT-[1]........................ [____________] (2) N/A
MT-[2]........................ [____________] (2) N/A
MT-[3]........................ [____________] (2) N/A
MT-[4]........................ [____________] (2) N/A
MT-[5]........................ [____________] (2) N/A
MT-[6]........................ (1) (2) N/A
MT-A ......................... (3) (2) A
MT-M-[1]...................... (3) (2) M-[1]
MT-M-[2]...................... (3) (2) M-[2]
MT-M-3........................ (3) (2) M-[3]
MT-M-4........................ (3) (2) M-[4]
MT-M-5........................ (3) (2) M-[5]
MT-M-6........................ (3) (2) M-[6]
MT-B.......................... (3) (2) B
MT-Accrual.................... (4) (2) N/A
MT-IO......................... N/A (5) N/A
(1) The Class MT-6 shall have an initial principal balance equal to 50% of
the Mortgage Loan Balance as of the Cut-off Date plus 50% of the amount
contributed to the Trust on the Closing Date to acquire Additional Home
Equity Loans less the sum of the principal balances of MT-1 through MT-5
Interests.
(2) Each MT Interest shall have an interest rate equal to the weighted
average of LT-1 and LT-2 for such Payment Date.
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(3) Each MT-A Interest shall have an initial balance equal to 50% of its
Corresponding Class of Notes and on each Payment Date principal payments
and Realized Losses shall be allocated so as to cause such Class to
continue to equal 50% of its Corresponding Class of Notes.
(4) The MT-Accrual shall have a principal balance equal to the sum of (a) 50%
of the Mortgage Loan Balance as of the Cut-off Date (b) 50% of the amount
contributed to the Trust on the Closing Date to acquire Additional Home
Equity Loans, and (c) 50% of initial overcollateralization. The initial
overcollateralization is the excess of the sum of outstanding balance of
the initial Mortgage Loans plus the amount contributed to the Trust to
acquire Additional Home Equity Loans. The MT-Accrual shall accrue its
interest so that on each Payment Date its balance equals the excess of
50% (less Net Draws) as of the end of the Collection Period over 50% of
the Note Principal Balance of the Class A Notes (after taking into
account distributions for such Payment Date).
(5) The MT-IO shall be entitled to receive the amounts due the LT-IO.
On each Payment Date: (i) 50% of the principal reduction in the
principal balance as a result of the receipt of principal from the Mortgage
Loans, proceeds from the liquidation of any REO, and net Realized Losses
(other than any amount used to reduce Net Draws) shall be paid first to the
MT-6 Interest until its principal balance is reduced to zero, and then
sequentially to the Class MT-1 through MT-5 until such classes are reduced to
zero. The other 50% of the principal reduction in the principal balance shall
be allocated as described above for the MT-A Interest and the MT-Accrual
Interest.
The Master REMIC
The following table specifies the class designation, pass through rate,
and principal amount for each class of Master REMIC Interest:
Master REMIC Regular Interests Initial Principal Balance Pass Through-Through Rate
Class A Notes..................... [____________] (1)
Class M-[1] Notes................. [____________] (1)
Class M-[2] Notes................. [____________] (1)
Class M-[3] Notes................. [____________] (1)
Class M-[4] Notes................. [____________] (1)
Class M-[5] Notes................. [____________] (1)
Class M-[6] Notes................. [____________] (1)
Class B Notes..................... [____________] (1)
Class A-IO Notes................ (2) (3)
Class C Certificates.............. (4) (5)
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(1) The pass-through rate on each of the Notes is equal to the lesser of its
LIBOR rate plus its margin and a rate equal to the weighted average of
the MT Interests (other than the MT-IO).
(2) The Class A-IO shall not have any principal balance. The notional balance
of the Class A-IO is initially equal to sum of the initial Mortgage Loans
and the amount contributed to the Trust to acquire Additional Home Equity
Loans.
(3) The pass-through rate on the Class A-IO shall equal the excess of the
Pass-Through Rate in respect of the Class MT-1 Interest over the
Component Class A-IO Rate.
(4) The Class C Interest shall have a principal balance equal to the initial
overcollateralization. It shall not be entitled to receive interest on
its principal balance. The C Interest shall have a notional balance equal
to the Mortgage Loan Balance as of the beginning of a Collection Period
less Net Draws.
(5) For each Interest Accrual Period the Class C Certificates are entitled to
an amount (the "Class C Distributable Amount") equal to the sum of (a)
the interest payable on the MT-IO Interest, and (b) a specified portion
of the interest on the Middle Tier REMIC Regular Interests equal to the
excess of the Class A-IO Rate over the product of two and the rate on the
MT-A Interest (capped at the rate on its Corresponding Class of Notes)
and MT-Accrual Interest (subject to a cap of 0.00%). The Pass-Through
Rate of the Class C Certificates shall be a rate sufficient to entitle it
to all interest accrued on the Mortgage Loans less the interest accrued
on the other interests issued by the Master REMIC. The Class C
Distributable Amount for any Payment Date is payable from current
interest on the Mortgage Loans to the extent not used to increase
overcollateralization and any related amount of overcollateralization
released for that Payment Date.
The foregoing REMIC structure is intended to cause all of the cash from
the Mortgage Loans to flow through to the Master REMIC as cash flow on a REMIC
regular interest, without creating any shortfall--actual or potential (other
than for credit losses) to any REMIC regular interest.
For any purpose for which the interest rate in respect of any Lower Tier
REMIC regular interest created hereunder is calculated, the interest rate on
the Mortgage Loans shall be appropriately adjusted to account for the
difference between the monthly day count convention of the Mortgage Loans and
the monthly day count convention of the regular interests issued by each of
the REMICs. For purposes of calculating the interest rates for each of the
interests issued by REMIC, such rates shall be adjusted to equal a monthly day
count convention based on a 30 day month for each Interest Period and a
360-day year so that the Mortgage Loans and all regular interests will be
using the same monthly day count convention.
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Section 3.12 Tax Matters.
(a) The assets of the Trust with respect to which a REMIC election is to
be made as provided in Section 3.11 are intended to be a real estate mortgage
investment conduit as defined in and in accordance with the REMIC Provisions,
and the affairs of the Trust shall be conducted so that each REMIC created
pursuant to Section 3.11 qualifies as a real estate mortgage investment
conduit as defined in the REMIC Provisions.
(b) The Trust shall require that the Indenture provide that the Indenture
Trustee act as agent on behalf of the Trust and as such agent it shall:
(1) prepare and file in a timely manner a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066 or any successor form
adopted by the Internal Revenue Service) and prepare and file with the
Internal Revenue Service and applicable state or local tax authorities
income tax or information returns for each taxable year for each REMIC as
required by the Code or state or local tax laws, regulations, or rules,
and furnish to the Holders of the Notes and the Certificates any
schedules, statements, or information required by the Code or state or
local tax laws, regulations, or rules;
(2) within thirty days of the Closing Date, furnish to the Internal
Revenue Service, on Forms 8811 or as otherwise may be required by the
Code, the name, title, address, and telephone number of the person that
the Holders of the Notes and the Certificates may contact for tax
information relating to the Notes and the Certificates, together with
such additional information as may be required by Form 8811, and update
such information as required by the Code for the Trust;
(3) make elections on behalf of each REMIC to be treated as a REMIC
on the federal tax return of each REMIC for its first taxable year (and,
if necessary, under applicable state law);
(4) prepare and forward to the Holders of the Notes and the
Certificates and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required
to be provided to them in accordance with the REMIC Provisions, including
the calculation of any original issue discount;
(5) provide any information necessary for the computation of any tax
imposed on any transfer of a Residual Certificate (the reasonable cost of
computing and furnishing such information may be charged to the person
liable for the tax);
(6) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC tax status of
any REMIC;
(7) pay, from the sources specified in Section 3.12 of the Trust
Agreement, any federal or state tax, including prohibited transaction
taxes as described below, imposed on any REMIC before its termination
when and as they become payable (but the Indenture Trustee or any other
appropriate person may contest any such tax in
26
appropriate proceedings and the Indenture Trustee may withhold payment of
the tax, if permitted by law, pending the outcome of such proceedings);
(8) ensure that federal, state, or local income tax or information
returns are signed as required by the Code or state or local laws;
(9) maintain records relating to each REMIC necessary to prepare the
foregoing returns, schedules, statements, or information, including the
income, expenses, assets, and liabilities of each REMIC, and the fair
market value and adjusted basis of the assets determined as required by
the Code; and
(10) 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.
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) The Trust shall require that the Transaction Documents provide that
if any tax is imposed on "prohibited transactions" of any REMIC as defined in
Section 860F(a)(2) of the Code, on the "net income from foreclosure property"
of a REMIC as defined in section 860G(c) of the Code, on any contribution to a
REMIC after the Startup Day pursuant to Section 860G(d) of the Code, or any
other tax is imposed on any REMIC (including any federal, state, or local
tax), the tax shall be paid by
o the Indenture Trustee, if the tax arises out of a breach by
the Indenture Trustee of any of its obligations described in Section
3.12(b) and included in the Indenture,
o the Master Servicer, in the case of any minimum tax imposed
on any REMIC pursuant to Sections 23153 and 24874 of the California
Revenue and Taxation Code, or if the tax arises out of a breach by
the Master Servicer or a Seller of any of their obligations under
any Transaction Document,
o the Seller, if the tax arises out of the Seller's obligation
to repurchase a Mortgage Loan pursuant to Section 2.02(b) or 2.04(d)
of the Sale and Servicing Agreement, or
27
o in all other cases, or if any liable party fails to honor its
obligations to pay the tax as provided above, the tax will be paid
FIRST, from amounts otherwise to be distributed on the Class C
Certificates,
SECOND, from amounts otherwise to be distributed on the Class R-[1]
Certificates, and
THIRD, from amounts otherwise to be distributed on the Notes as
provided in the Indenture.
(d) The Trust shall require that the Indenture provide that the Indenture
Trustee shall treat the rights of the holders of Principal Amount Notes to
receive payments from the Basis Risk Carryforward Reserve Fund as rights in a
notional principal contract written by the Holders of the Class C Certificates
in respect of any Basis Risk Carryforward distributed in favor of the holders
of the Principal Amount Notes. Thus, the Principal Amount Notes and the Class
C Certificates shall be treated as representing ownership of not only Master
REMIC regular interests, but also ownership of an interest in an interest rate
cap contract.
(e) The Trust shall require that the Indenture provide that 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 4
ACTIONS BY OWNER TRUSTEE
Section 4.01 Prior Notice to Certificateholders Regarding Certain
Matters.
(a) The Owner Trustee shall give the Certificateholders thirty days'
written notice before taking any of the following actions on behalf of the
Trust. Within thirty days of the date of the notice the Certificateholders may
instruct the Owner Trustee in writing not to take the proposed action or may
provide alternative direction. Thirty days after giving the notice, if the
Owner Trustee has not been instructed otherwise by a majority in interest of
the Holders of the Certificates, then the Owner Trustee may:
(1) initiate any claim or lawsuit by the Trust, or compromise any
action, claim, or lawsuit brought by or against the Trust;
(2) file an amendment to the Certificate of Trust;
(3) amend the Indenture by a supplemental indenture in circumstances
where the consent of any Noteholder is required;
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(4) amend the Indenture by a supplemental indenture in circumstances
where the consent of any Noteholder is not required, but the amendment
materially adversely affects the interests of the Certificateholders;
(5) amend the Administration Agreement; and
(6) appoint a successor Certificate Paying Agent, Certificate
Registrar, Administrator, or Indenture Trustee under the Indenture, or
consent to the assignment by the Transfer Agent and Registrar,
Administrator, or Indenture Trustee of its obligations under the
Indenture.
If the Trust has more than one holder of its Certificates, then the
Holders may only give instructions that are agreed to by the majority of the
Holders (based on the Holders' percentage ownership of the entire Certificate
Interest).
(b) Notwithstanding Section 4.01(a), without prior notice to the
Certificateholders the Owner Trustee may, on behalf of the Trust:
(1) initiate a claim or lawsuit by the Trust for collection of
Assets;
(2) file an amendment to the Certificate of Trust whenever the
amendment is required by the Statutory Trust Statute; or
(3) amend the Administration Agreement to cure any ambiguity or
mistake or effect any other amendment that would not materially adversely
affect the interests of the Certificateholders.
The foregoing provisions of this Section 4.01 do not create a duty on the
part of the Owner Trustee to take any of the actions described above.
Section 4.02 Action by Certificateholders Regarding Certain Matters.
Except when directed by the Certificateholders, the Owner Trustee may not
(a) remove the Administrator pursuant to Section 7(c) of the Administration
Agreement, (b) appoint a successor Administrator pursuant to Section 7(e) of
the Administration Agreement, (c) remove the Master Servicer under the Sale
and Servicing Agreement, or (d) except as expressly provided in the Indenture,
sell Assets after the termination of the Indenture.
Section 4.03 Action by Certificateholders Regarding Bankruptcy.
Except upon delivery to the Owner Trustee by each Certificateholder of a
certificate certifying that the Certificateholder reasonably believes that the
Trust is insolvent, the Owner Trustee may not commence a voluntary proceeding
in bankruptcy relating to the Trust.
Section 4.04 Restrictions on Certificateholder's Power.
A Certificateholder shall not direct the Owner Trustee to take or to
refrain from taking any action if that action or inaction would be contrary to
any obligation of the Trust, or the Owner Trustee under this Agreement or any
of the other Transaction Documents or would be
29
contrary to Section 2.03. The Owner Trustee shall not be obligated to follow
that direction if given.
Section 4.05 Majority Interest.
Except as expressly provided in this Agreement, any action that may be
taken by the Certificateholders under this Agreement shall be taken by
Certificateholders by a majority of the holders voting per capita.
ARTICLE 5
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01 Application of Trust Funds.
(a) On each Distribution Date, the Certificate Paying Agent shall
distribute to the Certificateholders any funds made available to it under
Section 8.01 or 8.03 of the Indenture
(1) on the first Distribution Date, to the Holders of the Class
R-[2] Certificates in reduction of their certificate principal balance
any funds distributed to the Issuer pursuant to Section 8.01(e) of the
Indenture;
(2) if the funds are from Net Draw Payment Amount pursuant to
Section 8.03(e)(i) of the Indenture, to the Holders of the Class R-[1]
Certificate until the Class R-[1] Balance is reduced to zero,
(3) if the funds are distributed pursuant to Section 8.03(e)(iii) of
the Indenture, to the Holders of the Class C Certificate until the Class
C Balance is reduced to zero, and any remaining amount to the Holders of
the Class C Certificate;
(4) to the Holders of the Class C Certificate in an amount equal to
the Class C Share of the funds that are distributed to the Issuer
pursuant to Section 8.03(c)(vi) of the Indenture;
(5) to the Holders of the Class R-[1] Certificate in an amount equal
to the Class R-[1] Share of the distribution if the funds are distributed
to the Issuer pursuant to Section 8.03(c)(vi) of the Indenture;
(6) to the Holders of the Class C Certificate in an amount equal to
the excess of
o the Class C Share of the distribution if the funds are
distributed to the Issuer pursuant to Section 8.03(e)(ii), over
o the Subordinated Transferor Collections for that Payment
Date; and
(7) to the Holders of the Class R-[1] Certificate the excess of any
amount distributed to the Issuer pursuant to Section 8.03(e)(ii) over the
amount to be distributed to the Holder of the Class C Certificate in
Section (6) above.
30
(b) If any withholding tax is imposed on the Trust's payment (or
allocations of income) to the Certificateholders, the withholding tax shall
reduce the amount otherwise distributable to the Certificateholders in
accordance with this Section. The Certificate Paying Agent is authorized and
directed to retain from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is legally
owed by the Trust. This authorization shall not prevent the Certificate Paying
Agent from contesting any tax in appropriate proceedings and withholding
payment of the tax pending the outcome of the proceedings if permitted by law.
The amount of any withholding tax imposed on any distributions shall be
treated as cash distributed to the Certificateholder at the time it is
withheld by the Trust and remitted to the appropriate taxing authority. If
withholding tax might be payable on a distribution to a non-U.S.
Certificateholder, the Certificate Paying Agent may in its sole discretion
withhold an appropriate amount to cover that possibility.
(c) Any Liquidation Loss Amount that is not an Investor Loss Amount
allocated to the Certificates will be first allocated to the Class C Balance
until it is reduced to zero and then to the Class R-[1] Balance until it is
reduced to zero.
Section 5.02 Method of Payment.
Distributions required to be made to a Certificateholder on any Payment
Date shall be made by wire transfer of immediately available funds to the
account of the Certificateholder at a bank or other entity having appropriate
facilities if the Certificateholder so notifies the Certificate Registrar in
writing at least five Business Days before the Payment Date. If appropriate
notice is not given by a Certificateholder, then distributions to that
Certificateholder shall be by check mailed to it at its address in the
Certificate Register.
ARTICLE 6
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01 General Authority.
The Owner Trustee is authorized and directed to execute and deliver the
Transaction Documents to which the Trust is to be a party and each other
document contemplated by the Transaction Documents in such form as the
Depositor shall approve, as evidenced conclusively by the Owner Trustee's
execution of it. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions permitted or
required of the Trust pursuant to the Transaction Documents. The Owner Trustee
is further authorized to take any action the Administrator recommends
regarding the Transaction Documents.
Section 6.02 General Duties.
The Owner Trustee shall discharge all of its responsibilities pursuant to
this Agreement and the other Transaction Documents to which the Trust is a
party and administer the Trust in the interest of the Certificateholders,
subject to this Agreement and the other Transaction Documents. The Owner
Trustee shall be considered to have discharged its obligations under this
31
Agreement and the other Transaction Documents to the extent the Administrator
has agreed in the Administration Agreement to perform any act or to discharge
any duty of the Owner Trustee or the Trust under this Agreement or any other
Transaction Document. The Owner Trustee shall not be liable for the failure of
the Administrator to carry out its obligations under the Administration
Agreement or the other Transaction Documents.
Section 6.03 Action on Instruction.
(a) Subject to Article IV and in accordance with the Transaction
Documents, the Certificateholders may by written instruction direct the Owner
Trustee in the management of the Trust. Such direction may be exercised at any
time by written instruction of the Certificateholders pursuant to Article IV.
(b) The Owner Trustee is not required to take any action under this
Agreement or any other Transaction Document if the Owner Trustee reasonably
determines, or is advised by counsel, that the action
(1) is likely to result in liability on the part of the Owner
Trustee,
(2) is contrary to the terms of this Agreement or of any other
Transaction Document, or
(3) is contrary to law.
(c) Whenever the Owner Trustee is
(1) unable to decide between alternative courses of action under
this Agreement or any other Transaction Document,
(2) unsure about the application of any provision of this Agreement
or any other Transaction Document or it appears to be in conflict with
any other applicable provision, or
(3) if this Agreement permits any determination by the Owner Trustee
or is silent or is incomplete about the course of action that the Owner
Trustee is required to take regarding a particular set of facts,
the Owner Trustee may give appropriate notice to the Certificateholders
requesting instruction and, if the Owner Trustee in good faith follows any
instructions it receives, the Owner Trustee shall not be liable to the
Certificateholders on account of its action or inaction. If the Owner Trustee
has not received appropriate instruction within ten days of the notice (or
within any shorter period necessary under the circumstances) it may, but shall
be under no duty to, take or refrain from taking any action not inconsistent
with this Agreement or the other Transaction Documents that it deems to be in
the best interests of the Certificateholders, and shall have no liability to
the Certificateholders for its action or inaction.
(d) The Owner Trustee may enter into any amendment of any Transaction
Document as to which the Rating Agency Condition is satisfied (without regard
to the Policy, as
32
defined in the Indenture), and when so requested by the Certificateholders,
the Owner Trustee shall enter into any amendment of any Transaction Documents:
(1) that does not impose further obligations or liabilities on the
Owner Trustee, and
(2) 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 have consented.
Section 6.04 No Duties Except as Specified in the Agreement or in
Instructions.
The Owner Trustee shall not have any duty to manage, make any payment on,
register, record, sell, dispose of, or otherwise deal with any Assets, or to
otherwise take or refrain from taking any action under any document
contemplated by this Agreement or any other Transaction Document to which the
Trust is a party, except as expressly provided by this Agreement or in any
written instruction received by the Owner Trustee under Section 6.03. No
implied duties or obligations shall be read into this Agreement or any other
Transaction Document against the Owner Trustee. The Owner Trustee shall have
no responsibility for filing any Financing or Continuation Statement in any
public office at any time or otherwise to perfect or maintain the perfection
of any security interest or lien granted to it under the Sale and Servicing
Agreement or to prepare or file any filing with the Securities and Exchange
Commission for the Trust or to record this Agreement or any other Transaction
Document. Wilmington Trust Company, in its individual capacity, shall, at its
own cost and expense, promptly take all action necessary to discharge any
liens on any part of any Assets resulting from actions by, or claims against,
Wilmington Trust Company, in its individual capacity, that are not related to
the ownership or the administration of the Assets.
Section 6.05 No Action Except Under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of, or
otherwise deal with any part of any Assets, except as provided in this
Agreement, pursuant to the other relevant Transaction Documents, and in
accordance with any instruction delivered to the Owner Trustee pursuant to
Section 6.03.
Section 6.06 Restrictions.
The Owner Trustee shall not take any action that is inconsistent with the
stated purposes of the Trust in Section 2.03. The Certificateholders, by their
acceptance of their Certificates, agree not to direct the Owner Trustee to
take action that would violate the Agreement or any other Transaction
Document.
33
ARTICLE 7
CONCERNING OWNER TRUSTEE
Section 7.01 Acceptance of Trusts and Duties.
The Owner Trustee accepts the trusts created by this Agreement and agrees
to perform its duties under it. The Owner Trustee also agrees to disburse all
moneys actually received by it constituting part of any Assets on the terms of
the Transaction Documents. The Owner Trustee shall not be accountable under
this Agreement or any other Transaction Document under any circumstances
except (1) for its own willful misconduct or gross negligence or (2) for the
inaccuracy of any representation or warranty in Section 7.03. In particular,
but not in limitation (and subject to the exceptions in the preceding
sentence):
(a) The Owner Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Owner Trustee.
(b) The Owner Trustee shall not be liable regarding any action taken or
omitted to be taken by it in accordance with instructions from the
Administrator or the Certificateholders.
(c) No provision of this Agreement or any other Transaction Document
shall require the Owner Trustee to expend or risk its funds or otherwise incur
any financial liability in the performance of any of its rights under this
Agreement or any other Transaction Document if the Owner Trustee has
reasonable grounds for believing that repayment of those funds or adequate
indemnity against the risk or liability is not reasonably assured to it.
(d) Under no circumstances shall the Owner Trustee be liable for
indebtedness under any of the Transaction Documents, including the principal
and interest on any of Notes.
(e) The Owner Trustee shall not be responsible for the validity or
sufficiency of this Agreement or for its due execution by the Depositor or for
the form, character, genuineness, sufficiency, value, or validity of any of
the Assets, or for the validity or sufficiency of the Transaction Documents,
other than the certificate of authentication on the Certificates.
(f) The Owner Trustee shall not be liable to any Noteholder or
Certificateholder, other than as expressly provided for in this Agreement or
expressly agreed to in the other Transaction Documents.
(g) The Owner Trustee shall not be liable for the default or misconduct
of the Depositor, the Indenture Trustee, the Administrator, or the Master
Servicer under any of the Transaction Documents or otherwise. The Owner
Trustee shall have no duty to perform the obligations of the Trust or the
Owner Trustee or any other person under this Agreement or the other
Transaction Documents that are required to be performed by the Administrator
under the Administration Agreement, the Indenture Trustee under the Indenture,
the Master Servicer
34
under the Sale and Servicing Agreement, or the Depositor under the Sale and
Servicing Agreement, or any other person under any other Transaction Document.
(h) The Owner Trustee need not exercise any of the rights or powers
vested in it by this Agreement, or to institute, conduct, or defend any
litigation under this Agreement or any other Transaction Document or
otherwise, at the request, order, or direction of the Certificateholders,
unless one or more Certificateholders have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs and liabilities
that may be incurred by the Owner Trustee thereby.
(i) The right of the Owner Trustee to perform any discretionary act in
this Agreement or in any other Transaction Document shall not be construed as
a duty, and the Owner Trustee shall not be answerable other than for its gross
negligence or willful misconduct in the performance of any discretionary act.
Section 7.02 Furnishing Documents.
The Owner Trustee shall furnish to the Certificateholders, promptly on
written request, copies of all reports, notices, requests, demands,
certificates, financial statements, and any other instruments furnished to the
Owner Trustee under the Transaction Documents.
Section 7.03 Representations and Warranties.
Wilmington Trust Company hereby represents and warrants to the Depositor
that:
(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver, and perform its obligations
under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
(c) Neither the execution and delivery by it of this Agreement, nor the
consummation by it of the transactions contemplated by this Agreement, nor
compliance by it with any of the provisions of this Agreement will contravene
any federal or Delaware law, governmental rule, or regulation governing the
banking or trust powers of the Owner Trustee, or any judgment or order binding
on it, or constitute a default under its charter documents or bylaws.
Section 7.04 Reliance; Advice of Counsel.
(a) The Owner Trustee shall not be liable to anyone in acting under this
Agreement on any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond, or other document or paper believed
by it to be genuine or believed by it to be signed by the proper parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive
evidence that the resolution has been duly adopted and that it is in full
force and effect. As to any fact or
35
matter the method of determination of which is not specifically prescribed in
this Agreement, the Owner Trustee may for all purposes of this Agreement
conclusively rely on a certificate, signed by a Responsible Officer of the
relevant party, as to the fact or matter, and that certificate shall
constitute full protection to the Owner Trustee for any action taken or
omitted to be taken by it in good faith in reliance on it.
(b) In the exercise or administration of the trusts under this Agreement
and in the performance of its obligations under this Agreement or the other
Transaction Documents, the Owner Trustee (1) may act directly or through its
agents or attorneys under agreements entered into with any of them, and the
Owner Trustee shall not be liable for the conduct or misconduct of those
agents or attorneys if they were selected by the Owner Trustee with reasonable
care and (2) may consult with counsel, accountants, and other skilled persons
it selects with reasonable care. The Owner Trustee shall not be liable for
anything done, suffered, or omitted in good faith by it in accordance with the
written opinion or advice of any such counsel, accountants, or other persons.
Section 7.05 Not Acting in Individual Capacity.
Except as provided in this Article, (1) in acting in the capacity of
Owner Trustee pursuant to the trusts created by this Agreement, Wilmington
Trust Company acts solely as Owner Trustee under this Agreement and not in its
individual capacity, and (2) all persons having any claim against the Owner
Trustee under this Agreement or any other Transaction Document shall look only
to the Assets for payment or satisfaction of that claim.
Section 7.06 Owner Trustee Not Liable for Certificates or Payment
Obligations.
The recitals in this Agreement and in the Certificates (other than the
signature and authentication of the Owner Trustee on the Certificates) shall
be taken as the statements of the Depositor, and the Owner Trustee assumes no
responsibility for their correctness. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
other Transaction Document, of the Certificates (other than the signature and
authentication of the Owner Trustee on the Certificates), of any Mortgage Loan
or related documents. The Owner Trustee shall not have any responsibility for
(1) the legality, validity, and enforceability of any Mortgage Loan,
or
(2) the perfection and priority of any security interest created in
any Mortgage Loan or the maintenance of that perfection and priority, or
(3) the sufficiency of the Assets or their ability to generate the
payments to be distributed under this Agreement or the Noteholders under
the Indenture, or
(4) the performance or enforcement of any Mortgage Loan, or
(5) the compliance by the Depositor or the Master Servicer with any
warranty or representation made under any Transaction Document or in any
related document, or
36
(6) any action of the Administrator, the Indenture Trustee, or the
Master Servicer or any subservicer taken in the name of the Owner
Trustee.
Section 7.07 Owner Trustee May Own Notes.
Wilmington Trust Company in its individual or any other capacity may
become the owner or pledgee of the Notes and may deal with the Depositor, the
Administrator, the Indenture Trustee, and the Master Servicer in banking
transactions with the same rights as it would have if it were not Owner
Trustee.
ARTICLE 8
COMPENSATION OF OWNER TRUSTEE
Section 8.01 Owner Trustee's Fees.
The Owner Trustee shall receive, as compensation from the Sponsor for its
services under this Agreement, fees that have been separately agreed on in a
fee agreement between the Sponsor and the Owner Trustee.
Section 8.02 Reimbursement and Indemnification.
(a) The Owner Trustee shall be entitled to be reimbursed for its
reasonable expenses (including reasonable attorneys' fees) incurred in the
performance of its duties as Owner Trustee under this Agreement, except to the
extent that such expenses arise out of or result from
o the Owner Trustee's own willful misconduct, bad faith, or
gross negligence,
o the inaccuracy of any of the Owner Trustee's representations
or warranties in Section 7.03,
o taxes based on or measured by any fees, commissions, or
compensation received by the Owner Trustee for acting as such in
connection with any of the transactions contemplated by this
Agreement or any other Transaction Document, or
o the Owner Trustee's failure to use reasonable care to
receive, manage, and disburse moneys actually received by it in
accordance with this Agreement.
(b) The Owner Trustee is hereby indemnified against any liabilities,
obligations, indemnity obligations, losses (excluding loss of anticipated
profits), damages, claims, actions, suits, judgments, out-of-pocket costs,
expenses, and disbursements (including legal and consultants' fees and
expenses) and taxes of any kind whatsoever (collectively, the "Liabilities")
that may be imposed on, incurred by, or asserted at any time against it in any
way relating to or arising out of the Trust Estate, any of the properties
included in the Trust Estate, the administration of the Trust Estate, or any
action or inaction of the Owner Trustee under this
37
Agreement or under the Transaction Documents, except to the extent that such
Liabilities arise out of or result from
o the Owner Trustee's own willful misconduct, bad faith, or
gross negligence,
o the inaccuracy of any of the Owner Trustee's representations
or warranties in Section 7.03,
o taxes based on or measured by any fees, commissions, or
compensation received by the Owner Trustee for acting as such in
connection with any of the transactions contemplated by this
Agreement or any other Transaction Document, or
o the Owner Trustee's failure to use reasonable care to
receive, manage, and disburse moneys actually received by it in
accordance with this Agreement.
(c) Any amounts payable to the Owner Trustee under this Section 8.02
shall be payable, first, out of amounts on deposit in the Collection Account
before payments on the Certificates, second, to the extent not paid pursuant
to clause first within 60 days of first being incurred, by the Holder of the
R-[1] Certificates, and third, to the extent not paid pursuant to clause first
and second within 60 days of first being incurred, by Countrywide Home Loans,
Inc.
(d) The indemnities in this Section 8.02 shall survive the termination of
this Agreement and the removal or resignation of the Owner Trustee under this
Agreement.
(e) Losses, claims, damages, liabilities, and expenses in any way
attributable to defaults on the Mortgage Loans are excluded from the coverage
of the provisions of this Section.
Section 8.03 Payments to Owner Trustee.
Any amounts paid to the Owner Trustee pursuant to this Article shall not
be a part of the Assets immediately after their payment. All amounts then due
to the Owner Trustee from the Trust, the Depositor, or the Master Servicer
under any Transaction Document shall be paid in full before any payments to
the Depositor or any holder of a Certificate.
ARTICLE 9
TERMINATION OF AGREEMENT
Section 9.01 Termination of Agreement.
(a) The Trust shall dissolve when the Trust has made the final
distribution of all moneys or other property or proceeds of all Assets in
accordance with the Transaction Documents, and Article V. The bankruptcy,
liquidation, or dissolution of any Certificateholder shall not (x) terminate
this Agreement or the Trust, (y) entitle that Certificateholder's legal
representatives to obtain an accounting or to take any action in any court for
a partition or
38
winding up of any part of the Trust or the Assets, or (z) otherwise affect the
rights and obligations of the parties to this Agreement.
(b) Except as provided in Section 9.01(a), neither the Depositor nor the
Certificateholders may dissolve, revoke, or terminate the Trust.
(c) On the winding up of the Trust and payment of all liabilities of the
Trust in accordance with Section 3808 of the Statutory Trust Statute, the
Owner Trustee shall cancel the Certificate of Trust by filing a certificate of
cancellation with the Secretary of State of the State of Delaware in
accordance with the provisions of the Statutory Trust Statute. The Owner
Trustee may rely on the directions of the Administrator with respect to
winding up the Trust. Thereupon, this Agreement (other than Article VIII) and
the Trust shall terminate.
ARTICLE 10
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01 Resignation or Removal of Owner Trustee.
The Owner Trustee may at any time resign and be discharged from the
trusts created by this Agreement by giving written notice of resignation to
the Administrator, and the Depositor. When it receives a notice of
resignation, the Administrator shall promptly appoint a successor Owner
Trustee in writing delivered to the resigning Owner Trustee and to the
successor Owner Trustee. If no successor Owner Trustee has been so appointed
and assumed trusteeship within thirty days after the notice of resignation,
the resigning Owner Trustee may petition any court of competent jurisdiction
for the appointment of a successor Owner Trustee.
The Administrator may remove the Owner Trustee if at any time the Owner
Trustee is legally unable to act, or an Insolvency Event occurs with respect
to the Owner Trustee. If the Administrator removes the Owner Trustee under the
authority of the preceding sentence, the Administrator shall promptly appoint
a successor Owner Trustee in writing delivered to the outgoing Owner Trustee
and to the successor Owner Trustee, and shall pay all fees and expenses owed
to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee shall not become effective until acceptance of the
appointment by the successor Owner Trustee pursuant to Section 10.02 and
payment of all fees and expenses of the outgoing Owner Trustee. The
Administrator shall provide notice of any resignation or removal of the Owner
Trustee to each of the Rating Agencies and the Depositor.
Section 10.02 Successor Owner Trustee.
Any successor Owner Trustee appointed pursuant to Section 10.01 shall
execute and deliver to the Administrator, the Depositor, and to the
predecessor Owner Trustee an instrument accepting appointment as trustee under
this Agreement, and thereupon the resignation or removal of the predecessor
Owner Trustee shall become effective. The successor Owner
39
Trustee shall become fully vested with all the rights and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Owner Trustee without any further act, deed, or conveyance. The predecessor
Owner Trustee shall promptly deliver to the successor Owner Trustee all
documents, statements, and monies held by it under this Agreement. The
Administrator and the predecessor Owner Trustee shall execute and deliver any
instruments and do anything else for fully and certainly vesting and
confirming in the successor Owner Trustee all rights and obligations under
this Agreement.
When a successor Owner Trustee accepts its appointment pursuant to this
Section, the Administrator shall mail notice of the change in trustee to the
Certificateholders, the Depositor, the Indenture Trustee, the Noteholders, and
the Rating Agencies. If the Administrator fails to mail that notice within ten
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall mail that notice at the expense of the
Administrator.
The successor Owner Trustee shall file an amendment to the Certificate of
Trust with the Secretary of State of the State of Delaware identifying the
name and principal place of business in the State of Delaware of the successor
Owner Trustee.
Section 10.03 Merger or Consolidation of Owner Trustee.
Any person into which the Owner Trustee may be merged or converted or
with which it may be consolidated, or any person resulting from any merger,
conversion, or consolidation to which the Owner Trustee is a party, or any
person succeeding to all or substantially all of the corporate trust business
of the Owner Trustee, shall be the successor of the Owner Trustee under this
Agreement without the execution or filing of any instrument or any further act
on the part of any of the parties to this Agreement, anything to the contrary
notwithstanding. The Owner Trustee shall mail notice of the merger or
consolidation or other action to each Rating Agency.
Section 10.04 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Assets may at any time be located, the Administrator and the Owner
Trustee acting jointly shall execute and deliver all instruments to appoint
persons approved by the Administrator, and Owner Trustee to act as co-trustee,
jointly with the Owner Trustee, or as separate trustee, of all or any part of
the Assets, and to vest in that person, in that capacity, such title to the
Assets or any part thereof and, subject to the other provisions of this
Section, such rights and obligations as the Administrator and the Owner
Trustee consider appropriate. If the Administrator has not joined in the
appointment within fifteen days after the receipt by it of a request so to do,
the Owner Trustee alone may make the appointment. No notice of the appointment
of any co-trustee or separate trustee shall be required pursuant to Section
10.02.
Each separate trustee and co-trustee shall be appointed and act subject
to the following provisions and conditions:
40
(a) All rights and obligations conferred or imposed on the Owner Trustee
shall be conferred on and exercised or performed by the Owner Trustee and the
separate trustee or co-trustee jointly (the separate trustee or co-trustee is
not authorized to act separately without the Owner Trustee joining in the
act), except to the extent that under applicable law the Owner Trustee is
incompetent or unqualified to perform the acts, in which case those rights and
obligations (including the holding of title to the Assets or any portion of
them in that jurisdiction) shall be exercised and performed singly by the
separate trustee or co-trustee, but solely at the direction of the Owner
Trustee;
(b) No trustee under this Agreement shall be personally liable for any
act or omission of any other trustee under this Agreement; and
(c) The Administrator and the Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request, or other writing given to the Owner Trustee shall be
considered to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to the conditions of
this Article. Each separate trustee and co-trustee, upon its acceptance of the
trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided in the instrument of appointment. Each
instrument of appointment shall be filed with the Owner Trustee and a copy of
it given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act with respect to this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign, or be removed, all of its
estates, properties, rights, and obligations shall vest in and be exercised by
the Owner Trustee, to the extent permitted by law, without the appointment of
a new or successor co-trustee or separate trustee.
ARTICLE 11
MISCELLANEOUS
Section 11.01 Supplements and Amendments.
(a) This Agreement may be amended in any way by the Depositor and the
Owner Trustee, with the consent of any affected Certificateholder, but only if
the Rating Agency Condition is satisfied and the amendment would not cause any
adverse tax event for any Noteholder. In addition, if the Owner Indenture
Trustee has been provided an Opinion of Counsel to the effect that such action
is necessary or helpful to, as applicable, maintain such qualification, avoid
or minimize the risk of the imposition of such a tax, or comply with any
41
such requirements of the Code, then this Agreement may be amended by the
Depositor and the Owner Trustee, without the consent of any Certificateholder,
(1) to modify, eliminate, or add to the provisions of this Agreement
to the extent appropriate to maintain the qualification of the Trust as a
REMIC under the Code,
(2) to avoid or minimize the risk of the imposition of any tax on
the Trust pursuant to the Code that would be a claim against the Trust at
any time before the final redemption of the Certificates, or
(3) to comply with any other requirements of the Code.
Promptly after the execution of any amendment or consent, the Owner
Trustee shall furnish a copy of the amendment or consent to the
Certificateholders, the Indenture Trustee, and each Rating Agency.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause its filing with the Secretary of State of
the State of Delaware.
The Owner Trustee may, but shall not be obligated to, enter into any
amendment that affects the Owner Trustee's own rights or obligations under
this Agreement or otherwise.
Notwithstanding any contrary provision of this Agreement, the Owner
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that the amendment
will not cause the imposition of any tax on any REMIC or the
Certificateholders or cause any REMIC to fail to qualify as a REMIC at any
time that any Certificates are outstanding. In connection with the execution
of any amendment to this Agreement, the Certificate of Trust, or any amendment
of any other agreement to which the Trust is a party, the Owner Trustee shall
be entitled to receive and conclusively rely upon an Opinion of Counsel to the
effect that the amendment is authorized or permitted by this Agreement and the
Transaction Documents.
(b) Notwithstanding anything to the contrary in this Agreement, before
the issuance of the Notes the Certificateholders may amend this Agreement
without the consent of any other party. Promptly after the execution of any
amendment pursuant to this paragraph, the Certificateholders shall furnish a
copy of the amendment to the Owner Trustee.
Section 11.02 Limitations on Rights of Others.
The provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Certificateholders, the Administrator, and, to the
extent expressly provided in this Agreement, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall
be construed to give to any other person any legal or equitable interest in
the Assets or under this Agreement.
42
Section 11.03 Notices.
(a) Except where telephonic instructions or notices are specifically
authorized, all notices, demands, instructions, consents, and other
communications required or permitted under this Agreement shall be in writing
and shall be personally delivered or sent by first class or express mail
(postage prepaid), national overnight courier service, or by facsimile
transmission or other electronic communication device capable of transmitting
or creating a written record (confirmed by first class mail) and shall be
considered to be given for purposes of this Agreement on the day that the
writing is delivered to its intended recipient. Unless otherwise specified in
a notice sent or delivered in accordance with this Section, notices, demands,
instructions, and other communications in writing shall be given to or made on
the respective parties at their respective addresses indicated below, and, in
the case of telephonic instructions or notices, by calling the telephone
number indicated for the party below:
if to the Owner Trustee, addressed to the Corporate Trust Office;
if to the Depositor, addressed to
CWHEQ, Inc.,
c/o ________________
_______________
_______________
_______________
Attention: ________________
Telephone: (___) ___-____
Facsimile: (___) ___-____
(b) Any notice required or permitted to be given to the
Certificateholders shall be given by first-class mail, postage prepaid, at the
addresses of the Certificateholders. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives the notice.
Section 11.04 Severability.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of the prohibition or unenforceability without invalidating the remaining
provisions of this Agreement, and that prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable the provision in any
other jurisdiction.
Section 11.05 Separate Counterparts.
This Agreement may be executed by the parties to this Agreement in
separate counterparts, each of which when so executed and delivered shall be
an original, but all the counterparts shall together constitute but one
instrument.
43
Section 11.06 Successors and Assigns.
All covenants and agreements in this Agreement shall be binding on, and
inure to the benefit of, each of the Depositor and its permitted assignees,
the Owner Trustee and its successors, and each Certificateholder and any of
its successors, all as provided in this Agreement. Any request, notice,
direction, consent, waiver or other instrument or action by any
Certificateholder shall bind its successors.
Section 11.07 Nonpetition Covenant.
Notwithstanding any prior termination of this Agreement, the Depositor
and the Owner Trustee, by entering into this Agreement, and each
Certificateholder, by accepting a Certificate, agree that they shall not,
before the date that is one year and one day after the termination of the
Agreement, file or participate in the filing of any petition against the Trust
that could cause the Trust to incur an Insolvency Event. Nothing in this
Agreement shall prohibit the Owner Trustee from participating in or filing
proofs of claim in any such proceeding instituted by any other person.
Section 11.08 No Recourse.
Each Certificateholder by accepting a Certificate acknowledges that the
Certificate represents the beneficial interest in the Trust only and does not
represent interests in or obligations of the Depositor, the Servicer, the
Administrator, the Owner Trustee, the Indenture Trustee, or any Affiliate of
any of them and no recourse may be had against those parties or their assets,
except as may be expressly stated or contemplated in this Agreement, the other
Transaction Documents, or the Certificates.
Section 11.09 Headings.
The headings of the various Articles and Sections in this Agreement are
for convenience of reference only and shall not define or limit any of the
provisions of this Agreement.
Section 11.10 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
Section 11.11 Rule 144A Information.
As long as any of the securities of this Trust are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act, the
Administrator on behalf of the Trust shall provide to any Noteholder or
Certificateholder and to any prospective purchaser from any of them designated
by any of them on the request of the Noteholder, Certificateholder, or
prospective purchaser, any information required to be provided the holder or
prospective purchaser to satisfy the conditions of Rule 144A(d)(4) under the
Securities Act.
44
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
CWHEQ, INC.
Depositor
By:_________________________________
Name:
Title:
________________________
By:_________________________________
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.
Master Servicer
With respect to Article VIII only
By:_________________________________
Name:
Title:
45
EXHIBIT A
FORM OF CERTIFICATE OF TRUST OF
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200[__]-[__]
This Certificate of Trust of CWHEQ Revolving Home Equity Loan Trust,
Series 200[__]-[__] (the "Trust"), dated [_____], 200[__], is being duly
executed and filed by Wilmington Trust Company, a Delaware banking
corporation, as trustee, to form a statutory trust under the Delaware
Statutory Trust Act (12 Del. Code, ss. 3801 et seq.) (the "Act").
1. Name. The name of the statutory trust is CWHEQ Revolving Home Equity
Loan Trust, Series 200[__]-[__].
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is ________________, [________________],
[_________], Delaware _____, Attention: [______________].
3. Effective Date. This Certificate of Trust shall be effective upon its
filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Trust in accordance with Section 3811(a)(1) of the Act.
________________,
Address: not in its individual capacity,
________________ but solely as owner trustee
________________
________________
Attention: ________________
By: ____________________________
Name:
Title:
X-0
XXXXXXX X-0
[FORM OF] CLASS C CERTIFICATE
This certificate has not been and will not be registered under the Securities
Act of 1933, as amended, or the securities laws of any state and may not be
resold or transferred unless it is registered pursuant to the Securities Act
of 1933 and the securities laws of any state or is sold or transferred in
transactions that are exempt from registration under the Securities Act of
1933 and under applicable state law and is transferred in accordance with
Section 3.10 of the Trust Agreement related to CWHEQ Revolving Home Equity
Loan Trust, Series 200[__]-[__]. Neither this certificate nor any interest in
it may be transferred unless the transferee delivers to the trustee either a
representation letter to the effect that the transferee is not an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974,
as amended, a plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), or a person acting on behalf of or using the
assets of any such plan; or an opinion of counsel in accordance with Section
3.10(c) of the Trust Agreement related to CWHEQ Revolving Home Equity Loan
Trust, Series 200[__]-[__]. Notwithstanding anything else to the contrary
herein, any purported transfer of this certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the opinion of
counsel satisfactory to the trustee as described above shall be void.
Solely for U.S. federal income tax purposes, this certificate is a "regular
interest" in a "Real Estate Mortgage Investment Conduit" as those terms are
defined, respectively, in Sections 860G and 860D of the Code.
B-1-1
Date of Trust Agreement : [______], 200[__]
Cut-off Date : [______], 200[__]
Percentage Interest : 100%
Certificate No. : [_______]
First Distribution Date : [_______]
REVOLVING HOME EQUITY LOAN ASSET BACKED CERTIFICATE
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200[__]-[__]
Class C Certificate
evidencing a percentage interest in the distributions allocable to the Class C
Certificates evidencing an undivided interest in a trust consisting primarily
of a pool of adjustable rate home equity revolving credit line Mortgage Loans
sold by
CWHEQ, INC.
This Certificate does not represent an obligation of or interest in
CWHEQ, Inc. (the "Depositor"), Countrywide Home Loans, Inc., or the Owner
Trustee or any of their affiliates. Neither this Certificate nor the
underlying Assets are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that [____________________________] is the registered
owner of the Percentage Interest evidenced by this Certificate in the entire
interest in the CWHEQ Revolving Home Equity Loan Trust, Series 200[__]-[__]
(the "Trust"), consisting primarily of a pool of Mortgage Loans (the "Mortgage
Loans") transferred by the Depositor and serviced by Countrywide Home Loans,
Inc. (in that capacity, the "Master Servicer"). The Trust was formed pursuant
to the Trust Agreement, dated as of [_____], 200[__] (the "Agreement"),
between the Depositor and Wilmington Trust Company, as trustee (the "Owner
Trustee"), a summary of some of the pertinent provisions of which follows.
Capitalized terms used in this Certificate without definition have the
meanings assigned in the Agreement or the Sale and Servicing Agreement. This
Certificate is issued under and is subject to the Agreement. The Holder of
this Certificate by virtue of the acceptance of it agrees to be bound by the
Agreement.
This Certificate is one of the Certificates from a duly authorized issue
of Certificates designated as Revolving Home Equity Loan Asset Backed
Certificates, Series 200[__]-[__], representing, to the extent specified in
the Agreement, an undivided interest in:
(1) each Mortgage Loan, including its Asset Balance (including all
Additional Balances), the related Mortgage File, all property that
secures the Mortgage Loans, and all collections received on it after the
Cut-off Date (excluding payments due by the Cut-off Date);
(2) property that secured a Mortgage Loan that is acquired by
foreclosure or deed in lieu of foreclosure;
(3) the Depositor's rights under the Purchase Agreement;
B-1-1
(4) the Depositor's rights under the hazard insurance policies
covering Mortgaged Properties; and
(5) certain other property described in the Agreement and Section
2.01 of the Sale and Servicing Agreement (collectively, the "Assets").
A first priority security interest in all the Assets has been granted to the
Indenture Trustee under the Indenture.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds available under the Agreement for payment of
this Certificate and that the Owner Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights, and limitations
of rights and obligations evidenced by this Certificate, and the rights and
obligations of the Owner Trustee.
The Agreement may be amended in any way by the Depositor and the Owner
Trustee, with the consent of any affected Certificateholder but only if the
Rating Agency Condition is satisfied and the amendment would not cause any
adverse tax event for any Noteholder.
No transfer of this Certificate shall be made unless the transfer is
exempt from the registration requirements of the Securities Act of 1933 (the
"Act") and any applicable state securities laws or is made in accordance with
the Act and those laws. In connection with any transfer of this Certificate,
the Owner Trustee will require either:
(i) the transferee to execute an investment letter acceptable to and
in form and substance satisfactory to the Owner Trustee certifying to the
Owner Trustee the facts surrounding the transfer, which investment letter
shall not be an expense of the Owner Trustee or
(ii) an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Owner Trustee and the Depositor that the transfer may
be made pursuant to an exemption from the Act, describing the applicable
exemption and its basis, or is being made pursuant to the Act, which
Opinion of Counsel shall not be an expense of the Owner Trustee or the
Depositor.
In connection with any transfer of this Certificate, the holder transferring
this Certificate shall indemnify the Trust against any liability that may
result if the transfer is not so exempt or is not made in accordance with any
federal and state laws.
Neither this Certificate nor any legal or beneficial interest in it may
be, directly or indirectly, purchased, transferred, sold, pledged, assigned,
or otherwise disposed of, and any proposed transferee of this Certificate
shall not become its registered Holder, unless the conditions in Section 3.10
of the Agreement are satisfied.
B-1-2
No service charge shall be made for the registration of transfer or
exchange of this Certificate, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of this Certificate.
The Owner Trustee, the Certificate Registrar, and any Certificate Paying
Agent will treat the person in whose name this Certificate is registered in
the Certificate Register as its owner for the purpose of receiving
distributions pursuant to Section 5.02 of the Agreement and for all other
purposes whatsoever, and none of the Owner Trustee, the Certificate Registrar,
and any Certificate Paying Agent shall be bound by any notice to the contrary.
The obligations created by the Agreement will terminate and this
Certificate will be retired and the Trust will be dissolved when the Trust has
made the final distribution of all moneys or other property or proceeds of all
Assets in accordance with the Transaction Documents and Article V of the
Agreement. The Holder of the R-[1] Certificates, with the consent of the
Master Servicer, may effect the transfer of all the Mortgage Loans at their
termination purchase price on any Payment Date from the Payment Date
immediately before which the aggregate Note Principal Balance of the Principal
Amount Notes is less than or equal to 10% of the Original Note Principal
Balance of the Principal Amount Notes. This transfer will result in the
termination of the Agreement and the dissolution of the Trust.
B-1-3
Unless the certificate of authentication on this Certificate has been
executed by the Certificate Registrar by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
Dated: [______], 200_
CWHEQ Revolving Home Equity Loan Trust,
Series 200[__]-[__]
By: ________________,
not in its individual capacity but
solely as Owner Trustee
By: _______________________________
Name:
Title:
Certificate of Authentication:
This is one of the Certificates
referenced in the within-mentioned Agreement.
__________________
By: ________________________
Authorized Officer
X-0-0
XXXXXXX X-0
[FORM OF] CLASS [R-[1]][R-[2]] CERTIFICATE
Solely for U.S. federal income tax purposes, this certificate is a "residual
interest" in a "Real Estate Mortgage Investment Conduit," as those terms are
defined, respectively, in sections 860G and 860D of the Internal Revenue Code
of 1986, as amended (the "Code").
This certificate has not been and will not be registered under the Securities
Act of 1933, as amended, or the securities laws of any state and may not be
resold or transferred unless it is registered pursuant to the Securities Act
of 1933 and the securities laws of any state or is sold or transferred in
transactions that are exempt from registration under the Securities Act of
1933 and under applicable state law and is transferred in accordance with
Section 3.10 of the trust agreement related to CWHEQ Revolving Home Equity
Loan Trust, Series 200[__]-[__] (the "Trust Agreement"). Neither this
certificate nor any interest in it may be transferred unless the transferee
delivers to the owner trustee either (a) a representation letter to the effect
that the transferee is not an employee benefit plan subject to Section 406 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or a
plan subject to Section 4975 of the Code, or a person acting on behalf of, or
investing plan assets of, any such plan, or (b) an opinion of counsel in
accordance with Section 3.10(c) of the Trust Agreement. Notwithstanding
anything else to the contrary herein, any purported transfer of this
certificate to or on behalf of an employee benefit plan subject to ERISA or a
plan or arrangement subject to Section 4975 of the Code without the opinion of
counsel satisfactory to the owner trustee as described above shall be void.
[ONLY FOR CLASS R-[1] CERTIFICATE-][This certificate will not be entitled to
payments until such time as described in the Trust Agreement. The holder of
this certificate is required to make certain advances of funds to the trust
pursuant to the Trust Agreement. If the holder of this certificate fails to do
so it may be required to sell this certificate to the Sponsor.]
[ONLY FOR CLASS R-[1] CERTIFICATE-][This certificate may not be transferred
except to the Master Servicer, the Sponsor, the Depositor or the Trust (or an
affiliate of any of them).]
[ONLY FOR TAX MATTER PERSON CERTIFICATE-][This certificate represents the "Tax
Matters Person Residual Interest" issued under the Trust Agreement and may not
be transferred to any person except in connection with the assumption by the
transferee of the duties of the Tax Matter Person under the Trust Agreement.]
B-2-1
Date of Trust Agreement : [____________], 200[__]
Cut-off Date : [____________], 200[__]
Percentage Interest : [____________]%
Certificate No. : [____________]
First Distribution Date : [____________], 200[__]
CUSIP : [____________]
REVOLVING HOME EQUITY LOAN ASSET BACKED CERTIFICATE
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200[__]-[__]
Class [R-[1]][R-[2]] Certificate
evidencing a percentage interest in the distributions
allocable to the Class [R-[1]][R-[2]] Certificates
evidencing an undivided interest in a trust consisting
primarily of a pool of adjustable rate home equity revolving
credit line Mortgage Loans sold by
CWHEQ, INC.
This Certificate does not represent an obligation of or an interest in,
and is not guaranteed by CWHEQ, Inc. (the "Depositor"), Countrywide Home
Loans, Inc., or the Owner Trustee or any of their affiliates. Neither this
Certificate nor the underlying Assets are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that [________________] [ONLY FOR TAX MATTER PERSON
CERTIFICATE-][, as Tax Matters Person,] is the registered owner of the
Percentage Interest evidenced by this Certificate in the entire interest in
the CWHEQ Revolving Home Equity Loan Trust, Series 200[__]-[__] (the "Trust"),
consisting primarily of a pool of Mortgage Loans (the "Mortgage Loans")
transferred by the Depositor and serviced by Countrywide Home Loans, Inc. (in
that capacity, the "Master Servicer"). The Trust was formed pursuant to the
Trust Agreement, dated as of [___________], 200_ (the "Agreement"), between
the Depositor and Wilmington Trust Company, as trustee (the "Owner Trustee"),
a summary of some of the pertinent provisions of which follows. Capitalized
terms used in this Certificate without definition have the meanings assigned
in the Agreement, in the Transfer Affidavit attached thereto as Annex 1 to
Exhibit C-2, or the Sale and Servicing Agreement. This Certificate is issued
under and is subject to the Agreement. The Holder of this Certificate by
virtue of the acceptance of it agrees to be bound by the Agreement.
This Certificate is one of the Certificates from a duly authorized issue
of Certificates designated as Revolving Home Equity Loan Asset Backed
Certificates, Series 200[__]-[__], representing, to the extent specified in
the Agreement, an undivided interest in:
(i) each Mortgage Loan, including its Asset Balance (including all
Additional Balances), the related Mortgage File, all property that
secures the Mortgage Loans, and
B-2-2
all collections received on it after the Cut-off Date (excluding payments
due by the Cut-off Date);
(ii) property that secured a Mortgage Loan that is acquired by
foreclosure or deed in lieu of foreclosure;
(iii) the Depositor's rights under the Purchase Agreement;
(iv) the Depositor's rights under the hazard insurance policies
covering Mortgaged Properties; and
(v) certain other property described in the Agreement and Section
2.01 of the Sale and Servicing Agreement (collectively, the "Assets").
A first priority security interest in all the Assets has been granted to
the Indenture Trustee under the Indenture.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds available under the Agreement for payment of
this Certificate and that the Owner Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
[ONLY FOR THE CLASS R-[1] CERTIFICATES-][The Certificateholder, by its
acceptance of this Certificate, agrees that it will advance funds to the Trust
to purchase the Additional Balances that were not funded by Principal
Collections during a Collection Period. If the Holder of the Class R-[1]
Certificates fails to advance to the Trust these amounts, the Holder of the
Class R-[1] Certificates will be required to sell the Class R-[1] Certificates
to the Sponsor immediately upon request.]
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights, and limitations
of rights and obligations evidenced by this Certificate, and the rights and
obligations of the Owner Trustee.
The Agreement may be amended in any way by the Depositor and the Owner
Trustee, with the consent of any affected Certificateholder but only if the
Rating Agency Condition is satisfied and the amendment would not cause any
adverse tax event for any Noteholder.
No transfer of this Certificate shall be made unless the transfer is
exempt from the registration requirements of the Securities Act of 1933 (the
"Act") and any applicable state securities laws or is made in accordance with
the Act and those laws. In connection with any transfer of this Certificate,
the Owner Trustee will require either:
(i) the transferee to execute an investment letter acceptable to and
in form and substance satisfactory to the Owner Trustee certifying to the
Owner Trustee the facts surrounding the transfer, which investment letter
shall not be an expense of the Owner Trustee or
B-2-3
(ii) an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Owner Trustee and the Depositor that the transfer may
be made pursuant to an exemption from the Act, describing the applicable
exemption and its basis, or is being made pursuant to the Act, which
Opinion of Counsel shall not be an expense of the Owner Trustee or the
Depositor.
Any distribution of the proceeds of any remaining assets of the Trust
Fund to which the holder of this Class [R-[1]][R-[2]] Certificate is entitled
to will be made only upon presentment and surrender of this Class
[R-[1]][R-[2]] Certificate at the Corporate Trust Office or the office or
agency maintained by the Owner Trustee in Wilmington, Delaware.
No transfer of a Class [R-[1]][R-[2]] Certificate shall be made unless
the Owner Trustee shall have received either (i) a representation letter from
the transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Owner Trustee, to the effect that such transferee is not
an employee benefit plan subject to Section 406 of ERISA or a plan or
arrangement subject to Section 4975 of the Code, or a person acting on behalf
of or investing plan assets of any such benefit plan or arrangement, which
representation letter shall not be an expense of the Owner Trustee, the Master
Servicer or the Trust, or (ii) in the case of any such Certificate presented
for registration in the name of an employee benefit plan subject to ERISA or a
plan or arrangement subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), a trustee of any such benefit plan
or arrangement or any other person acting on behalf of any such benefit plan
or arrangement, an Opinion of Counsel satisfactory to the Owner Trustee to the
effect that the purchase and holding of such Certificate will not result in a
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code,
and will not subject the Owner Trustee or the Master Servicer to any
obligation in addition to those undertaken in the Agreement, which Opinion of
Counsel shall not be an expense of the Owner Trustee, the Master Servicer or
the Trust. Notwithstanding anything else to the contrary herein, any purported
transfer of a Class [R-[1]][R-[2]] Certificate to or on behalf of an employee
benefit plan subject to ERISA or a plan or arrangement subject to Section 4975
of the Code without the opinion of counsel satisfactory to the Owner Trustee
as described above shall be void and of no effect.
Each Holder of this Class [R-[1]][R-[2]] Certificate will be deemed to
have agreed to be bound by the restrictions of the Agreement, including but
not limited to the restrictions that (i) each person holding or acquiring any
Ownership Interest in this Class [R-[1]][R-[2]] Certificate must be a
Permitted Transferee, (ii) no Ownership Interest in this Class [R-[1]][R-[2]]
Certificate may be transferred without delivery to the Owner Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate
of the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in
this Class [R-[1]][R-[2]] Certificate must agree to require a transfer
affidavit and to deliver a transfer certificate to the Owner Trustee as
required pursuant to the Agreement, (iv) each person holding or acquiring an
Ownership Interest in this Class [R-[1]][R-[2]] Certificate must agree not to
transfer an Ownership Interest in this Class [R-[1]][R-[2]]
B-2-4
Certificate if it has actual knowledge that the proposed transferee is not a
Permitted Transferee and (v) any attempted or purported transfer of any
Ownership Interest in this Class [R-[1]][R-[2]] Certificate in violation of
such restrictions will be absolutely null and void and will vest no rights in
the purported transferee.
In connection with any transfer of this Certificate, the holder
transferring this Certificate shall indemnify the Trust against any liability
that may result if the transfer is not so exempt or is not made in accordance
with any federal and state laws.
Neither this Certificate nor any legal or beneficial interest in it may
be, directly or indirectly, purchased, transferred, sold, pledged, assigned,
or otherwise disposed of, and any proposed transferee of this Certificate
shall not become its registered Holder, unless the conditions in Section 3.10
of the Agreement are satisfied.
No service charge shall be made for the registration of transfer or
exchange of this Certificate, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of this Certificate.
The Owner Trustee, the Certificate Registrar, and any Certificate Paying
Agent will treat the person in whose name this Certificate is registered in
the Certificate Register as its owner for the purpose of receiving
distributions pursuant to Section 5.02 of the Agreement and for all other
purposes whatsoever, and none of the Owner Trustee, the Certificate Registrar,
and any Certificate Paying Agent shall be bound by any notice to the contrary.
The obligations created by the Agreement will terminate and this
Certificate will be retired and the Trust will be dissolved when the Trust has
made the final distribution of all moneys or other property or proceeds of all
Assets in accordance with the terms of the Transaction Documents and Article V
of the Agreement. The Master Servicer may effect the transfer of all the
Mortgage Loans at their termination purchase price on any Payment Date from
the Payment Date immediately before which the aggregate Note Principal Balance
of the Principal Amount Notes is less than or equal to 10% of the Original
Note Principal Balance of the Principal Amount Notes. This transfer will
result in the termination of the Agreement and the dissolution of the Trust.
B-2-5
Unless the certificate of authentication on this Certificate has been
executed by the Certificate Registrar by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
Dated: [________________]
CWHEQ Revolving Home Equity Loan Trust,
Series 200[__]-[__]
By: ________________,
not in its individual capacity but
solely as Owner Trustee
By: _______________________________
Name:
Title:
Certificate of Authentication:
This is one of the Class [R-[1]][R-[2]]
Certificates referenced in the
within-mentioned Agreement.
__________________
By: ________________________
Authorized Officer
B-2-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to
assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Owner Trustee to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________.
Dated:
______________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
_____________________________________________________________________________,
for the account of _____________________________________________,
account number _______________, or, if mailed by check, to ______
________________________________________________________________. Applicable
B-2-7
statements should be mailed to
____________________________________________________________________________.
This information is provided by ___________________________,
the assignee named above, or ___________________________________, as its
agent.
B-2-28
STATE OF )
) ss.:
COUNTY OF )
On the __st day of _____________, _____ before me, a notary public
in and for said State, personally appeared ______________ __________, known to
me who, being by me duly sworn, did depose and say that he executed the
foregoing instrument.
_________________________________
Notary Public
[Notarial Seal]
B-2-9
EXHIBIT C-1
FORM OF TRANSFEROR INVESTMENT LETTER
FOR CERTIFICATES
Date:
CWHEQ, Inc.
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: ________________
________________, as Owner Trustee
________________
________________
________________
Attention: ________________
Re: CWHEQ Revolving Home Equity Loan Trust, Series
200[__]-[__] Revolving Home Equity Loan Asset Backed
Securities, Series 200[__]-[__] Certificates
--------------------------------------------
Ladies and Gentlemen:
This letter is delivered to you in connection with the sale by
_____________ (the "Transferor") to ______________________ (the "Transferee")
of the Certificates representing a ____% Percentage Interest (the "Transferred
Certificates"). All capitalized terms used in this certificate without
definition have the meanings given to them in the Trust Agreement, dated as of
[_____], 200 [__], between CWHEQ, Inc., as depositor, and ________________, as
owner trustee. The Transferor hereby certifies, represents, and warrants to
you that:
1. The Transferor is the lawful owner of the Transferred Certificates
with the full right to transfer them free from any claims and encumbrances
whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has (a)
offered, transferred, pledged, sold, or otherwise disposed of any Certificate,
any interest in any Certificate, or any other similar security to any person
in any manner, (b) solicited any offer to buy or accept a transfer, pledge, or
other disposition of any Certificate, any interest in any Certificate, or any
other similar security from any person in any manner, (c) otherwise approached
or negotiated with respect to any Certificate, any interest in any Certificate
or any
C-1-1
other similar security with any person in any manner, (d) made any general
solicitation by general advertising or in any other manner, or (e) taken any
other action that (in the case of any of the acts described in clauses (a)
through (e) of this paragraph) would constitute a distribution of any
Certificate under the Securities Act of 1933, as amended (the "Securities
Act"), or would render the disposition of any Certificate a violation of
Section 5 of the Securities Act or any state securities laws, or would require
registration or qualification of any Certificate pursuant to the Securities
Act or any state securities laws.
3. The Transferor and any person acting on behalf of the Transferor in
this matter reasonably believe that the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A ("Rule 144A") under
the Securities Act (a "Qualified Institutional Buyer") purchasing for its own
account or for the account of a Qualified Institutional Buyer. In determining
whether the Transferee is a Qualified Institutional Buyer, the Transferor and
any person acting on behalf of the Transferor in this matter have relied on
the following to establish the Transferee's ownership and discretionary
investments of securities (check one or more):
/ / The Transferee's most recent publicly available financial
statements, which statements present the information as of a date
within 16 months preceding the date of sale of the Transferred
Certificate in the case of a U.S. purchaser and within 18 months
preceding such date of sale for a foreign purchaser; or
/ / The most recent publicly available information appearing in
documents filed by the Transferee with the Securities and Exchange
Commission or another United States federal, state, or local
governmental agency or self-regulatory organization, or with a
foreign governmental agency or self-regulatory organization, which
information is as of a date within 16 months preceding the date of
sale of the Transferred Certificate in the case of a U.S. purchaser
and within 18 months preceding such date of sale for a foreign
purchaser; or
/ / The most recent publicly available information appearing in a
recognized securities manual, which information is as of a date
within 16 months preceding the date of sale of the Transferred
Certificate in the case of a U.S. purchaser and within 18 months
preceding such date of sale for a foreign purchaser; or
/ / A certification by the chief financial officer, a person fulfilling
an equivalent function, or other executive officer of the
Transferee, specifying the amount of securities owned and invested
on a discretionary basis by the Transferee as of a specific date on
or since the close of the Transferee's most recent fiscal year, or,
in the case of a Transferee that is a member of a "family of
investment companies," as that term is defined in Rule 144A, a
certification by an executive officer of the investment adviser
specifying the amount of securities owned by the "family of
investment companies" as of a specific date on or since the close of
the Transferee's most recent fiscal year.
C-1-2
4. The Transferor and any person acting on behalf of the Transferor
understand that in determining the aggregate amount of securities owned and
invested on a discretionary basis by an entity for purposes of establishing
whether such entity is a Qualified Institutional Buyer:
o the following instruments and interests shall be excluded: securities of
issuers that are affiliated with the Transferee; securities that are part
of an unsold allotment to or subscription by the Transferee, if the
Transferee is a dealer; securities of issuers that are part of the
Transferee's "family of investment companies," if the Transferee is a
registered investment company; bank deposit notes and certificates of
deposit; loan participations; repurchase agreements; securities owned but
subject to a repurchase agreement; and currency, interest rate, and
commodity swaps;
o the aggregate value of the securities shall be the cost of such
securities, except where the entity reports its securities holdings in
its financial statements on the basis of their market value, and no
current information with respect to the cost of those securities has been
published, in which case the securities may be valued at market;
o securities owned by subsidiaries of the entity that are consolidated with
the entity in its financial statements prepared in accordance with
generally accepted accounting principles may be included if the
investments of such subsidiaries are managed under the direction of the
entity, except that, unless the entity is a reporting company under
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
securities owned by such subsidiaries may not be included if the entity
itself is a majority-owned subsidiary that would be included in the
consolidated financial statements of another enterprise.
5. The Transferor or a person acting on its behalf has taken reasonable
steps to ensure that the Transferee is aware that the Transferor is relying on
the exemption from the provisions of Section 5 of the Securities Act provided
by Rule 144A.
6. The Transferor or a person acting on its behalf has furnished, or
caused to be furnished, to the Transferee all information regarding (a) the
Transferred Certificates and payments on them, (b) the nature and performance
of the Mortgage Loans, and (c) the Indenture, the Agreement, and the Trust
Estate, that the Transferee has requested.
Very truly yours,
__________________________________
(Transferor)
By: __________________________________
Name: ________________________________
Title: _______________________________
C-1-3
FORM OF TRANSFEREE INVESTMENT LETTER
FOR CERTIFICATES
Date:
CWHEQ, Inc.
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: ________________
________________, as Owner Trustee
________________
________________
________________
Attention: ________________
Re: CWHEQ Revolving Home Equity Loan Trust, Series
200[__]-[__], Revolving Home Equity Loan Asset Backed
Securities, Series 200[__]-[__] Certificates
-----------------------------------------------------
Ladies and Gentlemen:
_______________________ (the "Transferee") intends to purchase from
______________________ (the "Transferor") Certificates representing a ___%
percentage interest in the entire interest in the Certificates (the
"Transferred Certificates"). The Certificates, including the Transferred
Certificates, were issued pursuant to the Agreement. All capitalized terms
used in this certificate without definition have the meanings given to them in
the Trust Agreement, dated as of [_____], 200[__], between CWHEQ, Inc., as
depositor, and ________________, as owner trustee. The Transferee hereby
certifies, represents, and warrants that:
1. The Transferee is a "qualified institutional buyer" (a "Qualified
Institutional Buyer") as that term is defined in Rule 144A ("Rule 144A")
under the Securities Act of 1933, as amended (the "Securities Act"), and
has completed one of the forms of certification to that effect attached
as Annex 1 and Annex 2. The Transferee is aware that the sale to it of
the Transferred Certificates is being made in reliance on Rule 144A. The
Transferee is acquiring the Transferred Certificates for its own account
or for the account of a Qualified Institutional Buyer, and understands
that the Transferred Certificates may be resold, pledged, or transferred
only to a person reasonably believed to be a Qualified Institutional
Buyer that purchases for its own account or for the
C-1-4
account of a Qualified Institutional Buyer to whom notice is given that
the resale, pledge, or transfer is being made in reliance on Rule 144A.
2. The Transferee has been furnished with all information regarding
(a) the Transferred Certificates and payments on them, (b) the nature and
performance of the Mortgage Loans, (c) the Indenture, (d) the Agreement,
and (e) any credit enhancement mechanism associated with the Transferred
Certificates, that it has requested.
3. The Transferee represents that it is not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974,
as amended, or a plan subject to Section 4975 of the Internal Revenue
Code of 1986, as amended, nor is it acting on behalf of or investing plan
assets of any such employee benefit plan.
4. The Transferee agrees to be bound by the Agreement.
Very truly yours,
__________________________________
(Transferor)
By: __________________________________
Name: ________________________________
Title: _______________________________
C-1-5
ANNEX 1 TO EXHIBIT C-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[for Transferees other than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and [name of Certificate Registrar], as Certificate Registrar,
with respect to the Certificates being transferred (the "Transferred
Certificates") as described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial officer, a
person fulfilling an equivalent function, or other executive officer of
the entity purchasing the Transferred Certificates (the "Transferee").
2. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933, as amended ("Rule
144A"), because (1) the Transferee owned or invested on a discretionary
basis $________________________ in securities (other than the excluded
securities referred to below and otherwise calculated in accordance with
Rule 144A) as of the end of the Transferee's most recent fiscal year and
(2) the Transferee satisfies the criteria in the category marked below.
/ / Corporation, etc. The Transferee is a corporation (other than a
bank, savings and loan association, or similar institution),
Massachusetts or similar statutory trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended.
/ / Bank. The Transferee (a) is a national bank or a banking
institution organized under the laws of any state, U.S.
territory, or the District of Columbia, the business of which
is substantially confined to banking and is supervised by the
state or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached, as of a date not more than 16 months preceding the
date of sale of the Certificates in the case of a U.S. bank,
and not more than 18 months preceding such date of sale for a
foreign bank or equivalent institution.
/ / Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association, or similar institution that is
supervised and examined by a state or federal authority having
supervision over those institutions or is a foreign savings and
C-1-6
loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached, as of a date not more than 16 months preceding the
date of sale of the Certificates in the case of a U.S. savings
and loan association, and not more than 18 months preceding
such date of sale for a foreign savings and loan association or
equivalent institution.
/ / Broker-dealer. The Transferee is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934, as
amended.
/ / Insurance Company. The Transferee is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and that is subject to supervision by the insurance
commissioner or a similar official or agency of a state, U.S.
territory, or the District of Columbia.
/ / Investment Advisor. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940, as
amended.
3. / / Other. (Please supply a brief description of the entity and a
cross-reference to the paragraph and subparagraph under subsection (a)(1)
of Rule 144A pursuant to which it qualifies. Note that registered
investment companies should complete Annex 2 rather than this Annex 1.)
___________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________
The term "securities" does not include (1) securities of issuers that are
affiliated with the Transferee, (2) securities that are part of an unsold
allotment to or subscription by the Transferee, if the Transferee is a
dealer, (3) bank deposit notes and certificates of deposit, (4) loan
participations, (5) repurchase agreements, (6) securities owned but
subject to a repurchase agreement, and (7) currency, interest rate, and
commodity swaps. For purposes of determining the aggregate amount of
securities owned or invested on a discretionary basis by the Transferee,
the Transferee did not include any of the securities referred to in this
paragraph.
4. For purposes of determining the aggregate amount of securities owned or
invested on a discretionary basis by the Transferee, the Transferee used
the cost of the securities to the Transferee, unless the Transferee
reports its securities holdings in its financial statements on the basis
of their market value, and no current information with respect to the
cost of those securities has been published, in which case the securities
were valued at market. Further, in determining the aggregate amount, the
Transferee may have included securities owned by subsidiaries of the
Transferee, but only if the subsidiaries are consolidated with the
Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of the
subsidiaries are managed under the
C-1-7
Transferee's direction. However, such securities were not included if the
Transferee is a majority-owned, consolidated subsidiary of another
enterprise and the Transferee is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the
Transferred Certificates are relying and will continue to rely on the
statements made herein because one or more sales to the Transferee may be
in reliance on Rule 144A.
/ / / / Will the Transferee be purchasing the Transferred Owner Trust
Yes No Certificates only for the Transferee's own account?
6. If the answer to the foregoing question is "no," then in each case where
the Transferee is purchasing for an account other than its own, the
account belongs to a third party that is itself a "qualified
institutional buyer" within the meaning of Rule 144A, and the "qualified
institutional buyer" status of the third party has been established by
the Transferee through one or more of the appropriate methods
contemplated by Rule 144A.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions
herein. Until that notice is given, the Transferee's purchase of the
Transferred Certificates will constitute a reaffirmation of this
certification as of the date of the purchase. In addition, if the
Transferee is a bank or savings and loan as provided above, the
Transferee agrees that it will furnish to such parties any updated annual
financial statements that become available on or before the date of the
purchase, promptly after they become available.
____________________________________
Print Name of Transferee
By: ____________________________________
Name:
____________________________________
Title:
____________________________________Date:
X-0-0
XXXXX 0 XX XXXXXXX C-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[for Transferees that are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and [name of Certificate Registrar], as Certificate Registrar,
with respect to the Certificates being transferred (the "Transferred
Certificates") as described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial officer, a
person fulfilling an equivalent function, or other executive officer of
the entity purchasing the Transferred Certificates (the "Transferee") or,
if the Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933, as amended ("Rule
144A"), because the Transferee is part of a Family of Investment
Companies, is an executive officer of the investment adviser (the
"Adviser").
2. The Transferee is a "qualified institutional buyer" as defined in Rule
144A because (i) the Transferee is an investment company registered under
the Investment Company Act of 1940, as amended, and (ii) as marked below,
the Transferee alone owned or invested on a discretionary basis, or the
Transferee's Family of Investment Companies owned, at least $100,000,000
in securities (other than the excluded securities referred to below) as
of the end of the Transferee's most recent fiscal year. For purposes of
determining the amount of securities owned by the Transferee or the
Transferee's Family of Investment Companies, the cost of the securities
was used, unless the Transferee or any member of the Transferee's Family
of Investment Companies, as the case may be, reports its securities
holdings in its financial statements on the basis of their market value,
and no current information with respect to the cost of those securities
has been published, in which case the securities of the entity were
valued at market.
/ / The Transferee owned or invested on a discretionary basis
$_____________________ in securities (other than the excluded
securities referred to below and otherwise calculated in accordance
with Rule 144A) as of the end of the Transferee's most recent fiscal
year.
/ / The Transferee is part of a "Family of Investment Companies" that
owned in the aggregate $________________ in securities (other than
the excluded securities referred to below and otherwise calculated
in accordance with Rule 144A) as of the end of the Transferee's most
recent fiscal year.
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned
C-1-9
subsidiaries of the same parent or because one investment adviser is a
majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase
agreements, (v) securities owned but subject to a repurchase agreement
and (vi) currency, interest rate and commodity swaps. For purposes of
determining the aggregate amount of securities owned and/or invested on a
discretionary basis by the Transferee, or owned by the Transferee's
Family of Investment Companies, the securities referred to in this
paragraph were excluded.
5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales
to the Transferee will be in reliance on Rule 144A.
/ / / / Will the Transferee be purchasing the Transferred
Yes No Certificates only for the Transferee's own account?
6. If the answer to the foregoing question is "no," then in each case where
the Transferee is purchasing for an account other than its own, the
account belongs to a third party that is itself a "qualified
institutional buyer" within the meaning of Rule 144A, and the "qualified
institutional buyer" status of the third party has been established by
the Transferee through one or more of the appropriate methods
contemplated by Rule 144A.
7. The undersigned will notify the parties to which this certification is
made of any changes in the information and conclusions herein. Until that
notice, the Transferee's purchase of the Transferred Certificates will
constitute a reaffirmation of this certification by the undersigned as of
the date of the purchase.
______________________________
Print Name of Transferee or Adviser
By: _________________________
Name: _________________________
Title: _________________________IF AN
ADVISER:
_______________________________
Print Name of Transferee
Date: _________________________
C-1-10
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
___________________________________________
___________________________________________
___________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of the Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Issuer to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver the
Certificate to the following address:
___________________________________________.
Dated: _______________
_________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to:
___________________________________________
___________________________________________,
___________________________________________,
for the account of____________________________ , account number _____________,
or, if mailed by check, to_________________________ . Applicable statements
should be mailed to_____________________________ ,___________________________
information is provided by____________________________________ , the assignee
named above, or____________________________________ , as its agent
C-1-11
EXHIBIT C-2
[FORM OF] TRANSFER AFFIDAVIT
CWHEQ, Inc. Revolving Home Equity Loan Trust, Series 200[__]-[__]
Revolving Home Equity Loan Asset Backed Securities, Series 200[__]-[__]
Class [R-[1]][R-[2]] Certificates
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _________________, the proposed
Transferee of an Ownership Interest in a Class [R-[1]][R-[2]] Certificate (the
"Certificate") issued pursuant to the Trust Agreement, dated as of
[________________] (the "Agreement"), between CWHEQ, Inc. (the "Depositor")
and Wilmington Trust Company, as trustee (the "Owner Trustee"). Capitalized
terms used, but not defined herein or in Exhibit 1 hereto, shall have the
meanings ascribed to such terms in the Agreement. The Transferee has
authorized the undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is not an employee benefit plan or other plan or
arrangement that is subject to Title I of ERISA or to section 4975 of the
Internal Revenue Code of 1986, nor is it acting on behalf of or with plan
assets of any such plan. The Transferee is, as of the date hereof, and will
be, as of the date of the Transfer, a Permitted Transferee. The Transferee
will endeavor to remain a Permitted Transferee for so long as it retains its
Ownership Interest in the Certificate. The Transferee is acquiring its
Ownership Interest in the Certificate for its own account.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an affidavit
that such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the
C-2-1
pass-through entity a Person that is not a Permitted Transferee is the record
holder of an interest in such entity. The Transferee understands that such tax
will not be imposed for any period with respect to which the record holder
furnishes to the pass-through entity an affidavit that such record holder is a
Permitted Transferee and the pass-through entity does not have actual
knowledge that such affidavit is false. (For this purpose, a "pass-through
entity" includes a regulated investment company, a real estate investment
trust or common trust fund, a partnership, trust or estate, and certain
cooperatives and, except as may be provided in Treasury Regulations, persons
holding interests in pass-through entities as a nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 3.10 of the
Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 3.10 of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any Person
to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Owner Trustee a certificate substantially
in the form set forth as Exhibit E to the Agreement (a "Transferor
Certificate") to the effect that such Transferee has no actual knowledge that
the Person to which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the Class
[R-[1]][R-[2]] Certificates.
8. The Transferee's taxpayer identification number is ______________.
9. The Transferee is a U.S. Person as defined in Code section
7701(a)(30) and, unless the Transferor (or any subsequent transferor)
expressly waives such requirement, will not cause income from the Certificate
to be attributable to a foreign permanent establishment or fixed base (within
the meaning of an applicable income tax treaty) of the Transferee or another
U.S. taxpayer.
10. The Transferee is aware that the Class [R-[1]][R-[2]] Certificates
may be "noneconomic residual interests" within the meaning of Treasury
Regulation Section 1.860E-
C-2-2
1(c) and that the transferor of a noneconomic residual interest will remain
liable for any taxes due with respect to the income on such residual interest,
unless no significant purpose of the transfer was to impede the assessment or
collection of tax. In addition, as the Holder of a noneconomic residual
interest, the Transferee may incur tax liabilities in excess of any cash flows
generated by the interest and the Transferee hereby represents that it intends
to pay taxes associated with holding the residual interest as they become due.
11. The Transferee has provided financial statements or other financial
information requested by the Transferor in connection with the transfer of the
Certificate to permit the Transferor to assess the financial capability of the
Transferee to pay such taxes. The Transferee historically has paid its debts
as they have come due and intends to pay its debts as they come due in the
future.
[12. Unless the Transferor (or any subsequent transferor) expressly
waives such requirement, the Transferee (and any subsequent transferee)
certifies (or will certify), respectively, that the transfer satisfies either
the "Asset Test" imposed by Treasury Regulation ss. 1.860E-1(c)(5) or the
"Formula Test" imposed by Treasury Regulation ss. 1.860E-1(c)(7).]
* * *
C-2-3
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf by its duly authorized officer, this_____ day of
___________, 2___.
__________________________________
PRINT NAME OF TRANSFEREE
By: ______________________________
Name:
Title:
[Corporate Seal]
ATTEST:
_________________________________
[Assistant] Secretary
Personally appeared before me the above-named ______________________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the __________________ of the Transferee, and
acknowledged that he executed the same as his free act and deed and the free
act and deed of the Transferee.
Subscribed and sworn before me this ____ day of ___________, 20___.
________________________________
NOTARY PUBLIC
My Commission
expires the
___ day of____________, 20__
C-2-4
[WAIVER OF REQUIREMENT THAT TRANSFEREE CERTIFIES TRANSFER OF CERTIFICATE
SATISFIES CERTAIN REGULATORY "SAFE HARBORS"
The Transferor hereby waives the requirement that the Transferee certify
that the transfer of the Certificate satisfies either the "Asset Test" imposed
by Treasury Regulation ss.1.860E-1(c)(5) or the "Formula Test" imposed by
Treasury Regulation ss. 1.860E-1(c)(7).
CWHEQ, INC.
By: ______________________________
Name:
Title:]
X-0-0
XXXXX 0 XX XXXXXXX X-0
Xxxxxxx Definitions
"Asset Test": A transfer satisfies the Asset Test if: (i) At the time of
the transfer, and at the close of each of the transferee's two fiscal years
preceding the transferee's fiscal year of transfer, the transferee's gross
assets for financial reporting purposes exceed $100 million and its net assets
for financial reporting purposes exceed $10 million. The gross assets and net
assets of a transferee do not include any obligation of any "related person"
or any other asset if a principal purpose for holding or acquiring the other
asset is to permit the transferee to satisfy such monetary conditions; (ii)
The transferee must be an "eligible corporation" and must agree in writing
that any subsequent transfer of the interest will be to another eligible
corporation in a transaction that satisfies paragraphs 9 through 11 of this
Transfer Affidavit and the Asset Test. A transfer fails to meet the Asset Test
if the transferor knows, or has reason to know, that the transferee will not
honor the restrictions on subsequent transfers of the Certificate; and (iii) A
reasonable person would not conclude, based on the facts and circumstances
known to the transferor on or before the date of the transfer, that the taxes
associated with the Certificate will not be paid. The consideration given to
the transferee to acquire the Certificate is only one factor to be considered,
but the transferor will be deemed to know that the transferee cannot or will
not pay if the amount of consideration is so low compared to the liabilities
assumed that a reasonable person would conclude that the taxes associated with
holding the Certificate will not be paid. For purposes of applying the Asset
Test, (i) an "eligible corporation" means any domestic C corporation (as
defined in section 1361(a)(2) of the Code) other than (A) a corporation which
is exempt from, or is not subject to, tax under section 11 of the Code, (B) an
entity described in section 851(a) or 856(a) of the Code, (C) A REMIC, or (D)
an organization to which part I of subchapter T of chapter 1 of subtitle A of
the Code applies; (ii) a "related person" is any person that (A) bears a
relationship to the transferee enumerated in section 267(b) or 707(b)(1) of
the Code, using "20 percent" instead of "50 percent" where it appears under
the provisions, or (B) is under common control (within the meaning of section
52(a) and (b)) with the transferee.
"Formula Test": A transfer satisfies the formula test if the present
value of the anticipated tax liabilities associated with holding the
Certificate does not exceed the sum of (i) the present value of any
consideration given to the transferee to acquire the Certificate; (ii) the
present value of the expected future distributions on the Certificate; and
(iii) the present value of the anticipated tax savings associated with holding
the Certificate as the issuing REMIC generates losses. For purposes of
applying the Formula Test: (i) The transferee is assumed to pay tax at a rate
equal to the highest rate of tax specified in section 11(b)(1) of the Code. If
the transferee has been subject to the alternative minimum tax under section
55 of the Code in the preceding two years and will compute its taxable income
in the current taxable year using the alternative minimum tax rate, then the
tax rate specified in section 55(b)(1)(B) of the Code may be used in lieu of
the highest rate specified in section 11(b)(1) of the Code; (ii) The transfer
C-2-6
must satisfy paragraph 9 of the Transfer Affidavit; and (iii) Present values
are computed using a discount rate equal to the Federal short-term rate
prescribed by section 1274(d) of the Code for the month of the transfer and
the compounding period used by the taxpayer.
"Ownership Interest": As to any Certificate, any ownership interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
"Permitted Transferee" means any person other than
o the United States, any State or political subdivision
thereof, or any agency or instrumentality of any of them,
o a foreign government, International Organization, or any
agency or instrumentality of either of them,
o an organization (except certain farmers' cooperatives
described in Section 521 of the Code) that is exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by
Section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in Section 860E(c)(1) of the Code)
with respect to any Residual Certificate,
o rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code,
o an "electing large partnership" as defined in Section 775 of
the Code,
o a person that is not a citizen or resident of the United
States, a corporation, partnership, or other entity created or
organized in or under the laws of the United States, any state of
the United States, or the District of Columbia, or an estate or
trust whose income from sources without the United States is
includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or
business within the United States or a trust if a court within the
United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons
have the authority to control all substantial decisions of the trust
unless such person has furnished the transferor and the Owner
Trustee with a duly completed Internal Revenue Service Form W-8ECI
or any applicable successor form, and
o any other person so designated by the Depositor based on an
Opinion of Counsel that the Transfer of an Ownership Interest in a
Residual Certificate to such person may cause any REMIC to fail to
qualify as a REMIC at any time that the Certificates are
outstanding.
The terms "United States," "State," and "International Organization" have
the meanings in Section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof for these
C-2-7
purposes if all of its activities are subject to tax and, with the exception
of the Federal Home Loan Mortgage Corporation, a majority of its board of
directors is not selected by such government unit.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, bank, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency
or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
C-2-8
