EXHIBIT 99.3
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CWHEQ Revolving Home Equity Loan Trust,
Series 2005-M
Issuer
and
JPMorgan Chase Bank, N.A.
Indenture Trustee
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Indenture
Dated as of December 29, 2005
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Table of Contents
Page
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ARTICLE I
Definitions and Other Provisions of General Application
Section 1.01. Definitions..........................................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act....................................3
Section 1.03. Other Terms..........................................................................3
Section 1.04. Rules of Construction................................................................3
ARTICLE II
The Notes
Section 2.01. Form.................................................................................5
Section 2.02. Execution, Authentication, and Delivery..............................................5
Section 2.03. Registration; Registration of Transfer and Exchange..................................6
Section 2.04. Mutilated, Destroyed, Lost, or Stolen Notes..........................................7
Section 2.05. Persons Considered Owner.............................................................8
Section 2.06. Payment of Principal and Interest; Defaulted Interest................................8
Section 2.07. Cancellation.........................................................................9
Section 2.08. Book-Entry Notes.....................................................................9
Section 2.09. Notices To Depository...............................................................10
Section 2.10. Definitive Notes....................................................................10
Section 2.11. Tax Treatment.......................................................................11
Section 2.12. Transfer Restrictions; Restrictive Legends..........................................11
ARTICLE III
Covenants
Section 3.01. Payment of Principal and Interest...................................................12
Section 3.02. Maintenance of Office or Agency.....................................................12
Section 3.03. Money For Payments To Be Held in Trust..............................................13
Section 3.04. Existence...........................................................................14
Section 3.05. Protection of the Collateral........................................................14
Section 3.06. Opinions About Collateral...........................................................15
Section 3.07. Performance of Obligations..........................................................16
Section 3.08. Negative Covenants..................................................................17
Section 3.09. Annual Compliance Statement.........................................................19
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.................................19
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Section 3.11. Successor or Transferee.............................................................20
Section 3.12. Further Instruments and Acts........................................................20
Section 3.13. Compliance with Laws................................................................20
Section 3.14. Master Servicer as Agent and Bailee of the Indenture Trustee........................20
Section 3.15. Investment Company Act..............................................................20
Section 3.16. Representations.....................................................................20
ARTICLE IV
Satisfaction and Discharge
Section 4.01. Satisfaction and Discharge of Indenture.............................................22
Section 4.02. Application of Trust Money..........................................................23
Section 4.03. Subrogation and Cooperation.........................................................23
Section 4.04. Release of Collateral...............................................................24
ARTICLE V
Remedies
Section 5.01. Events of Default...................................................................25
Section 5.02. Acceleration of Maturity; Rescission and Annulment..................................25
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee...........26
Section 5.04. Indenture Trustee May File Proofs of Claim..........................................27
Section 5.05. Remedies; Priorities................................................................28
Section 5.06. Optional Preservation of the Collateral.............................................30
Section 5.07. Limitation of Suits.................................................................30
Section 5.08. Unconditional Right to Receive Principal and Interest...............................31
Section 5.09. Restoration of Rights and Remedies..................................................31
Section 5.10. Rights and Remedies Cumulative......................................................31
Section 5.11. Delay or Omission Not a Waiver......................................................32
Section 5.12. Control by Credit Enhancer or Noteholders...........................................32
Section 5.13. Waiver of Past Defaults.............................................................34
Section 5.14. Undertaking For Costs...............................................................34
Section 5.15. Waiver of Stay or Extension Laws....................................................34
Section 5.16. Rapid Amortization Events...........................................................35
Section 5.17. Sale of Collateral..................................................................36
Section 5.18. Performance and Enforcement of Certain Obligations..................................37
ARTICLE VI
The Indenture Trustee
Section 6.01. Duties of Indenture Trustee.........................................................37
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Section 6.02. Notice of Defaults..................................................................39
Section 6.03. Rights of Indenture Trustee.........................................................39
Section 6.04. Indenture Trustee Not Responsible for Certain Things................................40
Section 6.05. Individual Rights of Indenture Trustee..............................................41
Section 6.06. Money Held in Trust.................................................................41
Section 6.07. Compensation........................................................................41
Section 6.08. Eligibility.........................................................................41
Section 6.09. Preferential Collection of Claims Against Issuer....................................42
Section 6.10. Replacement of Indenture Trustee....................................................42
Section 6.11. Acceptance of Appointment by Successor..............................................42
Section 6.12. Successor Indenture Trustee by Merger...............................................43
Section 6.13. Appointment of Co-Indenture Trustee or Separate Indenture Trustee...................43
Section 6.14. Representations and Warranties of Indenture Trustee.................................44
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01. Issuer to Furnish Names and Addresses of Noteholders................................45
Section 7.02. Preservation of Information; Communications.........................................45
Section 7.03. Reports of Issuer...................................................................46
Section 7.04. Reports by Indenture Trustee........................................................46
ARTICLE VIII
Accounts, Disbursements, and Releases
Section 8.01. Accounts............................................................................47
Section 8.02. Withdrawals from the Collection Account.............................................49
Section 8.03. Payments............................................................................51
Section 8.04. Calculation of the Note Rate........................................................54
Section 8.05. Claims on the Policy; Policy Payments Account.......................................54
Section 8.06. Replacement Policy..................................................................56
ARTICLE IX
Supplemental Indentures
Section 9.01. Supplemental Indentures.............................................................56
Section 9.02. Execution of Supplemental Indentures................................................59
Section 9.03. Effect of Supplemental Indenture....................................................59
Section 9.04. Reference in Notes to Supplemental Indentures.......................................59
Section 9.05. Tax Opinion.........................................................................59
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ARTICLE X
Redemption of Notes
Section 10.01. Redemption..........................................................................60
Section 10.02. Form of Redemption Notice...........................................................61
Section 10.03. Notes Payable on Redemption Date....................................................62
ARTICLE XI
Miscellaneous
Section 11.01. Compliance Certificates and Opinions, etc...........................................62
Section 11.02. Form of Documents Delivered to Indenture Trustee....................................64
Section 11.03. Acts of Noteholders.................................................................64
Section 11.04. Notices.............................................................................65
Section 11.05. Notices to Noteholders; Waiver......................................................66
Section 11.06. Alternate Payment and Notice Provisions.............................................66
Section 11.07. Conflict with Trust Indenture Act...................................................67
Section 11.08. Effect of Headings and Table of Contents............................................67
Section 11.09. Successors and Assigns..............................................................67
Section 11.10. Separability........................................................................67
Section 11.11. Benefits of Indenture...............................................................67
Section 11.12. Legal Holidays......................................................................67
Section 11.13. Governing Law.......................................................................67
Section 11.14. Counterparts; Electronic Delivery...................................................68
Section 11.15. Recording of Indenture..............................................................68
Section 11.16. No Petition.........................................................................68
Section 11.17. Act on Instructions from Credit Enhancer............................................68
Section 11.18. Non-recourse........................................................................68
Section 11.19. Trust Obligation....................................................................69
Exhibits
Exhibit A - Form of Notes..........................................................................A-1
Exhibit B - Form of Custodial Agreement ...........................................................B-1
ANNEX 1 Definitions........................................................................XXX-1-1
ANNEX 2 Adoption Annex.....................................................................XXX-2-1
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This Indenture, dated as of December 29, 2005, between CWHEQ
Revolving Home Equity Loan Trust, Series 2005-M, a Delaware statutory trust,
and the Indenture Trustee, as indenture trustee,
Witnesseth That
Each party agrees for the benefit of the other party and for the
benefit of the Secured Parties as follows.
Granting Clause
The Issuer Grants to the Indenture Trustee for the classes of Notes
and series referred to in the Adoption Annex at the Closing Date, as Indenture
Trustee for the benefit of the relevant Secured Parties, all of the Issuer's
interest existing now or in the future in:
o the Mortgage Loans including their Asset Balances
(including all Additional Balances) and the related Mortgage Files
and all property that secures the Mortgage Loans and all property
that is acquired by foreclosure or deed in lieu of foreclosure, and
all collections received on each Mortgage Loan after the Cut-off Date
(excluding payments due by the Cut-off Date);
o the Additional Loan Account;
o the Additional Home Equity Loans acquired by the Trust
from funds in the Additional Loan Account;
o the Issuer's rights under hazard insurance policies
related to the Mortgage Loans;
o the interest of the Issuer in the Sale and Servicing
Agreement and the Purchase Agreement (including the Issuer's right to
cause the Mortgage Loans to be repurchased);
o all rights under any guaranty executed in connection with
the Mortgage Loans;
o the Collection Account and the Payment Account maintained
to hold collections related to the Mortgage Loans and their contents;
o any Transferor Collections the Notes are entitled to; and
o all present and future claims, demands, causes of action,
and choses in action regarding any of the foregoing and all payments
on and all proceeds from any of the foregoing, including all proceeds
of their conversion, voluntary or involuntary, into cash or other
liquid property, all cash proceeds, accounts, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of every kind, and
other forms of obligations, instruments, and other
property that at any time constitute any part of or are included in
the proceeds of any of the foregoing (collectively, the "Collateral").
The Insured Notes will have the benefit of the Policy issued by the
Credit Enhancer.
The Issuer agrees that the foregoing Grants are intended to grant in
favor of the Indenture Trustee, for the respective benefit of the Secured
Parties, a first priority, continuing lien and security interest in all of the
Issuer's personal property. The Issuer authorizes the Indenture Trustee to
file one or more financing statements describing the collateral as "all
personal property" or "all assets" of the Issuer.
These Grants are made in trust to secure the payment of principal and
interest on, and any other amounts owing on, the Notes, without prejudice,
priority, or distinction (except as specifically provided in this Indenture),
and to secure compliance with the provisions of this Indenture, all as
provided in this Indenture.
The foregoing Grants shall inure to the benefit of the Credit
Enhancer to the extent of draws made on the Policy and amounts owing under the
Insurance Agreement, and shall continue for the benefit of the Credit Enhancer
until all amounts owed the Credit Enhancer have been repaid in full.
The Indenture Trustee, as Indenture Trustee on behalf of the Secured
Parties, acknowledges the Grants, accepts the trusts under this Indenture in
accordance with this Indenture, and agrees to perform its duties required in
this Indenture in accordance with its terms and the terms of the Transaction
Documents.
ARTICLE I
Definitions and Other Provisions of General Application
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized terms
are used in this Indenture as defined in Annex 1 or the Adoption Annex.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference into this Indenture. The following TIA
terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
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"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the
TIA, defined by TIA reference to another statute, or defined by Commission
rule have the meanings so assigned to them.
Section 1.03. Other Terms.
Defined terms that are used only in one section or only in another
definition may be omitted from the list of defined terms in Annex 1. Defined
terms used in this Indenture are sometimes defined after their first use
without a reference such as "(as hereinafter defined)."
Section 1.04. Rules of Construction.
Except as otherwise expressly provided in this Indenture or unless
the context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural
as well as the singular.
(b) References to designated articles, sections, subsections,
exhibits, and other subdivisions of this Indenture, such as "Section 6.12
(a)," refer to the designated article, section, subsection, exhibit, or other
subdivision of this Indenture as a whole and to all subdivisions of the
designated article, section, subsection, exhibit, or other subdivision. The
exhibits and other attachments to this Indenture are a part of this Indenture.
The words "herein," "hereof," "hereto," "hereunder," and other words of
similar import refer to this Indenture as a whole and not to any particular
article, section, exhibit, or other subdivision of this Indenture.
(c) The headings of the various Articles and Sections in this
Indenture are for convenience of reference only and shall not define or limit
any of the provisions of this Indenture.
(d) Any term that relates to a document or a statute, rule, or
regulation includes any amendments, modifications, supplements, or any other
changes that may have occurred since the document, statute, rule, or
regulation came into being, including changes that occur after the date of
this Indenture, except in the case of the TIA. References to law are not
limited to statutes. References to statutes include any rules or regulations
promulgated under them by a governmental authority charged with the
administration of the statute. Any reference to any person includes references
to its successors and assigns.
(e) Any party may execute any of the requirements under this
Indenture either directly or through others, and the right to cause something
to be done rather than doing it directly shall be implicit in every
requirement under this Indenture. Unless a provision is restricted as to time
or limited as to frequency, all provisions under this Indenture are implicitly
available from time to time.
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(f) The term "including" and all its variations mean "including but
not limited to." Except when used in conjunction with the word "either," the
word "or" is always used inclusively (for example, the phrase "A or B" means
"A or B or both," not "either A or B but not both").
(g) A reference to "a [thing]" or "any [of a thing]" does not imply
the existence or occurrence of the thing referred to even though not followed
by "if any," and "any [of a thing]" is any and all of it. A reference to the
plural of anything as to which there could be either one or more than one does
not imply the existence of more than one (for instance, the phrase "the
obligors on a note" means "the obligor or obligors on a note"). "Until
[something occurs]" does not imply that it must occur, and will not be
modified by the word "unless." The word "due" and the word "payable" are each
used in the sense that the stated time for payment has passed. The word
"accrued" is used in its accounting sense, i.e., an amount paid is no longer
accrued. In the calculation of amounts of things, differences and sums may
generally result in negative numbers, but when the calculation of the excess
of one thing over another results in zero or a negative number, the
calculation is disregarded and an "excess" does not exist. Portions of things
may be expressed as fractions or percentages interchangeably. The word "shall"
is used in its imperative sense, as for instance meaning a party agrees to
something or something must occur or exist.
(h) All accounting terms used in an accounting context and not
otherwise defined, and accounting terms partly defined in this Indenture, to
the extent not completely defined, shall be construed in accordance with
generally accepted accounting principles in the United States. To the extent
that the definitions of accounting terms in this Indenture are inconsistent
with their meanings under generally accepted accounting principles, the
definitions in this Indenture shall control. Capitalized terms used in this
Indenture without definition that are defined in the Uniform Commercial Code
of the relevant jurisdiction are used in this Indenture as defined in that
Uniform Commercial Code.
(i) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means
"to and including." Likewise, in setting deadlines or other periods, "by"
means "on or before." The words "preceding," "following," and words of similar
import, mean immediately preceding or following. References to a month or a
year refer to calendar months and calendar years. The words "amended" and
"modified" and their derivatives as they relate to agreements refer to any
changes in the agreement and may be used interchangeably.
(j) Any reference to the enforceability of any agreement against a
party means that it is enforceable against the party in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
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(k) Generally only the registered holder of a Note is recognized,
such as in "Section 2.05. Persons Considered Owner" and payment provisions.
However, for the purposes of the transfer restrictions and related provisions,
such as agreements, representations, and warranties by holders of Notes,
references to Noteholders, holders, and the like refer equally to beneficial
owners who have an interest in a Note but are not reflected in the note
register as the owner and references to transfers of Notes include transfers
of interests in a Note.
ARTICLE II
The Notes
Section 2.01. Form.
The Notes, together with the Indenture Trustee's certificate of
authentication, shall be in substantially the form of Exhibit A, with any
appropriate insertions, omissions, substitutions, and other variations
required or permitted by this Indenture. The Notes may have any letters,
numbers, or other marks of identification and any legends or endorsements
placed on them that the officers executing them determine appropriate and that
are consistent with this Indenture, as evidenced by their execution of the
Notes. Any portion of the text of any Note may be on its reverse.
The Notes may be typewritten, printed, lithographed, or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing them, as evidenced by
their execution of them.
The terms of the Notes are part of the terms of this Indenture.
Section 2.02. Execution, Authentication, and Delivery.
(a) The Notes shall be executed on behalf of the Issuer by any of its
Authorized Officers. The signature of any Authorized Officer on the Notes may
be manual or facsimile. Notes bearing the manual or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that they may have ceased to hold their offices
before the authentication and delivery of the Notes or did not hold their
offices at the date of the Notes.
(b) The Indenture Trustee shall upon Issuer Order authenticate and
deliver for original issue the Classes of Notes in the amounts reflected in
the Adoption Annex. The aggregate principal amount of each Class of Notes
outstanding at any time may not exceed those amounts except as provided in
Section 2.04. Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of
$25,000 and in integral multiples of $1,000 above that.
(c) No Note shall be entitled to any benefit under this Indenture or
be a valid obligation of the Issuer for any purpose, unless a certificate of
authentication appears on it executed by the Indenture Trustee by the manual
signature of one of its authorized signatories.
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A certificate of authentication on any Note shall be conclusive evidence, and
the only evidence, that it has been duly authenticated and delivered under
this Indenture.
Section 2.03. Registration; Registration of Transfer and Exchange.
(a) The Issuer shall cause a register (the "Note Register") to be
kept in which the Issuer shall provide for the registration of Notes and the
registration of transfers of Notes. The Indenture Trustee initially shall be
the "Note Registrar" for registering Notes and transfers of Notes. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to, it shall assume the duties of Note
Registrar.
If the Issuer appoints a person other than the Indenture Trustee to
be Note Registrar, the Issuer will give the Indenture Trustee prompt notice of
the appointment of the Note Registrar and of the location, and any change in
the location, of the Note Register. The Indenture Trustee may inspect the Note
Register at all reasonable times and obtain copies of it. The Indenture
Trustee may rely on a certificate executed on behalf of the Note Registrar by
one of its Authorized Officers as to the names and addresses of the
Noteholders and the principal amounts and number of the Notes.
(b) Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained pursuant to Section 3.02, if
the requirements of this Indenture and Section 8-401(a) of the UCC are met,
the Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferees, new Notes of the same Class in any authorized
denominations, of a like aggregate principal amount.
(c) At the option of the Holder, Notes may be exchanged for other
Notes of the same Class in any authorized denominations, of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at the office or
agency of the Issuer maintained pursuant to Section 3.02. Whenever any Notes
are so surrendered for exchange, if the requirements of Section 8-401(a) of
the UCC are met the Issuer shall execute, and the Indenture Trustee shall
authenticate and the Noteholder shall obtain from the Indenture Trustee, the
Notes that the Noteholder making the exchange is entitled to receive.
(d) All Notes issued on any registration of transfer or exchange of
Notes shall be valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
for registration of transfer or exchange.
(e) Every Note presented or surrendered for registration of transfer
or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, its Holder or any attorney for its Holder duly authorized in
writing. The endorsement signature shall be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program
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("STAMP") or any other "signature guarantee program" chosen by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Exchange Act.
(f) No Holder shall incur a service charge for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
on any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 2.04 or 9.04 not involving any transfer.
(g) The preceding provisions of this Section notwithstanding, the
Note Registrar need not register and the Issuer need not make transfers or
exchanges of Principal Amount Notes selected for redemption or transfers or
exchanges of any Note during the 15 days preceding the due date for any
payment on it.
Section 2.04. Mutilated, Destroyed, Lost, or Stolen Notes.
If (i) the Indenture Trustee receives evidence to its satisfaction of
the destruction, loss, or theft of any Note and the Indenture Trustee receives
the security or indemnity it requires to hold the Issuer, the Credit Enhancer,
and the Indenture Trustee harmless, or (ii) any mutilated Note is surrendered
to the Indenture Trustee, then, in the absence of notice to the Issuer, the
Note Registrar, or the Indenture Trustee that the Note has been acquired by a
Protected Purchaser, and if the requirements of Section 8-406 of the UCC are
met and subject to Section 8-405 of the UCC, the Issuer shall execute, and on
its request the Indenture Trustee shall authenticate and deliver, in exchange
for the Note, a replacement Note of the same Class of like tenor and principal
amount. If the mutilated, destroyed, lost, or stolen Note is, or within seven
days becomes, payable, or is called for redemption, instead of issuing a
replacement Note the Issuer may pay the mutilated, destroyed, lost, or stolen
Note when payable or on its redemption date.
If, after the delivery of the replacement Note or payment of a
destroyed, lost, or stolen Note pursuant to this Section, a Protected
Purchaser of the original Note in lieu of which the replacement Note was
issued presents it for payment, the Issuer and the Indenture Trustee may
recover the replacement Note (or the payment) from the person to whom it was
delivered or any person taking the replacement Note from the person to whom
the replacement Note was delivered or any assignee of that person, except a
Protected Purchaser, and may recover on the security or indemnity provided for
it to the extent of any expense incurred by the Issuer, the Credit Enhancer or
the Indenture Trustee in connection with it.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of the Note of a sum sufficient
to cover any tax or other governmental charge that may be imposed on it and
any other reasonable expenses (including the fees and expenses of the
Indenture Trustee) in connection with it.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost, or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost, or stolen Note is
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enforceable by anyone at any time, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any other Notes duly issued
under this Indenture.
The provisions of this Section are exclusive and shall preclude all
other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost, or stolen Notes.
Section 2.05. Persons Considered Owner.
Before due presentment for registration of transfer of any Note, the
Issuer, the Indenture Trustee, the Credit Enhancer, and any agent of the
Issuer, the Credit Enhancer, or the Indenture Trustee may treat the person in
whose name any Note is registered (as of the day of determination) as the
owner of the Note for the purpose of receiving payments of principal and
interest on the Note and for all other purposes whatsoever, whether or not the
Note is overdue. None of the Issuer, the Credit Enhancer, the Indenture
Trustee, or any agent of the Issuer the Credit Enhancer, or the Indenture
Trustee shall be affected by notice to the contrary.
Section 2.06. Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Interest Bearing Notes shall accrue interest on its
Outstanding Amount at its Note Rate before and after maturity. Interest shall
be payable on each Payment Date as specified in Section 8.03 or 5.05, subject
to Section 3.01. Any installment of interest payable on an Interest Bearing
Note or installment of principal payable on a Principal Amount Note that is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the person in whose name the Note (or its predecessor
Note) is registered on the Record Date by wire transfer of immediately
available funds to the account designated by the Holder at a bank or other
entity having appropriate facilities, if the Holder has so notified the
Indenture Trustee in writing at least five Business Days before the Record
Date and is either the Depository or owner of record of Notes having an
aggregate principal or notional amount of at least $1,000,000, and otherwise
by check mailed first-class postage prepaid to the Holder's address as it
appears on the Note Register on the Record Date, or by any other means the
Noteholder and the Indenture Trustee agree to, except for the final
installment of principal payable on a Principal Amount Note on a Payment Date,
a redemption date, or the Scheduled Maturity Date (and except for the
redemption price for any Class of Principal Amount Notes called for redemption
pursuant to Section 10.01) which shall be payable as provided below.
(b) The principal of each Principal Amount Note shall be payable, if
not previously paid, on the Scheduled Maturity Date in the manner specified in
Section 8.03. All principal payments on each Class of Principal Amount Notes
shall be made pro rata to the Noteholders of that Class. The Indenture Trustee
shall send a notice to each person in whose name a Principal Amount Note is
registered at the close of business on the Record Date preceding the Scheduled
Maturity Date. The notice shall be sent by first-class mail, postage prepaid,
or by facsimile (promptly confirmed by mail) not later than ten days before
the Scheduled Maturity Date to each Holder of Principal Amount Notes as of the
close of business on the Record Date preceding the Scheduled Maturity Date, at
the Holder's address or facsimile number appearing
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in the Note Register, and shall specify that the principal of the Note will be
payable only on presentation and surrender of the Note and shall specify the
place where the Note may be presented and surrendered for payment. Notices in
connection with redemptions of Notes shall be mailed to Noteholders as
provided in Section 10.02.
(c) If the Issuer defaults in a payment of interest on a Class of
Interest Bearing Notes, the Issuer shall pay defaulted interest (plus interest
on the defaulted interest to the extent lawful) at the applicable Note Rate in
any lawful manner. The Issuer may pay the defaulted interest to the persons
who are Noteholders on a subsequent special record date, which date shall be
at least five Business Days before the payment date. The Issuer shall fix the
special record date and payment date, and, at least 15 days before the special
record date, the Issuer shall mail to each affected Holder a notice that
states the special record date, the payment date, and the amount of defaulted
interest to be paid.
Section 2.07. Cancellation.
All Notes surrendered for payment, registration of transfer,
exchange, or redemption shall, if surrendered to any person other than the
Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly
cancelled by the Indenture Trustee. The Issuer may at any time deliver to the
Indenture Trustee for cancellation any Notes previously authenticated and
delivered under this Indenture that the Issuer may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated instead of or in exchange
for any Notes cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless before their disposal the Issuer
directs by an Issuer Order that they be returned to it.
Section 2.08. Book-Entry Notes.
(a) The Book-Entry Notes, on original issuance, will be issued by the
Issuer in the form of typewritten Notes representing the Book-Entry Notes, to
the Depository Trust Company, the initial Depository. The Book-Entry Notes
shall be registered initially on the Note Register in the name of Cede & Co.,
the nominee of the initial Depository, and no Note Owner will receive a
definitive Note representing its interest in a Note, except as provided in
Section 2.10. Until definitive, fully registered Notes have been issued to the
Note Owners pursuant to Section 2.10:
(i) the provisions of this Section shall be in full force;
(ii) the Note Registrar and the Indenture Trustee may deal
with the Depository for all purposes of this Indenture (including the
payment of principal and interest on the Notes and accepting
instructions under this Indenture) as the sole holder of the Notes,
and shall have no obligation to the Note Owners;
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(iii) to the extent that this Section conflicts with any
other provisions of this Indenture, this Section shall control;
(iv) the rights of Note Owners shall be exercised only
through the Depository and shall be limited to those established by
law and agreements between the Note Owners and the Depository;
(v) until definitive Notes are issued for the Book-Entry
Notes pursuant to Section 2.10, the Depository will make book-entry
transfers among the Depository's participants and receive and
transmit payments of principal and interest on the Book-Entry Notes
to the Depository's participants;
(vi) whenever this Indenture requires or permits actions to
be taken based on instructions from Holders of Notes evidencing a
specified percentage of the Outstanding Amount, the Depository shall
be treated as representing that percentage only to the extent that it
has received instructions to that effect from Note Owners owning the
required percentage of the beneficial interest in the Notes and has
delivered the instructions to the Indenture Trustee; and
(vii) the Indenture Trustee may conclusively rely on
information furnished by the Depository about its participants and
furnished by the participants about indirect participating firms and
persons shown on the books of the indirect participating firms as
direct or indirect Note Owners.
(b) The Book-Entry Notes may not be transferred except as a whole and
then only by the Depository to its nominee or by its nominee to the Depository
or another nominee of the Depository, or by the Depository or its nominee to a
successor to the Depository or the successor's nominee.
Section 2.09. Notices To Depository.
Whenever a communication to the Noteholders is required under this
Indenture, until definitive Notes have been issued to the Note Owners pursuant
to Section 2.10, the Indenture Trustee shall communicate with the Depository
as Holder of the Notes, and shall have no obligation to the Note Owners.
Section 2.10. Definitive Notes.
If
(i) the Issuer advises the Indenture Trustee in writing that
the Depository is no longer willing or able to discharge its
responsibilities properly with respect to the Book-Entry Notes and
the Issuer is unable to locate a qualified successor, or
(ii) after the occurrence of an Event of Default, Note
Owners of not less than 51% of the aggregate Outstanding Amount of
all Classes of Book-Entry Notes advise the Depository in writing that
the continuation of a book-entry system through the Depository is no
longer in the best interests of the Note Owners,
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then the Depository shall notify all Note Owners and the Indenture Trustee of
the occurrence of the event and of the availability of definitive Notes to
Note Owners requesting them. Upon surrender to the Indenture Trustee of the
Book-Entry Notes by the Depository, accompanied by registration instructions,
the Issuer shall execute and the Indenture Trustee shall authenticate and
deliver the definitive Notes in accordance with the instructions of the
Depository. None of the Issuer, the Note Registrar, or the Indenture Trustee
shall be liable for any delay in delivery of the instructions and may
conclusively rely on, and shall be protected in relying on, the instructions.
On the issuance of definitive Notes, the Indenture Trustee shall recognize the
Holders of the definitive Notes as Noteholders.
Section 2.11. Tax Treatment.
The Issuer has agreed to make a REMIC election pursuant to the Trust
Agreement, and the Notes will be REMIC regular interests.
Section 2.12. Transfer Restrictions; Restrictive Legends.
(a) Each transferee or purchaser of a Note that is a plan or is
investing plan assets shall represent (or, in the case of a Book-Entry Note,
shall be deemed to represent) that the investment and holding of the Note
satisfy the conditions for exemptive relief under XXXX 00-00, XXXX 00-0, XXXX
00-00, XXXX 00-00, XXXX 96-23, or a similar exemption. No plan advised by the
Issuer, the Master Servicer, any other servicer, the Indenture Trustee, the
underwriter or any of their respective affiliates may invest in the Notes
unless an appropriate administrative prohibited transaction exemption applies
to the investment. A plan is advised by a person if the person has investment
or administrative discretion with respect to plan assets to be invested in the
Notes, has authority or responsibility to give, or regularly gives, investment
advice with respect to those plan assets for a fee and pursuant to an
agreement or understanding that the advice will serve as a primary basis for
investment decisions with respect to those plan assets, and will be based on
the particular investment needs for the plan, or the person is an employer
maintaining or contributing to the plan. The Class A-IO Notes may not be
transferred to a plan or to an entity investing plan assets. The Note
Registrar will not register any transfer of a Note that violates the foregoing
representation or prohibitions. A "plan" is an employee benefit plan (as
defined in section 3(3) of ERISA) that is subject to Title I of ERISA, a plan
(as defined in and subject to section 4975 of the Code), and any entity whose
underlying assets include plan assets by reason of a plan's investment in the
entity or otherwise.
(b) Unless the Indenture Trustee receives an Opinion of Counsel to
the effect that it is no longer appropriate, each definitive Note shall bear
the following legend on its face:
"[Notes other than Class A-IO Notes] Each transferee or purchaser of
this Note that is a plan or is investing plan assets, by acceptance of this
Note or an interest in this Note, represents that the investment and holding
of this Note satisfy the conditions for exemptive relief under XXXX 00-00,
XXXX 00-0, XXXX 00-00, XXXX 00-00, XXXX 96-23, or a similar exemption. [Class
A-IO Notes: This Note may not be transferred to a plan or to an entity
investing plan assets] A "plan" is an employee benefit plan (as defined in
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section 3(3) of ERISA) that is subject to Title I of ERISA, a plan (as defined
in and subject to section 4975 of the Code) and any entity whose underlying
assets include plan assets by reason of a plan's investment in the entity or
otherwise.
Any transfer in violation of either of the foregoing will be void ab
initio, and will not operate to transfer any rights to the transferee,
notwithstanding any instructions to the contrary."
(c) Each Book-Entry Note shall bear the following legend on its face:
"Unless this Note is presented by an authorized representative of the
Depository to the Issuer or its agent for registration of transfer, exchange,
or payment, and any Note issued in exchange for this Note is registered in the
name of the Depository or in another name requested by an authorized
representative of the Depository (and any payment on this Note is made to the
Depository or to another entity requested by an authorized representative of
the Depository), any transfer, pledge, or other use of this Note for value or
otherwise by or to any person is wrongful inasmuch as the registered owner of
this Note, the Depository, has an interest in this Note."
ARTICLE III
Covenants
Section 3.01. Payment of Principal and Interest.
The Issuer will duly and punctually pay the principal of the
Principal Amount Notes and interest on the Interest Bearing Notes and other
amounts payable on the Notes in accordance with the terms of the Notes and
this Indenture. Amounts properly withheld under the Code or other applicable
tax laws by any person from a payment to any Noteholder of interest or
principal or other amounts shall be considered to have been paid by the Issuer
to the Noteholder for all purposes of this Indenture.
The Notes are non-recourse obligations of the Issuer and are limited
in right of payment to amounts available from the Trust. The Issuer shall not
otherwise be liable for payments on the Notes.
Section 3.02. Maintenance of Office or Agency.
The Issuer will maintain in the Borough of Manhattan, The City of New
York, an office or agency where Notes may be surrendered for registration of
transfer or exchange, and where notices to and demands on the Issuer regarding
the Notes and this Indenture may be served. The Issuer initially appoints the
Indenture Trustee to serve as its agent for these purposes. The Indenture
Trustee will give prompt notice to the Issuer of the location, and of any
change in the location, where the Indenture Trustee maintains this office or
agency. If the Issuer ever fails to maintain the required office or agency,
then surrenders, notices, and demands may be made or served at the Corporate
Trust Office.
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Section 3.03. Money For Payments To Be Held in Trust.
All payments of amounts payable on any Notes pursuant to Section
8.03, shall be made from amounts deposited in the Payment Account by the
Indenture Trustee or by another Paying Agent, and no amounts so deposited in
the Payment Account for payments of Notes shall be paid over to the Issuer
except as provided in this Section or Section 8.03.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
the Paying Agent agrees with the Indenture Trustee that it will, and the
Indenture Trustee hereby agrees in its capacity as Paying Agent that it will:
(i) hold all sums held by it for the payment of amounts due
on the Notes in trust for the benefit of the persons entitled to them
until they are paid to the persons entitled to them or otherwise
disposed of as provided in this Indenture, and pay them to the
persons entitled to them as provided in this Indenture;
(ii) give the Indenture Trustee and the Credit Enhancer
notice of any payment default by the Issuer on the Notes of which it
has actual knowledge;
(iii) at any time during the continuance of any payment
default on the Notes, at the request of the Indenture Trustee,
immediately pay to the Indenture Trustee all sums held in trust by it
for the payment of the Notes;
(iv) immediately resign as a Paying Agent and immediately
pay to the Indenture Trustee all sums held by it in trust for the
payment of Notes if at any time it ceases to meet the standards
required to be met by a Paying Agent at the time of its appointment;
(v) be bound by Section 11.16; and
(vi) comply with all requirements of the Code to withhold
from any payments made by it on any Notes any applicable withholding
taxes imposed on them and comply with any applicable reporting
requirements.
To obtain the satisfaction and discharge of this Indenture or for any
other purpose, the Issuer may at any time by Issuer Order direct any Paying
Agent to pay to the Indenture Trustee all sums held by it in trust. Those sums
shall be held by the Indenture Trustee on the same trusts as those on which
the sums were held by the Paying Agent. On payment by a Paying Agent to the
Indenture Trustee, it shall be released from all further liability with
respect to that money.
Subject to applicable laws on abandoned property, any money held in
trust by the Indenture Trustee or any Paying Agent for the payment of any
amount due on any Note remaining unclaimed for two years after it has become
payable shall be discharged from the trust and be paid to the Issuer on Issuer
Request with the consent of the Credit Enhancer. If any of that money had been
previously deposited by the Credit Enhancer for the payment of principal or
interest on the Notes, to the extent any amounts are owing to the Credit
Enhancer
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that money shall be promptly paid to the Credit Enhancer. After that the
Holder of the unpaid Note shall look only to the Issuer for its payment as an
unsecured general creditor (but only to the extent of the amounts paid to the
Issuer). On its payment to the Issuer all liability of the Indenture Trustee
or the Paying Agent with respect to that trust money shall cease. The
Indenture Trustee or the Paying Agent, before being required to make the
payment to the Issuer, shall at the expense and direction of the Issuer cause
to be published once a notice that the money remains unclaimed and that, after
a date specified in the notice not less than 30 days from the date of the
publication, any unclaimed balance of the money then remaining will be repaid
to the Issuer. The notice shall be published in a newspaper published in the
English language, customarily published on each Business Day and of general
circulation in The City of New York. The Indenture Trustee may also adopt and
employ, at the expense and direction of the Issuer, any other reasonable means
of notification of the repayment (including mailing notice of the repayment to
their last address of record to Holders whose Principal Amount Notes have been
called but have not been surrendered for redemption or whose right to or
interest in moneys payable but not claimed is determinable from the records of
the Indenture Trustee or of any Paying Agent).
Section 3.04. Existence.
The Issuer will preserve its existence, rights, and franchises as a
Delaware statutory trust (unless it or any successor becomes organized under
the laws of any other State or of the United States, in which case the Issuer
will preserve its existence, rights, and franchises under the laws of that
other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which qualification to do business is
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral, and each other material agreement of the Issuer.
Section 3.05. Protection of the Collateral.
(a) The Issuer intends the Security Interest Granted pursuant to this
Indenture in favor of the Indenture Trustee on behalf of the Secured Parties
to be before all other liens on the Collateral (except as otherwise provided
in the Transaction Documents). The Issuer shall take all actions necessary to
obtain and maintain, for the benefit of the Indenture Trustee on behalf of the
Secured Parties, a first priority perfected Security Interest in the
Collateral (except as otherwise provided in the Transaction Documents). The
Issuer will execute and deliver any supplements and amendments to this
Indenture and any Financing Statements, Continuation Statements, instruments
of further assurance, and other instruments and will take any other action
appropriate to:
(i) Grant more effectively any portion of the Collateral;
(ii) preserve the Security Interest (and its priority)
created by this Indenture or carry out more effectively the purposes
of this Indenture;
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(iii) perfect, publish notice of, or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to any of the
Collateral;
(v) preserve and defend title to the Collateral and the
rights of the Indenture Trustee, the Credit Enhancer, and the
Noteholders in the Collateral against all adverse claims; or
(vi) pay all taxes or assessments levied or assessed on the
Collateral when due.
(b) Except as otherwise provided in this Indenture or the other
Transaction Documents, the Indenture Trustee shall not remove any portion of
the Collateral that consists of money or is evidenced by an instrument,
certificate, or other writing from the jurisdiction in which it was held at
the date of the most recent Opinion of Counsel delivered pursuant to Section
3.06 unless the Indenture Trustee and the Credit Enhancer receive an Opinion
of Counsel to the effect that the lien and Security Interest created by this
Indenture will continue to be maintained on any removed property after giving
effect to its removal.
(c) The Issuer designates the Indenture Trustee its agent and
attorney-in-fact to execute any Financing Statement, Continuation Statement,
or other instrument required to be executed pursuant to this Section. The
Issuer authorizes the Indenture Trustee to file Financing Statements or
Continuation Statements, and amendments to them, relating to any part of the
Collateral without the signature of the Issuer where permitted by law. A
carbon, photographic, or other reproduction of this Indenture or any filed
Financing Statement covering the Collateral or any part of it shall be
sufficient as a Financing Statement where permitted by law. The Indenture
Trustee will promptly send to the Issuer any Financing Statements or
Continuation Statements that it files without the signature of the Issuer. Any
Financing Statement filed relating to any part of the Collateral will state in
bold-faced type that a purchase of the Mortgage Loans included in the
collateral covered by the Financing Statement from the debtor will violate the
rights of the secured party and its assignee.
Section 3.06. Opinions About Collateral.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee and the Credit Enhancer an Opinion of Counsel either
(i) stating that, in its opinion, no action is necessary to
perfect the Security Interest of this Indenture in the Mortgage Loans
or
(ii) stating that, in its opinion, all action
o with respect to the recording and filing of this
Indenture, any indentures supplemental to this Indenture,
and any other requisite documents and
15
o with respect to the execution and filing of any
Financing Statements and Continuation Statements
has been taken that is necessary to perfect the Security Interest of
this Indenture in the Mortgage Loans, and reciting the details of the
action.
(b) By the date specified in the Adoption Annex in each calendar year
beginning in the year specified in the Adoption Annex, the Issuer shall
furnish to the Indenture Trustee and the Credit Enhancer an Opinion of Counsel
either stating that, in its opinion, no action is necessary to maintain the
perfected Security Interest of this Indenture in the Mortgage Loans or stating
that, in its opinion, all action has been taken
(i) with respect to the recording, filing, re-recording, and
refiling of this Indenture, any indentures supplemental to this
Indenture, and any other requisite documents and
(ii) with respect to the execution and filing of any
Financing Statements and Continuation Statements
necessary to maintain the perfected Security Interest created by this
Indenture in the Mortgage Loans and reciting the details of the action. The
Opinion of Counsel shall also describe the recording, filing, re-recording,
and refiling of this Indenture, any indentures supplemental to this Indenture,
and any other requisite documents and the execution and filing of any
Financing Statements and Continuation Statements that will, in counsel's
opinion, be required to maintain the perfected Security Interest of this
Indenture in the Mortgage Loans until the date specified in the Adoption Annex
in the following calendar year.
Section 3.07. Performance of Obligations.
(a) The Issuer will not take any action (and will not permit others
to take any action) that would release any person from any of their material
obligations under any of the Transaction Documents, that would create any
Security Interests that are not provided for in the Transaction Documents, or
that would change or impair the validity or effectiveness of the Transaction
Documents or any Security Interest granted under them, except as expressly
provided in the Transaction Documents. The Indenture Trustee, as pledgee of
the Mortgage Loans and an assignee of the Issuer's rights under the Sale and
Servicing Agreement may exercise all of the rights of the Issuer to direct the
actions of the Master Servicer pursuant to the Sale and Servicing Agreement.
Unless granted or permitted by the Credit Enhancer, the Issuer may not waive
any default by the Master Servicer under the Sale and Servicing Agreement or
terminate the Master Servicer under the Sale and Servicing Agreement.
(b) The Issuer may contract with other persons to assist it in
performing its duties under this Indenture, and the performance of those
duties by a person identified to the Indenture Trustee in an Officer's
Certificate shall be considered to be action taken by the Issuer.
16
(c) The Issuer will punctually perform all of its obligations under
the Transaction Documents, including properly filing all Financing Statements
and Continuation Statements required to be filed by the Transaction Documents.
Except as provided in Section 9.01, the Rating Agency Condition must be
satisfied in connection with any amendment, termination, or material change in
a Transaction Document. The Issuer shall not amend, terminate, or otherwise
change any Transaction Document without the consent of the Indenture Trustee
and the Credit Enhancer. The Issuer will provide notice of any termination,
amendment, or material change in any Transaction Document to the Rating
Agencies. The consent of the Indenture Trustee will not be required if the
Rating Agency Condition is satisfied with respect to the proposed action.
(d) Without derogating from the Grants to the Indenture Trustee under
this Indenture or the rights of the Indenture Trustee under this Indenture,
the Issuer agrees
(i) that it will not, without the prior consent of the
Credit Enhancer and either the Indenture Trustee or the Holders of
not less than 51% of the aggregate Outstanding Amount of all Classes,
change or waive, or agree to or otherwise permit any change to or
waiver of, the terms of any Collateral (except to the extent
otherwise provided in the Sale and Servicing Agreement); and
(ii) that any change in the terms of any Collateral shall
not
(A) increase or reduce the amount of, or accelerate
or delay the timing of, distributions that are required to
be made for the benefit of the Noteholders (except as may be
incidental to changes or waivers allowed under (d)(i)) or
(B) reduce the percentage of the Notes that is
required to consent to any change in the terms of any
Collateral without the consent of the Holders of all the
Outstanding Notes.
If the Credit Enhancer and either the Indenture Trustee or the requisite
percentage of Holders consent to any change in the terms of any Collateral,
the Issuer agrees, promptly following a request by the Indenture Trustee to do
so, to execute and deliver, in its own name and at its own expense, any
documents the Indenture Trustee deems appropriate under the circumstances.
Section 3.08. Negative Covenants.
So long as any Notes are Outstanding, the Issuer shall not:
(a) dispose of any of the Collateral or other properties or assets of
the Issuer, except as expressly permitted by this Indenture or the Sale and
Servicing Agreement, unless directed to do so by the Indenture Trustee with
the consent of the Credit Enhancer;
(b) claim any credit on, or make any deduction from the principal or
interest or other amounts payable on, the Notes (other than amounts properly
withheld from payments under the Code or applicable State law) or assert any
claim against any present or former Noteholder for the payment of the taxes
levied or assessed on any part of the Collateral;
17
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be changed (except as
otherwise provided in the Sale and Servicing Agreement), or permit any person
to be released from any obligations on the Notes or under this Indenture
except as expressly permitted by this Indenture, (ii) permit any lien, charge,
excise, claim, Security Interest, mortgage, or other encumbrance (other than
the lien of this Indenture and as otherwise provided in the Sale and Servicing
Agreement) to affect any part of the Collateral, or any interest in it or its
proceeds, or (iii) permit the lien of this Indenture not to constitute a valid
first priority Security Interest in the Collateral; or
(d) dissolve or liquidate in whole or in part;
(e) make any distributions on any ownership interest in the Issuer
(except as expressly provided for in the Transaction Documents), redeem,
purchase, or otherwise retire or acquire for value any ownership interest in
the Issuer (except as expressly provided for in the Transaction Documents), or
set aside any amounts for any of these purposes;
(f) engage in any business other than financing, purchasing, owning,
selling, and managing the Collateral; issuing the Notes; and activities
incidental to those contemplated businesses, in each case, in the manner
contemplated by the Transaction Documents;
(g) issue, incur, assume, guarantee, or otherwise have the Trust
become liable, directly or indirectly, for any indebtedness except for its
liabilities under the Transaction Documents and other expenses for which the
Issuer is entitled to reimbursement under this Indenture or the Sale and
Servicing Agreement;
(h) make any loan or advance of credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment
or performance on any obligation), endorse (except for endorsement of
instruments for collection in the ordinary course of business), or otherwise
become contingently liable, directly or indirectly, in connection with the
obligations, stocks, or dividends of, or own, purchase, repurchase, or acquire
(or agree contingently to do so) any stock, obligations, assets, or securities
of, or any other interest in, or make any capital contribution to, any other
person out of the Trust;
(i) make any expenditure (by long-term or operating lease or
otherwise) for capital assets;
(j) subject to the Master Servicer's servicing the Mortgage Loans in
accordance with the Sale and Servicing Agreement, waive or impair, or fail to
assert rights under, the Mortgage Loans, or effect impairment of the Issuer's
interest in the Mortgage Loans, the Sale and Servicing Agreement, or any other
Transaction Document, if the action would materially and adversely affect the
interests of the Noteholders or the Credit Enhancer; or
(k) take any other action or fail to take any action that would
result in the imposition of tax on the Issuer (including the tax on prohibited
transactions under Section 860F(a)(2) or contributions after the Startup Date,
as defined in Section 860G(d) of the Code) .
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Section 3.09. Annual Compliance Statement.
Within 80 days after the end of each year (commencing with the year
specified in the Adoption Annex) the Issuer will deliver to the Indenture
Trustee and the Credit Enhancer an Officer's Certificate stating, as to the
Authorized Officer signing the Officer's Certificate, that:
(i) a review of the activities of the Issuer during the
calendar year and of its performance under this Indenture and the
Trust Agreement has been made under the Authorized Officer's
supervision; and
(ii) to the best of the Authorized Officer's knowledge,
based on that review, the Issuer has complied with all its
obligations under this Indenture and the Trust Agreement throughout
that year or, if there has been a default in its compliance with any
obligation, specifying each default known to the Authorized Officer
and its nature and status.
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
The Issuer shall not consolidate or merge with or into or transfer
all or substantially all of its properties or assets to any other person,
unless:
(i) the person (if other than the Issuer) formed by or
surviving the consolidation or merger or to which the transfer is
made is organized and existing under the laws of the United States or
any State and expressly assumes the due and punctual payment of the
principal and interest on the Notes and the performance of every
obligation under each Transaction Document on the part of the Issuer
to be performed by an indenture supplemental to this Indenture,
executed and delivered to the Indenture Trustee, in form satisfactory
to the Indenture Trustee and the Credit Enhancer;
(ii) immediately after giving effect to the transaction, no
Incipient Default has occurred and is continuing;
(iii) the Rating Agency Condition has been satisfied with
respect to the transaction;
(iv) the Issuer has delivered to the Indenture Trustee and
the Credit Enhancer an Opinion of Counsel to the effect that the
transaction will not have any material adverse tax consequence to the
Issuer or any Noteholder;
(v) any action that is necessary to maintain the Security
Interest created by this Indenture has been taken; and
(vi) the Issuer has delivered to the Indenture Trustee and
the Credit Enhancer an Officer's Certificate and an Opinion of
Counsel each stating that the consolidation or merger and the
supplemental indenture comply with this Article and that all
conditions precedent in this Indenture relating to the transaction
have been complied with (including any filing required by the
Exchange Act).
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Section 3.11. Successor or Transferee.
Upon any consolidation or merger of the Issuer or transfer of all or
substantially all of its properties or assets in accordance with Section 3.10,
the person formed by or surviving the consolidation or merger (if other than
the Issuer) or to which the transfer is made shall succeed to, and be
substituted for, and may exercise every right of, the Issuer under this
Indenture with the same effect as if it had been named as the Issuer in this
Indenture.
Section 3.12. Further Instruments and Acts.
On request of the Indenture Trustee or the Credit Enhancer, the
Issuer will execute and deliver any further instruments and do any further
acts that may be appropriate to carry out more effectively the purpose of this
Indenture.
Section 3.13. Compliance with Laws.
The Issuer shall comply with the requirements of all laws the
non-compliance with which would, individually or in the aggregate, materially
and adversely affect the ability of the Issuer to perform its obligations
under the Notes or any Transaction Document.
Section 3.14. Master Servicer as Agent and Bailee of the Indenture
Trustee.
Solely for the purposes of perfection under Section 9-313(c) of the
UCC or other similar applicable law, rule, or regulation of the State in which
property is held by the Master Servicer, the Master Servicer is acting as
agent and bailee of the Indenture Trustee in holding amounts subject to
deposit to the Collection Account, as well as its agent and bailee in holding
any Mortgage File released to the Master Servicer, and any other items of
Collateral that come into the possession of the Master Servicer. By the Master
Servicer's execution of the Sale and Servicing Agreement, the Indenture
Trustee, as a secured party of the Mortgage Loans, has possession of these
items for the purposes of Section 9-313(c) of the UCC of the state in which
the Issuer is organized.
Section 3.15. Investment Company Act.
The Issuer shall not become an "investment company" or under the
"control" of an "investment company" as those terms are defined in the
Investment Company Act of 1940 and the rules and regulations under it (taking
into account not only the general definition of the term "investment company"
but also any available exceptions to the general definition). The Issuer shall
be in compliance with this Section 3.15 if it obtains an order exempting it
from regulation as an "investment company" so long as it is in compliance with
the conditions imposed in the order.
Section 3.16. Representations.
(a) The Issuer represents and warrants to the Indenture Trustee and
the Credit Enhancer that as of the Closing Date, unless specifically stated
otherwise:
(i) This Indenture creates a valid and continuing Security
Interest in the Collateral in favor of the Indenture Trustee. The
Security Interest created by this
20
Indenture is a first priority perfected Security Interest and it is
enforceable as such against creditors of, and purchasers from, the
Issuer.
(ii) The Mortgage Notes are "instruments" as defined in the
UCC.
(iii) Before the Grants of the Security Interest pursuant to
the Granting Clause of this Indenture, the Issuer owns, and has good
and marketable title to, the Mortgage Loans free of any lien, claim,
or encumbrance of any person.
(iv) By the Closing Date with respect to the Mortgage Loans
and within 10 days of the applicable date of substitution with
respect to any Eligible Substitute Mortgage Loan, the Issuer will
file Financing Statements in the proper filing office in the
appropriate jurisdiction to perfect the Security Interest in the
Collateral Granted under this Indenture.
(v) The Issuer has received a written acknowledgement from
the Custodian that the Custodian is acting solely as agent of the
Indenture Trustee.
(vi) The Issuer has not authorized the filing of and is not
aware of any Financing Statements against the Issuer that include a
description of collateral covering the Collateral other than any
financing statement (A) relating to the Security Interests granted to
the Indenture Trustee pursuant to this Indenture, (B) that has been
terminated, or (C) that names the Indenture Trustee as secured party.
(vii) The Mortgage Notes that constitute or evidence the
Collateral do not have any marks or notations indicating that they
have been pledged, assigned, or otherwise conveyed to any person
other than the Indenture Trustee. All Financing Statements filed or
to be filed against the Issuer in favor of the Indenture Trustee in
connection with this Indenture describing the Collateral contain a
statement to the following effect: "A purchase of the Mortgage Loans
included in the collateral covered by this financing statement will
violate the rights of the Indenture Trustee."
(viii) On the Closing Date, the Issuer is a "Qualifying SPE"
as such term is defined in the statement of Accounting Standards No.
140 of the Financial Accounting Standards Board, as in effect on the
Closing Date.
(b) The representations and warranties in this Section 3.16 shall
survive delivery of the respective Mortgage Files to the Custodian pursuant to
the Custodial Agreement and the termination of the Sale and Servicing
Agreement.
(c) The Indenture Trustee and the Credit Enhancer shall not, without
the prior written consent of the Rating Agencies, waive any of the
representations and warranties in Section 3.16(a).
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ARTICLE IV
Satisfaction and Discharge
Section 4.01. Satisfaction and Discharge of Indenture.
Except for rights of conversion or transfer or exchange of Notes
expressly provided for, the rights of the Indenture Trustee under Section
6.07, the rights of Noteholders as beneficiaries of this Indenture, and the
rights of the Credit Enhancer as subrogee of the Noteholders, this Indenture
shall cease to be of further effect, and the Indenture Trustee, on demand of
and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when the option of
the Issuer or the Credit Enhancer to redeem the Principal Amount Notes as
described in Section 10.01 is exercised or, if not exercised then:
(i) either:
(A) all Notes previously authenticated and
delivered have been delivered to the Indenture Trustee for
cancellation, other than
(1) Notes that have been destroyed, lost,
or stolen and that have been replaced or paid as
provided in Section 2.04;
(2) Notes for whose payment money has been
deposited in trust or segregated and held in trust
by the Issuer and later repaid to the Issuer or
discharged from the trust, as provided in Section
3.03); and
(3) Notes that have been paid in full and
that by their terms expire without the payment of a
principal balance; or
(B) all Notes not previously delivered to the
Indenture Trustee for cancellation:
(1) have become payable,
(2) will become payable at their Scheduled
Maturity Date within one year, or
(3) are to be called for redemption within
one year under arrangements satisfactory to the
Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name,
and at the expense, of the Issuer or by their terms
expire within one year without the payment of a
principal balance,
and the Issuer, in the case of (1), (2), or (3) above, has
irrevocably deposited with the Indenture Trustee cash or
direct obligations of or obligations guaranteed by the
United States (which will mature before the date the amounts
are payable), in trust for these purposes, in an amount
sufficient to pay the entire indebtedness when due on the
unexpired Notes not previously delivered
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to the Indenture Trustee for cancellation to the applicable
Scheduled Maturity Date or redemption date (if Notes have
been called for redemption pursuant to Section 10.01), as
the case may be;
(ii) the Issuer has paid all other sums payable under this
Indenture by the Issuer; and
(iii) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate, an Opinion of Counsel, and (if required by the
TIA, the Indenture Trustee, or the Credit Enhancer) an Independent
Certificate from a firm of certified public accountants, each meeting
the applicable requirements of Section 11.01, each stating that all
conditions precedent provided for in this Indenture relating to the
satisfaction and discharge of this Indenture have been complied with.
Section 4.02. Application of Trust Money.
All money deposited with the Indenture Trustee pursuant to Section
4.01 shall be held in trust and applied by it, in accordance with the Notes
and this Indenture, to the payment to the Holders of the particular Notes for
the payment or redemption of which the money has been deposited with the
Indenture Trustee, of all sums due and to become due on them for principal and
interest. That money need not be segregated from other funds except to the
extent required in this Indenture or required by law.
Section 4.03. Subrogation and Cooperation.
(a) To the extent the Credit Enhancer makes payments of principal or
interest on the Notes under the Policy, the Credit Enhancer will be fully
subrogated to the rights of the Noteholders to receive that principal and
interest from the Mortgage Loans, and any Subordinated Transferor Collections
and the Credit Enhancer shall be paid that principal and interest, but only
from the sources and in the manner provided in this Indenture and the Sale and
Servicing Agreement for the payment of that principal and interest. Any
payment of principal or interest on a Class of Notes made with moneys received
under the Policy shall not be considered payment of that Class of Notes from
the Trust and shall not result in the payment of or the provision for the
payment of the principal or interest on that Class of Notes under Section
4.01. The Credit Enhancer shall be paid principal and interest from Mortgage
Loans only from the sources and in the manner provided in this Indenture and
in the Insurance Agreement.
The Indenture Trustee shall cooperate in all respects with any
reasonable request or direction by the Credit Enhancer to take any of the
following actions to preserve or enforce the Credit Enhancer's interest under
each of this Indenture and the Sale and Servicing Agreement, consistent with
this Indenture and without limiting the rights of the Noteholders under this
Indenture, including upon the occurrence and continuance of a Credit Enhancer
Default:
(i) institute Proceedings for the collection of all amounts
then payable on the Notes or under this Indenture with respect to the
Notes and all amounts payable
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under the Insurance Agreement and to enforce any judgment obtained
and collect from the Issuer monies adjudged due;
(ii) sell any part of Collateral or interests in it at one
or more public or private sales called and conducted in any manner
permitted by law;
(iii) file or record all Assignments of Mortgage that have
not previously been recorded;
(iv) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the
interests of the Credit Enhancer under this Indenture.
Following the payment in full of the Notes, the Credit Enhancer shall
continue to have all the rights given to it under this Section and in all
other provisions of this Indenture, until all amounts owing to the Credit
Enhancer have been paid in full.
Section 4.04. Release of Collateral.
(a) Upon satisfaction and discharge of this Indenture pursuant to
Section 4.01 and otherwise as permitted by this Indenture, the Indenture
Trustee shall execute instruments to release property from the lien of this
Indenture, or convey the Indenture Trustee's interest in the property, in a
manner and under circumstances that are not inconsistent with this Indenture.
No party relying on an instrument executed by the Indenture Trustee as
provided in this Section shall be bound to ascertain the Indenture Trustee's
authority, inquire into the satisfaction of any conditions precedent, or see
to the application of any moneys.
(b) When no Notes are Outstanding, the Indenture Trustee shall
release any remaining Collateral that secured the Notes from the lien of this
Indenture and release to the Issuer any funds then on deposit in any account
other than funds held in trust for the satisfaction of Notes that have not
been surrendered for payment. The Indenture Trustee shall release property
from the lien of this Indenture pursuant to this Section only on receipt of an
Issuer Request accompanied by an Officer's Certificate.
(c) Whenever a Mortgage Loan has been substituted for or repurchased
in accordance with Section 2.02(b) or 2.04(d) of the Sale and Servicing
Agreement, purchased in accordance with Section 3.06 of the Sale and Servicing
Agreement, or designated for transfer in accordance with Section 2.06 of the
Sale and Servicing Agreement, the Indenture Trustee shall execute appropriate
documents to release the Mortgage Loan from the lien of this Indenture and
deliver the Mortgage File to the appropriate party.
(d) The Indenture Trustee shall release property from the lien of
this Indenture only on receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel, and Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(l) or an
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Opinion of Counsel in lieu of Independent Certificates to the effect that the
TIA does not require any Independent Certificates.
ARTICLE V
Remedies
Section 5.01. Events of Default.
Any one of the following events is an "Event of Default" whatever the
reason:
(i) default by the Issuer in the payment of any interest on
any Interest Bearing Note when it becomes payable, and the default
continues for five days; or
(ii) default by the Issuer in the payment of the principal
of any Principal Amount Note when it becomes payable and the default
continues for five days; or
(iii) default in the performance of any obligation of the
Issuer under this Indenture (other than an obligation specifically
dealt with elsewhere in this Section), or any representation or
warranty of the Issuer made in this Indenture or in any certificate
or other writing delivered in connection with this Indenture proves
to have been materially incorrect as of the time when it was made,
and the default or the circumstance making the representation or
warranty incorrect has not been cured within 60 days after notice to
the Issuer by the Indenture Trustee or to the Issuer and the
Indenture Trustee by the Credit Enhancer (or, if a Credit Enhancer
Default exists, by the Holders of at least 25% of the Outstanding
Amount of all Classes of Notes) by registered or certified mail
specifying the default or incorrect representation or warranty and
requiring it to be remedied and stating that the notice is a notice
of default under this Indenture; or
(iv) an Insolvency Event occurs with respect to the Issuer.
The Issuer shall deliver to the Indenture Trustee and the Credit Enhancer,
within five days after its occurrence, notice in the form of an Officer's
Certificate of any Incipient Default under clause (iii), its status, and what
action the Issuer is taking or proposes to take with respect to the event.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then the Indenture
Trustee or the Holders of not less than 51% of the aggregate Outstanding
Amount of all Classes of Principal Amount Notes, in either case with the
consent of the Credit Enhancer, or the Credit Enhancer may declare all the
Notes to be immediately payable, by a notice in writing to the Issuer (and to
the Indenture Trustee if given by Noteholders), and upon that declaration the
unpaid principal amount of the Principal Amount Notes, together with accrued
interest on them through the date of acceleration, shall become immediately
payable.
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At any time after the declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has
been obtained by the Indenture Trustee, the Holders of not less than 51% of
the aggregate Outstanding Amount of all Classes, with the consent of the
Credit Enhancer, or the Credit Enhancer, by notice to the Issuer and the
Indenture Trustee, may rescind the declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(A) all payments of principal on the Principal
Amount Notes and interest on the Interest Bearing Notes and
all other amounts that would then be due under this
Indenture or on the Notes if the Event of Default giving
rise to the acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture
Trustee under this Indenture and the reasonable
compensation, expenses, disbursements, and advances of the
Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal or interest of the Notes that have become due solely by the
acceleration, have been cured or waived as provided in Section 5.13.
No rescission shall affect any subsequent default or impair any right
consequent to it.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if the Notes are accelerated following
an Event of Default, then the Issuer will pay to the Indenture Trustee on
demand, for the benefit of the Noteholders or the Credit Enhancer if the
Credit Enhancer has made a payment on the Notes under the Policy, the whole
amount then payable on the Notes and, in addition, any further amount needed
to cover the expenses of collection, including the reasonable compensation and
expenses of the Indenture Trustee and its agents and counsel.
(b) If the Issuer fails to pay those amounts immediately on demand,
the Indenture Trustee, in its own name and as trustee of an express trust,
subject to Section 11.16 may, and at the direction of the Credit Enhancer
shall, institute a Proceeding for the collection of the sums due, and may
prosecute the Proceeding to final decree, and may enforce the judgment against
the Issuer (or other obligor on the Notes) and collect in the manner provided
by law out of the property of the Issuer (or other obligor on the Notes)
wherever situated, the moneys determined to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee subject to Section 11.16 may in its discretion with the consent of the
Credit Enhancer (subject to Section 5.04), and at the direction of the Credit
Enhancer shall, proceed to protect and enforce its rights and the rights of
the Secured Parties, by Proceedings the Indenture Trustee deems most
26
effective to protect and enforce those rights, whether for the specific
enforcement of any agreement in this Indenture or in aid of the exercise of
any power granted in this Indenture, or to enforce any other proper remedy or
legal or equitable right vested in the Indenture Trustee by this Indenture or
by law.
(d) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of this Indenture to which the
Indenture Trustee is a party), the Indenture Trustee shall be held to
represent all the Secured Parties, and it shall not be necessary to make any
Noteholder or the Credit Enhancer a party to the Proceedings.
(e) All rights of action and assertion of claims under this
Indenture, the Sale and Servicing Agreement, or any of the Notes may be
enforced by the Indenture Trustee without the possession of any of the Notes
or their production in any Proceedings regarding them. Any Proceedings
instituted by the Indenture Trustee shall be brought in its own name as
trustee of an express trust. Any recovery of judgment, subject to the payment
of the expenses, disbursements, and compensation of the Indenture Trustee,
each predecessor Indenture Trustee, and their agents and counsel, shall be for
the ratable benefit of the Secured Parties.
Section 5.04. Indenture Trustee May File Proofs of Claim.
(a) If
(1) Proceedings under Title 11 of the United States Code or
any other applicable federal or State bankruptcy, insolvency, or
other similar law are pending relating to the Issuer or any other
obligor on the Notes or any person having or claiming an ownership
interest in the Collateral, or
(2) a receiver, assignee, or trustee in bankruptcy or
reorganization, or liquidator, sequestrator, or similar official has
been appointed for or taken possession of the Issuer or its property
or the other obligor or person, or
(3) any other comparable judicial Proceedings are pending
relating to the Issuer or other obligor on the Notes, or to the
creditors or property of the Issuer or the other obligor,
then, irrespective of whether the principal of any Principal Amount Notes is
then payable as expressed in them or by declaration or otherwise and
irrespective of whether the Indenture Trustee has made any demand pursuant to
this Section, with the consent of the Credit Enhancer the Indenture Trustee is
authorized by intervention in the Proceedings or otherwise:
(i) to file and prove claims for the entire amount of
principal owing on any Principal Amount Notes and interest owing on
any Interest Bearing Notes and other amounts owing on any Notes and
to file any other documents appropriate to have the claims of the
Indenture Trustee, the Credit Enhancer, and of the Noteholders
allowed in the Proceedings (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents and
27
counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of negligence or
bad faith);
(ii) to vote on behalf of the Holders of Notes in any
election of a trustee, a standby trustee, or person performing
similar functions in the Proceedings; and
(iii) to collect and receive any moneys or other property
payable on any claims and to distribute all amounts received on the
claims of the Noteholders, the Credit Enhancer, and of the Indenture
Trustee on their behalf;
and any trustee, receiver, liquidator, custodian, or other similar official in
any Proceeding is hereby authorized by each of the Noteholders to make
payments to the Indenture Trustee and, if the Indenture Trustee consents to
the Noteholders receiving payments directly, to pay to the Indenture Trustee
amounts sufficient to cover reasonable compensation to the Indenture Trustee,
each predecessor Indenture Trustee, and their respective agents and counsel,
and all other expenses and liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture Trustee except as a result of
negligence or bad faith, and to pay all amounts due to the Credit Enhancer.
(b) Nothing in this Indenture authorizes the Indenture Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder or the Credit Enhancer any plan of reorganization, arrangement,
adjustment, or composition affecting the Notes or the rights of any Noteholder
or the Credit Enhancer or authorizes the Indenture Trustee to vote on the
claim of any Noteholder or the Credit Enhancer in any such proceeding except
to vote for the election of a trustee in bankruptcy or similar person.
Section 5.05. Remedies; Priorities.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee subject to Section 11.16 may with the consent of the Credit
Enhancer, and at the direction of the Credit Enhancer shall, do any of the
following (subject to Section 5.11):
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then payable on
the Notes or under this Indenture, whether by declaration or
otherwise, and all amounts payable under the Sale and Servicing
Agreement, and enforce any judgment obtained, and collect from the
Issuer and any other obligor on the Notes moneys adjudged due;
(ii) institute Proceedings for the complete or partial
foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the
rights of the Indenture Trustee, the Credit Enhancer, and the
Noteholders;
28
(iv) exercise all rights of the Issuer in connection with
the Purchase Agreement and the Sale and Servicing Agreement against
the Sponsor, the Depositor, or the Master Servicer or otherwise; and
(v) sell any portion of the Collateral or interests in it as
directed by the Credit Enhancer, at one or more public or private
sales called and conducted in any manner permitted by law.
The Indenture Trustee, however, may not sell or otherwise liquidate Collateral
following an Event of Default unless
(A) the Indenture Trustee obtains the consent of the Credit
Enhancer and the Holders of 100% of the aggregate Outstanding Amount
of the Notes of all Classes,
(B) the proceeds of the sale or liquidation distributable to
the Secured Parties are sufficient to discharge in full all amounts
then due on the Principal Amount Notes and to reimburse the Credit
Enhancer for any unreimbursed Credit Enhancement Draw Amounts and any
other amounts due the Credit Enhancer under the Insurance Agreement,
or
(C) the Indenture Trustee determines that the Collateral
will not continue to provide sufficient funds for the payment of
principal of the Principal Amount Notes and interest on the Interest
Bearing Notes as they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee obtains the
consent of the Credit Enhancer and the Holders of a majority of the
aggregate Outstanding Amount of the Notes of all Classes.
In determining the sufficiency or insufficiency under clause (B) and (C), the
Indenture Trustee may, but need not, obtain and rely on an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of the proposed action and as to the sufficiency of the
Collateral for the purpose. If a Credit Enhancer Default exists at the time
any consent is required or direction may be given under this Section 5.05(a),
the consent or direction shall be by Holders representing at least 66-2/3% of
the Outstanding Amount of all Classes instead of by the Credit Enhancer.
(b) If the Indenture Trustee collects any money or property under
this Article, it shall pay out the money or property in the following order:
First: to the Indenture Trustee for the fee of the Indenture
Trustee (separately agreed to between the Master Servicer and the
Indenture Trustee) then due and any expenses incurred by it in
connection with the enforcement of the remedies under this Article
and to the Owner Trustee for the fee of the Owner Trustee (separately
agreed to between the Master Servicer and the Owner Trustee) then due
and any expenses due to the Owner Trustee under any of the
Transaction Documents;
Second: any premium owing to the Credit Enhancer;
29
Third: to the Noteholders for interest due on the Interest
Bearing Notes (except for Basis Risk Carryforward), pro rata
according to the amounts due on those Notes for interest;
Fourth: to the Noteholders of each Class of Principal Amount
Notes for amounts due on the relevant Principal Amount Notes for
principal according to the Note Payment Convention until the Note
Principal Balances of each Class of Notes is reduced to zero;
Fifth: to the Credit Enhancer, any other amounts owed to the
Credit Enhancer under the Insurance Agreement;
Sixth: to pay any Basis Risk Carryforward to the Noteholders
of each Class of Principal Amount Notes, pro rata among Classes on
the basis of the Basis Risk Carryforward then owed to each Class of
Principal Amount Notes; and
Seventh: to the Issuer for distribution in accordance with
the Trust Agreement.
Section 5.06. Optional Preservation of the Collateral.
If the Notes have been declared to be due under Section 5.02
following an Event of Default and the declaration and its consequences have
not been annulled, the Indenture Trustee may with the consent of the Credit
Enhancer, but need not unless so directed by the Credit Enhancer, elect to
maintain possession of the Collateral. The parties and the Noteholders want
sufficient funds to exist at all times for the payment of principal of and
interest on the Notes and other obligations of the Issuer including payments
to the Credit Enhancer, and the Indenture Trustee shall take that into account
when determining whether or not to maintain possession of any Collateral. In
determining whether to maintain possession of the Collateral, the Indenture
Trustee may, but need not, obtain and rely on an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of the proposed action and as to the sufficiency of the Collateral
for the purpose.
Section 5.07. Limitation of Suits.
No Noteholder may institute any Proceeding with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy under this Indenture, unless the Credit Enhancer has consented and
subject to Section 11.16:
(i) the Holder has previously given notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 51% of the aggregate
Outstanding Amount of all Classes have requested the Indenture
Trustee in writing to institute a Proceeding with respect to the
Event of Default in its own name as Indenture Trustee under this
Indenture;
(iii) the Holders have offered the Indenture Trustee
reasonable indemnity against the costs and liabilities to be incurred
in complying with the request;
30
(iv) the Indenture Trustee for 60 days after its receipt of
the request and offer of indemnity has failed to institute
Proceedings;
(v) no direction inconsistent with the request has been
given to the Indenture Trustee during the 60-day period by the
Holders of not less than 51% of the aggregate Outstanding Amount of
all Classes; and
(vi) the Holders have obtained the consent of the Credit
Enhancer.
No Holders of Notes shall have any right in any manner whatever because of
this Indenture to affect the rights of any other Holders of Notes or to obtain
or to seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner provided in this
Indenture.
If the Indenture Trustee receives inconsistent requests and indemnity
from two or more groups of Holders of Notes, each representing less than 51%
of the aggregate Outstanding Amount of all Classes, the Indenture Trustee in
its sole discretion may determine what action shall be taken.
Section 5.08. Unconditional Right to Receive Principal and Interest.
Notwithstanding any other provisions in this Indenture, every
Noteholder has an absolute and unconditional right to receive payment of the
principal of the Principal Amount Notes and interest on the Interest Bearing
Notes and other amounts payable on its Note after their due dates (or, in the
case of redemption, after the redemption date) and to institute suit for the
enforcement of any payment, and this right shall not be impaired without the
consent of the Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Indenture Trustee or any Noteholder has instituted any
Proceeding to enforce any right under this Indenture and the Proceeding has
been discontinued or abandoned for any reason or has been determined adversely
to the Indenture Trustee or to the Noteholder, then the Issuer, the Indenture
Trustee, the Credit Enhancer, and the Noteholders shall, subject to any
determination in the Proceeding, be restored severally and respectively to
their former positions under this Indenture, and all rights of the Indenture
Trustee and the Noteholders shall continue as though no Proceeding had been
instituted.
Section 5.10. Rights and Remedies Cumulative.
No right given to the Indenture Trustee, the Credit Enhancer, or to
the Noteholders in this Indenture is intended to be exclusive of any other
right, and every right shall, to the extent permitted by law, be cumulative to
every other right given under this Indenture or existing at law or in equity
or otherwise. The assertion of any right under this Indenture, or otherwise,
shall not prevent the concurrent assertion of any other appropriate right.
31
Section 5.11. Delay or Omission Not a Waiver.
No delay in exercising or failure to exercise any right accruing on
any Incipient Default shall impair the right or constitute a waiver of the
Incipient Default or an acquiescence in it. Every right given by this Article
or by law to the Indenture Trustee, to the Credit Enhancer, or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee, by the Credit Enhancer, or by the
Noteholders.
Section 5.12. Control by Credit Enhancer or Noteholders.
(a) If no Credit Enhancer Default exists, then the Credit Enhancer,
otherwise the Holders of not less than 51% of the aggregate Outstanding Amount
of all Classes, may direct the time, method, and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect to
the Notes or exercising any right conferred on the Indenture Trustee. No
direction shall be binding unless:
(i) it does not conflict with any rule of law or with this
Indenture; and
(ii) if no Credit Enhancer Default exists, it is by the
Credit Enhancer, otherwise by the Holders of Notes representing not
less than 100% of the aggregate Outstanding Amount of all Classes if
the direction to the Indenture Trustee is to sell or liquidate the
Collateral.
The Indenture Trustee may take any other action it deems proper that is not
inconsistent with the direction, Section 5.04, or Section 5.05.
(b) If no Credit Enhancer Default exists, then until the Notes have
been paid in full, all amounts owed to the Credit Enhancer have been paid in
full, the Insurance Agreement has terminated, and the Policy has been returned
to the Credit Enhancer for cancellation, the following provisions shall apply:
(i) Notwithstanding anything in this Indenture or in the
other Transaction Documents to the contrary, the Credit Enhancer
shall have the right to participate in, to direct the enforcement or
defense of, and, at the Credit Enhancer's sole option, to institute
or assume the defense of, any action, proceeding, or investigation
(other than foreclosure proceedings involving the Mortgage Loans and
other actions constituting ordinary servicing activities) that could
adversely affect the Collateral, the Issuer, or the rights or
obligations of the Credit Enhancer under this Indenture or under the
Policy or the other Transaction Documents, including any insolvency
or bankruptcy proceeding in respect of the Master Servicer, the
Sponsor, the Depositor, the Issuer, or any affiliate of any of them.
Following written notice to the Indenture Trustee, the Credit
Enhancer shall have exclusive right to determine, in its sole
discretion, the actions necessary to preserve and protect the
Collateral and the Issuer. All costs and expenses of the Credit
Enhancer in connection with such action, proceeding, or
investigation, including any judgment or settlement entered into
affecting the Credit Enhancer or the Credit
32
Enhancer's interests, shall be included in reimbursement amounts owed
to the Credit Enhancer under Section 8.03(a)(ix) and Section
8.03(a)(xi).
(ii) In connection with any action, proceeding, or
investigation that could adversely affect the Collateral, the Issuer,
or the rights or obligations of the Credit Enhancer under this
Indenture or under the Policy or the other Transaction Documents
(other than foreclosure proceedings involving the Mortgage Loans and
other actions constituting ordinary servicing activities), including
any insolvency or bankruptcy proceeding in respect of the Master
Servicer, the Sponsor, the Depositor, the Issuer, or any affiliate of
any of them, the Indenture Trustee agrees to cooperate with, and to
take any reasonable action directed by, the Credit Enhancer,
including entering into agreements and settlements as directed the
Credit Enhancer, in its sole discretion, without the consent of any
Transferor Certificateholder or any Noteholder.
(iii) The Indenture Trustee agrees to provide to the Credit
Enhancer prompt written notice of any action, proceeding, or
investigation that a Responsible Officer of the Indenture Trustee has
actual knowledge of (other than foreclosure proceedings involving the
Mortgage Loans and other actions constituting ordinary servicing
activities) that names the Issuer or the Indenture Trustee as a party
or that could adversely affect the Collateral, the Issuer, or the
rights or obligations of the Credit Enhancer under this Indenture or
under the Policy or the other Transaction Documents, including any
insolvency or bankruptcy proceeding in respect of the Master
Servicer, the Sponsor, the Depositor, the Issuer, or any affiliate of
any of them.
(iv) Notwithstanding anything in this Indenture or in any of
the other Transaction Documents to the contrary, the Indenture
Trustee shall not, without the Credit Enhancer's prior written
consent or unless directed in writing by the Credit Enhancer,
undertake or join any litigation or agree to any settlement of any
action, proceeding, or investigation affecting the Collateral, the
Issuer, or the rights or obligations of the Credit Enhancer under
this Indenture or under the Policy or the other Transaction Documents
(other than foreclosure proceedings involving the Mortgage Loans and
other actions constituting ordinary servicing activities).
(v) Each Noteholder, by acceptance of its Note, and the
Indenture Trustee agree that Credit Enhancer shall have the rights
provided in this Section, which are in addition to any rights of the
Credit Enhancer pursuant to the other provisions of the Transaction
Documents, that the rights provided in this Section may be exercised
by the Credit Enhancer, in its sole discretion, without the need for
the consent or approval of any Noteholder or the Indenture Trustee,
notwithstanding any other provision in this Indenture or in any of
the other Transaction Documents, and that nothing in this Section
shall be deemed to be an obligation of the Credit Enhancer to
exercise any of the rights provided for in this Indenture.
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Section 5.13. Waiver of Past Defaults.
Before the declaration of the acceleration of the maturity of the
Notes as provided in Section 5.02, the Credit Enhancer or, if a Credit
Enhancer Default exists, the Holders of not less than 51% of the aggregate
Outstanding Amount of all Classes may waive any past default and its
consequences except a default
(i) in payment of principal on any Principal Amount Notes or
interest on any Interest Bearing Notes or
(ii) regarding a provision of this Indenture that cannot be
changed without the consent of the Holder of each affected Note.
After any such waiver, the Incipient Default shall cease to exist and
be considered to have been cured and not to have occurred, and any Event of
Default arising from it shall be considered to have been cured and not to have
occurred, for every purpose of this Indenture. No waiver shall extend to any
subsequent or other default or impair any right consequent to it.
Section 5.14. Undertaking For Costs.
All parties to this Indenture agree, and each Holder of a Note by its
acceptance of its Note agrees, that in any suit for the enforcement of any
right under this Indenture, or in any suit against the Indenture Trustee for
any action taken, suffered, or omitted by it as Indenture Trustee, any court
may in its discretion require the filing by any party litigant in the suit of
an undertaking to pay the costs of the suit, and that the court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant. The
provisions of this Section shall not apply to
(i) any suit instituted by the Indenture Trustee or the
Credit Enhancer,
(ii) any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate more than 25% of the aggregate
Outstanding Amount of all Classes, or
(iii) any suit instituted by any Noteholder for the
enforcement of the payment of principal of any Principal Amount Note
or interest on any Interest Bearing Note after the due dates
expressed in the Note and in this Indenture (or, in the case of
redemption, after the redemption date).
Section 5.15. Waiver of Stay or Extension Laws.
To the extent that it may lawfully do so, the Issuer covenants that
it will not at any time insist on, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time after this in force, that may affect the covenants
or the performance of this Indenture. To the extent that it may lawfully do
so, the Issuer expressly waives all benefit of any such law, and covenants
that it will not hinder, delay, or impede the execution of any power granted
in this Indenture to the Indenture Trustee, but will permit the execution of
every power as though the law had not been enacted.
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Section 5.16. Rapid Amortization Events.
If any one of the following events occurs during the Managed
Amortization Period:
(a) The failure of the Sponsor or the Master Servicer to make any
payment or deposit required by the Sale and Servicing Agreement within three
Business Days after the payment or deposit was required to be made;
(b) The failure of the Sponsor or the Master Servicer to cause the
Depositor to observe or perform in any material respect the covenants of the
Depositor in Section 2.01(h) or 2.05 of the Sale and Servicing Agreement;
(c) The failure of the Sponsor to observe or perform in any material
respect any other covenants of the Sponsor in the Sale and Servicing Agreement
that materially and adversely affects the interests of the Noteholders or the
Credit Enhancer and that continues unremedied and continues to affect
materially and adversely the interests of the Noteholders or the Credit
Enhancer for 60 days (five days in the case of any failure to transfer to the
Trust Eligible Substitute Mortgage Loans or deposit into the Collection
Account the Transfer Deposit Amount in accordance with Section 2.07(a) of the
Sale and Servicing Agreement) after the date on which written notice of the
failure, requiring it to be remedied, shall have been given to the Sponsor by
the Indenture Trustee, or to the Sponsor and the Indenture Trustee by the
Credit Enhancer or the Holders of not less than 51% of the aggregate
Outstanding Amount of all Classes of Notes;
(d) Any representation or warranty made by the Sponsor or the
Depositor in the Sale and Servicing Agreement proves to have been incorrect in
any material respect when made, as a result of which the interests of the
Noteholders or the Credit Enhancer are materially and adversely affected and
that continues to be incorrect in any material respect and continues to affect
materially and adversely the interests of the Noteholders or the Credit
Enhancer for 60 days after the date on which notice of the failure, requiring
it to be remedied, shall have been given to the Sponsor or the Depositor, as
the case may be, by the Indenture Trustee, or to the Sponsor, the Depositor,
and the Indenture Trustee by either the Credit Enhancer or the Holders of not
less than 51% of the aggregate Outstanding Amount of all Classes (a Rapid
Amortization Event pursuant to this subparagraph (d) shall not occur if the
Sponsor has accepted retransfer of the related Mortgage Loans or substituted
for them during the 60-day period (or such longer period (not to exceed an
additional 60 days) as the Indenture Trustee may specify) in accordance with
the Sale and Servicing Agreement);
(e) An Insolvency Event occurs with respect to the Transferor or the
Depositor, but for this purpose the 60-day periods in the definition of
Insolvency Event shall be 30 days;
(f) The Trust becomes subject to registration as an "investment
company" under the Investment Company Act of 1940;
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(g) Any draw has been made under the Policy and the Credit Enhancer
has not been reimbursed for the draw within 90 days of the date of the draw;
or
(h) The occurrence of an Event of Servicing Termination;
then, when any event described in subparagraph (a), (b), (c), (d), or (h)
occurs, either the Indenture Trustee (with the consent of the Credit
Enhancer), the Credit Enhancer, or the Holders of not less than 51% of the
aggregate Outstanding Amount of all Classes (with the consent of the Credit
Enhancer), by notice given in writing to the Transferor, the Depositor, and
the Master Servicer (and to the Indenture Trustee if given by either the
Credit Enhancer or the Noteholders) may declare that an early amortization
event (a "Rapid Amortization Event") has occurred as of the date of the
notice, and in the case of any event described in subparagraph (e), (f), or
(g), a Rapid Amortization Event shall occur without any notice or other action
on the part of the Indenture Trustee, the Credit Enhancer, or the Noteholders,
immediately upon its occurrence.
Section 5.17. Sale of Collateral.
(a) The power to effect any sale or other disposition (a "Sale") of
any portion of the Collateral pursuant to Section 5.05 is subject to this
Section 5.17. The Indenture Trustee waives its right to any amount fixed by
law as compensation for any Sale.
(b) In connection with a Sale of any of the Collateral,
(i) any Holder of Notes may bid for the property offered for
sale, and on compliance with the terms of sale may own the property
without further accountability, and may, in paying its purchase
price, deliver any Principal Amount Notes or claims for interest on
Interest Bearing Notes rather than cash up to the amount that would
be payable on them from the distribution of the net proceeds of the
sale, and the Notes shall be returned to the Holders after being
appropriately stamped to show partial payment if the amount payable
for the property is less than the amount due on the Notes;
(ii) the Indenture Trustee may bid for and acquire the
property offered for Sale, and may purchase any portion of the
Collateral in a private sale, and rather than paying cash, may settle
the purchase price by crediting the gross Sale price against the
amount that would be distributable as a result of the Sale in
accordance with Section 5.05(b) on the next Payment Date after the
Sale without being required to produce the Notes to complete the Sale
or for the net Sale price to be credited against the Notes, and any
property so acquired by the Indenture Trustee shall be held and dealt
with by it in accordance with this Indenture;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Collateral in connection with its Sale;
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(iv) the Indenture Trustee is hereby irrevocably appointed
the agent and attorney-in-fact of the Issuer to transfer its interest
in any portion of the Collateral in connection with its Sale, and to
take all action necessary to effect the Sale; and
(v) no purchaser or transferee at a Sale need ascertain the
Indenture Trustee's authority, inquire into the satisfaction of any
conditions precedent, or see to the application of any monies.
Section 5.18. Performance and Enforcement of Certain Obligations.
The Indenture Trustee, as pledgee of the Mortgage Loans, may, and at
the direction of the Credit Enhancer (or the Holders of 66-2/3% of the
Outstanding Amount of all Classes if a Credit Enhancer Default exists) shall
exercise all rights of the Issuer against the Sponsor or the Master Servicer
in connection with the Sale and Servicing Agreement, including the right to
take any action to obtain performance by either Seller or the Master Servicer,
as the case may be, of each of their obligations to the Issuer under the Sale
and Servicing Agreement and to give any consent, request, notice, direction,
approval, extension, or waiver under the Sale and Servicing Agreement, and any
right of the Issuer to take such action shall not be suspended. Any direction
by the Credit Enhancer under this Section may be by telephone, promptly
confirmed in writing.
ARTICLE VI
The Indenture Trustee
Section 6.01. Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would use under the circumstances in the conduct of its own
affairs, except when this Indenture or the Sale and Servicing Agreement
requires it to follow the directions of the Credit Enhancer.
(b) Except during the continuance of an Event of Default:
(i) obligations of the Indenture Trustee shall be determined
solely by the express provisions of this Indenture and the Sale and
Servicing Agreement, the Indenture Trustee undertakes to perform only
the duties specifically stated in this Indenture and the Sale and
Servicing Agreement, and no implied covenants or obligations shall be
read into this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed in them, on certificates,
opinions, or other documents furnished to the Indenture Trustee and
conforming to the requirements of this Indenture and the Sale and
Servicing Agreement, and the Indenture Trustee need not investigate
into any of the
37
matters expressed in them; but in the case of certificates or
opinions specifically required to be furnished to the Indenture
Trustee, the Indenture Trustee must examine them to determine whether
or not they conform to the requirements of this Indenture and the
Sale and Servicing Agreement. If any instrument is found not to
conform to the requirements of this Indenture or the Sale and
Servicing Agreement and is not timely corrected to the Indenture
Trustee's satisfaction, the Indenture Trustee shall notify the Credit
Enhancer and request written instructions as to the action the Credit
Enhancer deems appropriate to have the instrument corrected, and if
the instrument is not so corrected, the Indenture Trustee will so
notify the Credit Enhancer, who may then direct the Indenture Trustee
as to any action to be taken.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this subsection does not limit the effect of Section
6.01(b);
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with the direction of the Credit Enhancer or in accordance with a
direction received by it from the Holders of not less than 51% of the
aggregate Outstanding Amount of all Classes relating to the method
and place of conducting any Proceeding for any remedy available to
the Indenture Trustee with respect to the Notes or exercising any
right conferred on the Indenture Trustee under this Indenture or the
Sale and Servicing Agreement;
(iv) the Indenture Trustee shall not be charged with
knowledge of the occurrence of an Incipient Default, a Rapid
Amortization Event, or of any failure by the Master Servicer to
comply with its obligations under Section 6.01(i) or (ii) of the Sale
and Servicing Agreement unless a Responsible Officer at the Corporate
Trust Office obtains actual knowledge of the failure or the Indenture
Trustee receives notice of the failure; and
(v) no provision of this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties under
this Indenture or in the exercise of any of its rights, if it has
reasonable grounds to believe that repayment of the funds or adequate
indemnity against the risk is not reasonably assured to it.
(d) Every provision of this Indenture relating to the conduct or
affecting the liability of the Indenture Trustee shall be subject to the
provisions of this Section and the TIA.
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(e) The limitations on the obligations of the Indenture Trustee under
this Indenture shall not affect any obligations of the Indenture Trustee
acting as Master Servicer under the Sale and Servicing whenever it may be so
acting.
Section 6.02. Notice of Defaults.
If an Incipient Default or Rapid Amortization Event occurs and is
continuing and if a Responsible Officer knows of it, the Indenture Trustee
shall notify the Credit Enhancer and mail to each Noteholder notice of the
Incipient Default or Rapid Amortization Event within 90 days after it occurs.
Except in the case of an Incipient Default in payment of principal or interest
on any Note, the Indenture Trustee may withhold the notice to Noteholders so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
Section 6.03. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper person.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel unless
other evidence is specifically required.
(c) The Indenture Trustee may execute any of the trusts or powers
under this Indenture or perform any duties under this Indenture either
directly or through agents or counsel or a custodian or nominee, and the
Indenture Trustee shall not be responsible for any misconduct or negligence on
the part of, or for the supervision of, any agent, counsel, custodian, or
nominee appointed with due care by it under this Indenture.
(d) The Indenture Trustee may consult with counsel, and the written
advice of counsel with respect to legal matters relating to this Indenture,
the Transaction Documents, and the Notes and any Opinion of Counsel shall be
full authorization and protection from liability for any action taken,
omitted, or suffered by it under this Indenture in good faith and in
accordance with the advice of counsel or any Opinion of Counsel.
(e) The Indenture Trustee may enter into any amendment of the Sale
and Servicing Agreement as to which the Rating Agency Condition is satisfied,
and when so requested by an Issuer Request and the Rating Agency Condition is
satisfied, the Indenture Trustee shall enter into any amendment of the Sale
and Servicing Agreement
(i) that does not impose further obligations or liabilities
on the Indenture Trustee, and
(ii) as to which either the Rating Agency Condition is
satisfied or Holders of not less than 66-2/3% of the aggregate
Outstanding Amount of all Classes and the Credit Enhancer have
consented.
39
(f) With the consent of the Master Servicer and the Credit Enhancer,
the Indenture Trustee may appoint Custodians to hold any portion of the
Collateral as agent for the Indenture Trustee, by entering into a Custodial
Agreement substantially in the form of Exhibit B. Subject to this Article, the
Indenture Trustee agrees to comply with each Custodial Agreement and to
enforce each Custodial Agreement against the custodian for the benefit of the
Secured Parties. Each custodian shall be a depository institution (or an
affiliate of a depository institution) subject to supervision by federal or
state authority and shall be qualified to do business in the jurisdiction in
which it holds any Collateral. Each Custodial Agreement may be amended only
with the consent of the Credit Enhancer, which shall not be unreasonably
withheld.
Section 6.04. Indenture Trustee Not Responsible for Certain Things.
The Indenture Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of the Collateral or any
Transaction Document (other than the signature and authentication of the
Indenture Trustee on the Notes). It shall not be responsible for any statement
in this Indenture other than Section 6.14 or in any document issued in the
sale of the Notes or in the Notes other than the Indenture Trustee's
certificate of authentication.
The Indenture Trustee is not accountable for the use or application
by the Issuer of any of the Notes or of the proceeds of the Notes, or for the
use or application of any funds paid to the Depositor or the Master Servicer
on the Mortgage Loans or deposited in or withdrawn from the Collection Account
by the Master Servicer. The Indenture Trustee shall not be responsible for:
(i) the validity and enforceability of any Mortgage or any
Mortgage Loan, or the perfection and priority of any Mortgage or the
maintenance of its perfection and priority, or for the sufficiency of
the Trust or its ability to generate the payments to be distributed
to Noteholders under this Indenture, or the sufficiency or validity
of MERS or the MERS(R) System, including the existence, condition,
and ownership of any Mortgaged Property;
(ii) the existence and enforceability of any hazard
insurance on any Mortgaged Property;
(iii) the validity of the assignment of any Mortgage Loan to
the Indenture Trustee or of any intervening assignment;
(iv) the completeness of any Mortgage Loan;
(v) the performance or enforcement of any Mortgage Loan;
(vi) any investment of monies by or at the direction of the
Master Servicer or any resulting loss;
(vii) the acts or omissions of any of the Depositor, the
Master Servicer, any subservicer, or any mortgagor under a Mortgage;
40
(viii) any action of the Master Servicer or any subservicer
taken in the name of the Indenture Trustee; or
(ix) the failure of the Master Servicer or any subservicer
to act or perform any duties required of it as agent of the Indenture
Trustee.
The Indenture Trustee shall 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 this Indenture or to prepare or file any Commission filing for the
Trust or to record this Indenture.
Section 6.05. Individual Rights of Indenture Trustee.
The Indenture Trustee in its individual or any other capacity may
become the owner or pledgee of Notes and may otherwise deal with the Issuer,
the Sponsor, and their affiliates with the same rights it would have if it
were not Indenture Trustee. Any co-trustee, Paying Agent, Note Registrar,
co-registrar, or co-paying agent may do the same with like rights.
Section 6.06. Money Held in Trust.
Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the Transaction
Documents. The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing.
Section 6.07. Compensation.
The compensation of the Indenture Trustee will be separately agreed
to between the Master Servicer and the Indenture Trustee and, to the extent
not paid otherwise, will be payable after an Event of Default as provided in
Section 5.05(b). To the extent funds available under Section 5.05(b) are
insufficient to pay the full amount of the fees, they will be paid by the
Master Servicer. Except for amounts available for the purpose as provided in
Section 5.05(b), the Indenture Trustee shall have no claim against the Issuer
or any of the Collateral for the payment of any of its fees and expenses. The
Indenture Trustee shall not fail to perform its duties under the Transaction
Documents if its fees and expenses are not paid.
Section 6.08. Eligibility.
The Indenture Trustee shall be a corporation organized and doing
business under the laws of the United States or any State, authorized under
those laws to exercise trust powers, and shall satisfy the requirements of
Rule 3a-7(a)(4)(i) of the Investment Company Act of 1940. The Indenture
Trustee shall satisfy the requirements of TIA Section 310(a) at all times. The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as shown in its most recent published annual report of condition.
The Indenture Trustee shall comply with TIA Section 310(b), including the
optional provision permitted by the second sentence of TIA Section 310(b)(9).
However, any indentures under which other securities of the Issuer are
outstanding shall be excluded from the operation of TIA Section 310(b)(1) if
the requirements for the exclusion in TIA Section 310(b)(1) are met. The
principal office of any successor
41
Indenture Trustee shall be in a state for which an Opinion of Counsel has been
delivered to the successor Indenture Trustee and the Credit Enhancer at the
time it is appointed to the effect that the Trust will not be a taxable entity
under the laws of the state of its principal office. Whenever an Indenture
Trustee ceases to be eligible in accordance with the provisions of this
Section, the Indenture Trustee shall resign immediately in accordance with
Section 6.10.
Section 6.09. Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). An Indenture Trustee
who has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.10. Replacement of Indenture Trustee.
No resignation or removal of the Indenture Trustee and no appointment
of a successor Indenture Trustee shall become effective until the acceptance
of appointment by the successor Indenture Trustee. The Indenture Trustee may
resign at any time by so notifying the Issuer, the Transferor, the Depositor,
the Master Servicer, and the Credit Enhancer. The Credit Enhancer or the
Holders of not less than 51% of the aggregate Outstanding Amount of all
Classes may remove the Indenture Trustee at any time and the Issuer shall then
appoint a successor Indenture Trustee reasonably acceptable to the Credit
Enhancer by so notifying the Indenture Trustee, the Transferor, the Depositor,
the Master Servicer, and the Credit Enhancer. The Issuer (and if the Issuer
fails to do so, the Transferor) shall remove the Indenture Trustee and appoint
a successor reasonably acceptable to the Credit Enhancer if:
(i) the Indenture Trustee fails to satisfy Section 6.08;
(ii) an Insolvency Event occurs with respect to the
Indenture Trustee; or
(iii) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee fails to satisfy Section 6.08, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee. If
a successor Indenture Trustee does not take office within 60 days after the
retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer, the Transferor, the Depositor, the Master Servicer, the
Credit Enhancer, or the Holders of not less than 51% of the aggregate
Outstanding Amount of all Classes may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee. If the
Indenture Trustee resigns or is removed or if a vacancy exists in the office
of Indenture Trustee for any reason, the Issuer, with the approval of the
Transferor and the Credit Enhancer, shall promptly appoint a successor
Indenture Trustee for the retiring Indenture Trustee.
Section 6.11. Acceptance of Appointment by Successor.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Issuer, the
Transferor, the Depositor, the Master Servicer, and the Credit Enhancer. The
resignation or removal of the retiring Indenture Trustee
42
shall become effective on receipt of the written acceptance, and the successor
Indenture Trustee shall have all the rights and obligations, and automatically
succeed to the estate, of the Indenture Trustee under this Indenture without
any further act or transfer. The successor Indenture Trustee shall mail a
notice of its succession to the Noteholders. The retiring Indenture Trustee
shall promptly deliver any instruments of transfer with respect to the trust
estate requested by the Issuer or the successor Indenture Trustee and deliver
all property held by it as Indenture Trustee to the successor Indenture
Trustee. No proposed successor Indenture Trustee shall accept its appointment
unless at the time of its acceptance it is eligible under Section 6.08.
Section 6.12. Successor Indenture Trustee by Merger.
If the Indenture Trustee consolidates with, merges or converts into,
or transfers all or substantially all its corporate trust business or assets
to, another corporation or banking association, the resulting, surviving, or
transferee corporation shall be the successor Indenture Trustee if it is
otherwise eligible under Section 6.08 without any further act on the part of
anyone. The Indenture Trustee shall provide the Credit Enhancer and each
Rating Agency notice of any such transaction.
If any of the Notes have been authenticated but not delivered when
the successor Indenture Trustee takes over, it may adopt the certificate of
authentication of any predecessor Indenture Trustee and deliver the
authenticated Notes with the same effect as if it had authenticated the Notes.
Section 6.13. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.
(a) Notwithstanding any other provision of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Indenture
Trustee and the Issuer, acting jointly, may execute and deliver instruments to
appoint one or more persons approved by the Master Servicer and the Credit
Enhancer to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of any part of the Collateral, and to vest in them, in that
capacity and for the benefit of the Secured Parties, title to any part of the
Collateral and any rights and obligations the Indenture Trustee considers
appropriate, subject to the other provisions of this Section. No co-trustee or
separate trustee under this Indenture need satisfy the requirements for a
successor trustee under Section 6.08, and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.09.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following:
(i) all rights and obligations of the Indenture Trustee
shall be performed by the Indenture Trustee and any separate trustee
or co-trustee jointly (the separate trustee or co-trustee is not
authorized to act without the Indenture Trustee joining in the act),
except to the extent that under any law of any jurisdiction in which
any particular acts are to be performed the Indenture Trustee is
unable to perform the acts, in which case
43
the rights and obligations (including holding title to any part of
the Collateral) shall be performed singly by the separate trustee
or co-trustee, but solely at the direction of the Indenture Trustee;
(ii) no trustee under this Indenture shall be personally
liable for any act or omission of any other trustee under this
Indenture; and
(iii) the Indenture Trustee, the Master Servicer, and the
Issuer may at any time accept the resignation of or remove any
separate trustee or co-trustee.
(c) Any notice, request, or other writing given to the Indenture
Trustee shall be considered to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Indenture and the conditions of this Article. Each separate trustee and
co-trustee, on its acceptance of the trusts conferred, shall be subject to
this Indenture and vested with the estates specified in its instrument of
appointment, either jointly with the Indenture Trustee or separately, as may
be provided in the instrument of appointment. Every instrument of appointment
shall be filed with the Indenture Trustee and a copy of it given to the
Issuer.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee dies, becomes incapable of acting, resigns or is removed, all of
its estates, rights, and obligations shall vest in the Indenture Trustee, to
the extent permitted by law, without the appointment of a new trustee.
Section 6.14. Representations and Warranties of Indenture Trustee.
The Indenture Trustee represents and warrants that on the Closing
Date:
(i) it is a corporation duly organized, validly existing,
and in good standing under the laws of its place of incorporation;
(ii) it has full power and authority to execute, deliver,
and perform this Indenture and the Sale and Servicing Agreement, and
has taken all necessary action to authorize the execution, delivery,
and performance by it of this Indenture and the Sale and Servicing
Agreement;
(iii) the consummation of the transactions contemplated by
this Indenture and the fulfillment of its terms do not conflict with,
result in any breach of, or constitute (with or without notice or
lapse of time) a default under, the certificate of incorporation or
bylaws of the Indenture Trustee or any agreement or other instrument
to which it is a party or by which it is bound;
(iv) it does not have notice of any adverse claim (as used
in Section 8-302 of the UCC in effect in Delaware) with respect to
the Mortgage Loans;
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(v) it satisfies the requirements of Section 6.08; and
(vi) to the Indenture Trustee's best knowledge, no
proceedings or investigations concerning the Indenture Trustee are
pending or threatened before any court, regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over or its properties:
(A) asserting the invalidity of this Indenture,
(B) seeking to prevent the consummation of any of
the transactions contemplated by this Indenture, or
(C) seeking any determination that might affect its
performance of its obligations under this Indenture or the
validity or enforceability of this Indenture.
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01. Issuer to Furnish Names and Addresses of Noteholders.
The Issuer will furnish to the Indenture Trustee not more than five
days after each Record Date a list of the names and addresses of the Holders
of Notes as of the Record Date in the form the Indenture Trustee reasonably
requires, and at any other times the Indenture Trustee or Credit Enhancer
requests in writing, within 30 days after the Issuer receives the request, a
list of similar form and content as of a date not more than ten days before
the time the list is furnished. So long as the Indenture Trustee is the Note
Registrar, the Issuer need not furnish these lists.
Section 7.02. Preservation of Information; Communications.
(a) The Indenture Trustee shall preserve the names and addresses of
the Holders of Notes in the most recent list furnished to the Indenture
Trustee as provided in Section 7.01 and the names and addresses of Holders of
Notes received by the Indenture Trustee in its capacity as Note Registrar in
as current a form as is reasonably practicable. The Indenture Trustee may
destroy any list furnished to it under Section 7.01 on receipt of a new list
so furnished.
(b) Noteholders may communicate with other Noteholders with respect
to their rights under this Indenture or under the Notes in the manner provided
under TIA Section 312(b).
(c) The Issuer, the Indenture Trustee, and the Note Registrar shall
have the protections provided under TIA Section 312(c).
Section 7.03. Exchange Act Reports.
(a) The Indenture Trustee shall prepare for filing and file in
accordance with the Exchange Act within 15 days after each Payment Date
(subject to permitted extensions under
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the Exchange Act) with the Commission a Form 10-D with copies of the Monthly
Statement and, to the extent delivered to the Indenture Trustee, no later than
10 days following the Payment Date, any other information identified by the
Issuer or the Master Servicer (the "Additional Designated Information") to be
filed with the Commission. If the Issuer or Master Servicer directs that any
Additional Designated Information is to be filed with any Form 10-D, the
Issuer or Master Servicer, as the case may be, shall specify the item on Form
10-D to which the information is responsive and, with respect to any exhibit
to be filed on Form 10-D, the exhibit number. Any Additional Designated
Information to be filed on Form 10-D shall be delivered to the Indenture
Trustee in XXXXX-compatible form. The Indenture Trustee shall prepare for
filing and file any amendment to any Form 10-D previously filed with the
Commission with respect to the Issuer at the request of the Issuer or the
Master Servicer. The Master Servicer shall sign each Form 10-D filed on behalf
of the Issuer. The Indenture Trustee shall encode these filings to provide for
automated filing notification instructions to the Countrywide MBS Surveillance
Group at its email address at XXXxxxx@xxxxxxxxxxx.xxx (or at any other address
designated in writing by the Master Servicer) in its XXXXX submissions when
making these filings.
(b) Other than the reports required to be filed on behalf of the
Issuer by the Indenture Trustee pursuant to Section 7.03(a), the Issuer shall:
(i) file with the Commission, the Indenture Trustee, and the
Credit Enhancer copies of the annual reports and of the information,
documents, and other reports (or copies of the portions of any of
these the Commission prescribes in its rules and regulations) that
the Issuer may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act, within 15 days after the
Issuer is required to file the same with the Commission;
(ii) file with the Indenture Trustee, the Credit Enhancer,
and the Commission in accordance with the Commission's rules and
regulations any additional information, documents, and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture the rules and regulations require; and
(iii) supply to the Indenture Trustee and the Credit
Enhancer summaries of any information, documents, and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii)
of this Section and by the rules and regulations of the Commission
(and the Indenture Trustee shall transmit them by mail to all
Noteholders described in TIA Section 313(c)).
(c) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee.
If required by TIA Section 313(a), within 60 days after the date in
each year specified in the Adoption Annex, beginning with the date specified
in the Adoption Annex, the Indenture
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Trustee shall mail to each Noteholder as required by TIA Section 313(c) and to
the Credit Enhancer a brief report dated that date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section
313(b). A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each securities
exchange on which the Notes are listed. The Issuer shall notify the Indenture
Trustee and the Credit Enhancer before the Notes are listed on any securities
exchange.
The Indenture Trustee shall deliver to each Noteholder the
information necessary for the Holder to prepare its federal and State income
tax returns. On each Payment Date, the Indenture Trustee shall make available
to each Noteholder, the Master Servicer, the Credit Enhancer, and each Rating
Agency on its Internet website the statement for Noteholders prepared by the
Master Servicer and delivered to it pursuant to Section 4.04 of the Sale and
Servicing Agreement for the Payment Date.
If the statement for Noteholders is not accessible to any of the
Noteholders, the Master Servicer, the Credit Enhancer, or either Rating Agency
on the Indenture Trustee's internet website, the Indenture Trustee shall
forward a hard copy of it to each Noteholder, the Master Servicer, the Credit
Enhancer, and each Rating Agency immediately after the Indenture Trustee
becomes aware that it is not accessible to any of them via its website. The
address of the Indenture Trustee's internet website where the statement for
Noteholders will be accessible is xxxxx://xxx.xxxxxxxx.xxx/xxx. Assistance in
using the Indenture Trustee's internet website may be obtained by calling the
Indenture Trustee's customer service desk at (000) 000-0000. The Indenture
Trustee shall notify each Noteholder, the Master Servicer, the Credit
Enhancer, and each Rating Agency in writing of any change in the address or
means of access to the internet website where the statement for Noteholders is
accessible.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, Internal Revenue
Service Form 1099 (or any successor form) and any other tax forms required to
be filed or furnished to Noteholders covering payments by the Indenture
Trustee (or the Paying Agent) on the Notes and shall file and distribute them
as required by law. In addition, the Indenture Trustee shall promptly furnish
any information reasonably requested by the Issuer that is reasonably
available to the Indenture Trustee to enable the Issuer to perform its federal
and state income tax reporting obligations.
ARTICLE VIII
Accounts, Disbursements, and Releases
Section 8.01. Accounts.
(a) The Indenture Trustee will establish and maintain on behalf of
the Noteholders an Eligible Account (the "Payment Account") with the title
specified in the Adoption Annex. The Indenture Trustee shall hold amounts
deposited in the Payment Account as Indenture Trustee for the benefit of the
Secured Parties. The Indenture Trustee will, promptly upon
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receipt, deposit in the Payment Account and retain in it the aggregate amount
remitted by the Master Servicer pursuant to the Sale and Servicing Agreement.
The Indenture Trustee shall invest amounts on deposit in the Payment Account
at the direction of the Master Servicer in Eligible Investments payable on
demand or maturing no later than the day before the next Payment Date. All
income realized from investment of funds in the Payment Account shall be for
the benefit of the Master Servicer. Any losses incurred on funds in the
Payment Account that reduce their principal amount shall be immediately
deposited in the Payment Account by the Master Servicer out of its own funds.
Pursuant to the Sale and Servicing Agreement, the Master Servicer has
established the Collection Account. The Sale and Servicing Agreement requires
the Master Servicer to deposit specified collections on the Mortgage Loans
into the Collection Account no later than two Business Days before each
Payment Date and to deposit the amounts specified in Section 3.03 of the Sale
and Servicing Agreement in the Payment Account on the dates specified in
Section 3.03 of the Sale and Servicing Agreement and, not later than the
Business Day before each Payment Date, to withdraw from the Collection Account
and remit to the Indenture Trustee the amount to be applied on the next
Payment Date by the Indenture Trustee pursuant to Section 8.03, to the extent
on deposit in the Collection Account.
If on a Determination Date the Master Servicer notifies the Indenture
Trustee and the Credit Enhancer of the amount in the Collection Account
allocable to Interest Collections and Principal Collections for the Mortgage
Loans for the related Payment Date, then the Master Servicer may withdraw from
the Collection Account and the Payment Account and retain any amounts that
constitute income and gain realized from the investment of the collections.
(b) The Indenture Trustee shall establish and maintain an Additional
Loan Account with the title specified in the Adoption Annex. The Additional
Loan Account shall be an Eligible Account solely for the benefit of the
Secured Parties. Neither the Sponsor nor the Depositor shall have any interest
in any of the principal of the funds deposited into the Additional Loan
Account. The Additional Loan Account is not an asset of any REMIC created
under the Trust Agreement. The Additional Loan Account shall be maintained in
accordance with Section 8.02.
(c) On the Closing Date, the Indenture Trustee shall establish and
maintain in its name, in trust for the benefit of the Holders of the Principal
Amount Notes, the Basis Risk Carryforward Reserve Fund and shall deposit in
it, upon receipt from or on behalf of the Depositor, $5,000. All funds on
deposit in the Basis Risk Carryforward Reserve Fund shall be held separate
from, and not commingled with, any other money, including other money held by
the Indenture Trustee pursuant to this Indenture.
The Indenture Trustee shall make withdrawals from the Basis Risk
Carryforward Reserve Fund for distribution to the Principal Amount Notes in
the manner specified in Section 8.03(f). At the earlier of the retirement of
the Principal Amount Notes and the termination of the
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Trust in accordance with Section 10.01, the Indenture Trustee shall distribute
to the Depositor all monies remaining on deposit in the Basis Risk
Carryforward Reserve Fund after making the distributions specified in Section
8.03(f). In addition, the Indenture Trustee may withdraw from the Basis Risk
Carryforward Reserve Fund any amount deposited in the Basis Risk Carryforward
Reserve Fund and not required to be deposited in it.
The Indenture Trustee shall invest amounts on deposit in the Basis
Risk Carryforward Reserve Fund at the written direction of the Master Servicer
in Eligible Investments payable on demand or maturing no later than the day
before the next Payment Date. All income realized from investment of funds in
the Basis Risk Carryforward Reserve Fund shall be for the benefit of the
Holders of the Class C Certificates. Any net investment earnings on such
amounts shall be retained therein until withdrawn as provided in Section
8.03(f). Any losses incurred on funds in the Basis Risk Carryforward Reserve
Fund that reduce their principal amount shall be charged against amounts on
deposit in the Basis Risk Carryforward Reserve Fund immediately as realized.
The Basis Risk Carryforward Reserve Fund will not be an asset of any REMIC
created under the Trust Agreement. The Class C Certificates shall evidence
ownership of the Basis Risk Carryforward Reserve Fund for federal tax
purposes.
(d) The Indenture Trustee shall establish and maintain, on behalf of
the Certificateholders, a Principal Reserve Fund in the name of the Indenture
Trustee. On the Closing Date, CHL shall deposit into the Principal Reserve
Fund $100.00. Funds on deposit in the Principal Reserve Fund shall not be
invested. The Principal Reserve Fund shall be treated as an outside reserve
fund under applicable Treasury regulations and shall not be part of any REMIC
created under the Trust Agreement.
On the Business Day before the first Payment Date, the Indenture
Trustee shall transfer $100.00 from the Principal Reserve Fund to the Payment
Account, and on the first Payment Date, the Indenture Trustee shall withdraw
$100 from the Payment Account and distribute it to the Issuer for distribution
pursuant to the Trust Agreement, and thereafter terminate the Principal
Reserve Fund.
Section 8.02. Withdrawals from the Collection Account and the
Additional Loan Account.
(a) Upon delivery of an Officer's Certificate to the Indenture
Trustee, the Master Servicer may withdraw funds from the Collection Account
for the following purposes:
(i) to pay to the Master Servicer its Servicing Fee to the
extent that it has not been retained pursuant to Section 3.02(b) of
the Sale and Servicing Agreement;
(ii) to pay to the Master Servicer net earnings on amounts
on deposit in the Collection Account as provided in Section 8.01; and
49
(iii) to pay from Principal Collections the amounts provided
for the purchase of Additional Balances pursuant to Section 2.01 of
the Sale and Servicing Agreement.
If the Master Servicer deposits in the Collection Account any amount
not required to be deposited or any amount representing payments by mortgagors
made by checks subsequently returned uncollected, it may at any time withdraw
that amount from the Collection Account upon delivery of an Officer's
Certificate to the Indenture Trustee.
(b) Upon its receipt of the Officer's Certificate specified in
Section 2.01(b)(ii)(I) of the Sale and Servicing Agreement confirming
satisfaction of the conditions precedent to subsequent additions in Section
2.01(b) of the Sale and Servicing Agreement on a Subsequent Closing Date, the
Indenture Trustee shall withdraw from the Additional Loan Account, release
from the lien of this Indenture, and set aside for the benefit of the
Depositor for later delivery pursuant to Section 8.02(c) an amount equal to
the Cut-off Date Asset Balance of the Additional Home Equity Loans covered by
the Transfer Document and to purchase for the Trust the Additional Home Equity
Loans covered by the Transfer Document.
(c) On the date on which the revised Mortgage Loan Schedule
reflecting the addition of the Additional Home Equity Loans covered by a
Transfer Document is delivered to the Indenture Trustee along with an Opinion
of Counsel, substantially in the form delivered on the Closing Date, addressed
to the Indenture Trustee and the Credit Enhancer to the effect that a court in
a bankruptcy context addressing the transfer of the Additional Home Equity
Loans would characterize the transfer as a sale rather than as a secured
lending and an Opinion of Counsel, substantially in the form delivered on the
Closing Date, addressed to the Indenture Trustee and the Credit Enhancer
relating to the perfection of security interest in the Additional Home Equity
Loans, the Indenture Trustee shall deliver to the order of the Depositor an
amount in cash equal to the actual Cut-off Date Asset Balance of the relevant
Additional Home Equity Loans, and to the Master Servicer any earnings on those
funds since the relevant Subsequent Closing Date. If after that payment any
funds remain from the original set aside with respect to the Transfer Document
pursuant to Section 2.01(b) of the Sale and Servicing Agreement and Section
8.02(b), then they shall be returned to the Additional Loan Account. If on the
Latest Subsequent Closing Date any funds remain in the Indenture Trustee's
possession from any set aside under Section 2.01(b) of the Sale and Servicing
Agreement and Section 8.02(b), then they shall be returned to the Additional
Loan Account.
(d) All earnings on funds in the Additional Loan Account and on funds
set aside in accounts under Section 2.01(b) of the Sale and Servicing
Agreement and Section 8.02(b) are for the account of the Master Servicer. The
Additional Loan Account and the funds set aside shall be invested in Eligible
Investments. If any funds remain in the Additional Loan Account on the Latest
Subsequent Closing Date, to the extent that they represent earnings on the
amounts originally deposited into the Additional Loan Account, the Indenture
Trustee shall distribute them to the order of the Master Servicer. The
remaining funds shall be transferred to the Collection Account and treated as
though they were Investor Principal Collections and they
50
shall increase the Scheduled Principal Collections Payment Amount (above the
amount calculated without regard to this provision) for purposes of
calculating amounts distributable on the following Payment Date.
(e) If at any time the Depositor becomes aware that the Cut-off Date
Asset Balance of Additional Home Equity Loans reflected on any Transfer
Document exceeds the actual Cut-off Date Asset Balance of the relevant
Additional Home Equity Loans, the Depositor shall so notify the Indenture
Trustee in writing and the Indenture Trustee shall redeposit into the
Additional Loan Account the excess reported to it by the Depositor.
Section 8.03. Payments.
(a) Payments of Investor Interest Collections and Investment
Proceeds. On each Payment Date, the Indenture Trustee shall distribute out of
the Payment Account (to the extent of Investor Interest Collections collected
during the related Collection Period, the deposits by the Master Servicer
pursuant to Section 3.03 of the Sale and Servicing Agreement) and out of the
Basis Risk Carryforward Reserve Fund (in the case of Section 8.03(a)(x)) the
following amounts and in the following order of priority to the following
persons (based on the information in the Servicing Certificate):
(i) to pay the premium pursuant to the Insurance Agreement
to the Credit Enhancer;
(ii) to pay the accrued monthly interest on the Class A-IO
Note Notional Balance at the Class A-IO Note Rate;
(iii) to pay the Aggregate Investor Interest (with interest
on overdue interest (exclusive of Basis Risk Carryforward) to the
extent permitted by applicable law) for the Classes of Principal
Amount Notes, pro rata, for the Payment Date to the Noteholders;
(iv) to pay the Investor Loss Amount for each Class of
Principal Amount Notes for the Payment Date to the Holders of the
Classes of Principal Amount Notes (pursuant to the Note Payment
Convention) as principal in reduction of their Note Principal
Balance;
(v) to pay the Investor Loss Reduction Amount for each Class
of Principal Amount Notes for the Payment Date to the Holders of the
Classes of Principal Amount Notes (pursuant to the Note Payment
Convention) in reduction of their Note Principal Balance,
(vi) to pay previously unreimbursed Credit Enhancement Draw
Amounts together with interest on such amounts at the applicable rate
in the Insurance Agreement to the Credit Enhancer;
51
(vii) after the sixth Payment Date, to pay the Accelerated
Principal Payment Amount to Holders of the Principal Amount Notes
(pursuant to the Note Payment Convention) as principal in reduction
of their Note Principal Balance;
(viii) to pay any amounts owed to the Credit Enhancer
pursuant to the Insurance Agreement to the Credit Enhancer;
(ix) to pay any amounts required to be paid to the Master
Servicer with respect to the Notes pursuant to Sections 3.08 and 5.03
of the Sale and Servicing Agreement that have not been previously
paid to the Master Servicer;
(x) to pay any Basis Risk Carryforward to the Holders of
each Class of Principal Amount Notes, pro rata among Classes on the
basis of the Basis Risk Carryforward then owed to each Class of
Principal Amount Notes and then to restore the Basis Risk
Carryforward Reserve Fund to $5,000; and
(xi) any remaining amount to the Issuer for distribution in
accordance with the Trust Agreement.
(b) Payment of Principal Collections and Excess Overcollateralization
Amounts. Except on the Payment Date in the month specified in the Adoption
Annex, on each Payment Date, the Indenture Trustee shall distribute out of the
Payment Account to the Holders of each Class of Principal Amount Notes
(pursuant to the Note Payment Convention) the Principal Collections up to the
Scheduled Principal Collections Payment Amount but not in excess of their Note
Principal Balance. On the Payment Date in the month specified in the Adoption
Annex, the Indenture Trustee shall distribute to the Holders of each Class of
the Principal Amount Notes (pursuant to the Note Payment Convention) the
Principal Collections up to their Note Principal Balance.
So long as a Rapid Amortization Event has not occurred, the dollar
amount of any Excess Overcollateralization Amount will be deducted from the
Scheduled Principal Collections Payment Amount and paid to the Issuer for
distribution pursuant to the Trust Agreement.
(c) Application of Subordinated Transferor Collections. If, after
applying Investor Interest Collections, the deposits by the Master Servicer
pursuant to Section 3.03 of the Sale and Servicing Agreement, any Required
Amount remains unpaid, the Indenture Trustee shall, based on information in
the Servicing Certificate for the Payment Date, apply Subordinated Transferor
Collections to pay the unpaid Required Amounts in the priority provided in
Sections 8.03(a)(i) through 8.03(a)(v).
If, after making those payments, the Required Amount remains unpaid,
then the remaining Investor Loss Amount and the Investor Loss Reduction Amount
shall be allocated to reduce the Transferor Interest to the extent of the
Available Transferor Subordinated Amount.
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(d) Payment of the Credit Enhancement Draw Amount. The Indenture
Trustee will make payments to the Holders of Classes of Principal Amount Notes
from the Credit Enhancement Draw Amount (but not including any portion of it
representing a Preference Claim) drawn under the Policy for any Payment Date
and Class of Principal Amount Notes pursuant to Section 8.05 on the Payment
Date as follows:
First, as an addition to the amount distributed pursuant to
Section 8.03(a)(iii); and
Second, the portion of the Credit Enhancement Draw Amount
remaining after the application of the amounts referred to in First
above, as an addition to the amounts distributed pursuant to Section
8.03(b).
The aggregate amount of principal distributed to the Holders of each
Class of Notes under this Indenture shall not exceed the related Original Note
Principal Balance.
(e) Distributions to Issuer. On each Payment Date, based on the
information in the Servicing Certificate for the Payment Date and subject to
Section 8.03(a),(b), and (c), the Indenture Trustee shall distribute to the
Issuer from amounts in the Payment Account
(i) the Interest Collections that are not Investor Interest
Collections on the Payment Date for the related Collection Period and
are not paid out as Subordinated Transferor Collections under Section
8.03(c) and
(ii) the portion of Transferor Principal Collections for the
related Collection Period in excess of Additional Balances created on
the Mortgage Loans during the Collection Period and are not paid out
as Subordinated Transferor Collections under Section 8.03(c).
For the purposes of this Section 8.03(e), payments of Subordinated
Transferor Collections under Section 8.03(c) shall be considered to be made
first from Interest Collections until they are reduced to zero, and then from
Principal Collections.
Collections allocable to the Issuer pursuant to this Section 8.03(e)
will be distributed to the Issuer only to the extent that the distribution
will not reduce the Transferor Interest as of the related Payment Date below
the Required Transferor Subordinated Amount. Amounts not distributed to the
Issuer because of this limitation will be retained in the Payment Account
until the Transferor Interest exceeds the Required Transferor Subordinated
Amount, at which time the excess shall be released to the Issuer. If any such
amounts are still retained in the Payment Account at the commencement of the
Rapid Amortization Period or are collected thereafter, they will be paid to
the related Noteholders as a reduction of the applicable Note Principal
Balance.
(f) Basis Risk Carryforward Reserve Fund. On each Payment Date, any
amounts deposited in the Basis Risk Carryforward Reserve Fund shall be
distributed by the Indenture Trustee as follows:
53
(i) on the initial Payment Date, to the Classes of Principal
Amount Notes, proportionately based on the Basis Risk Carryforward
for that Payment Date, the lesser of $5,000 and the aggregate Basis
Risk Carryforward with respect to the Principal Amount Notes for that
Payment Date;
(ii) concurrently, to the Principal Amount Notes, pro rata,
in an amount up to the Class' Basis Risk Carryforward remaining
unpaid for the Payment Date after payment pursuant to Section
8.03(a)(x).
(g) Applied Realized Loss Amounts. Applied Realized Loss Amounts will
be applied to reduce the Note Principal Balances of the Principal Amount Notes
pro rata according to their respective Note Principal Balances, until their
Note Principal Balances have been reduced to zero.
Section 8.04. Calculation of the Note Rate.
On each Adjustment Date, the Indenture Trustee shall determine LIBOR
for the related Interest Period and inform the Master Servicer (at the
facsimile number given to the Indenture Trustee in writing) of the rate. On
each Determination Date, the Indenture Trustee shall determine the applicable
Note Rate for each Class of Interest Bearing Notes for the related Payment
Date.
Section 8.05. Claims on the Policy; Policy Payments Account.
(a) If the Credit Enhancement Draw Amount for a Class specified in
the Servicing Certificate for a Payment Date is more than zero (determined as
of the close of business on the third Business Day before the Payment Date),
then the Indenture Trustee shall notify the Credit Enhancer by telephone or
telecopy of the Credit Enhancement Draw Amount for the Class of Notes. The
notice shall be confirmed to the Credit Enhancer in writing in the form of the
Notice of Nonpayment and Demand for Payment of Insured Amounts in Exhibit A to
the Policy, by 10:00 a.m., New York City time, on the second Business Day
before the Payment Date. Following receipt by the Credit Enhancer of the
notice in that form, the Credit Enhancer will pay any amount payable under the
Policy for the Class of Notes in the form (that is not a Preference Amount) on
the later to occur of (i) 12:00 noon, New York City time, on the second
Business Day following the receipt and (ii) 12:00 noon, New York City time, on
the Payment Date to which the deficiency relates.
The Credit Enhancer will pay any Credit Enhancement Draw Amount that
is a Preference Amount on the Business Day following receipt on a Business Day
by 12:00 noon, New York City time, by the Fiscal Agent (as defined in the
Policy) of (1) a certified copy of the order requiring the return of a
preference payment, (2) an opinion of counsel satisfactory to the Credit
Enhancer that the order is final and not subject to appeal, (3) an assignment
in any form reasonably required by the Credit Enhancer irrevocably assigning
to the Credit Enhancer all rights and c1aims of the Holder relating to or
arising under the Notes against the debtor that made the preference payment or
otherwise with respect to the preference payment, and (4)
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appropriate instruments in any form reasonably required by the Credit Enhancer
to effect the appointment of the Credit Enhancer as agent for the Holder in
any legal proceeding related to the preference payment. If the documents in
(1) through (4) above are received after 12:00 noon, New York City time, on a
Business Day, they will be deemed to be received on the following Business
Day. Any Credit Enhancement Draw Amount that is a Preference Amount will be
distributed by the Indenture Trustee to the receiver or trustee in bankruptcy
named in the final order of the court exercising jurisdiction on behalf of the
Holder and not to any Holder directly unless the Holder has returned principal
or interest paid on the Insured Notes to the receiver or trustee in
bankruptcy, in which case such payment shall be distributed by the Indenture
Trustee to the Holder.
(b) The Indenture Trustee shall establish the Policy Payments
Account. The Indenture Trustee shall deposit any amount paid under the Policy
in the Policy Payments Account and distribute the amount only to pay Holders
of the Notes the Guaranteed Payment for their Class of Notes for which a claim
was made. No payments under the Policy may be used to pay any costs, expenses,
or liabilities of the Master Servicer, the Indenture Trustee, or the Trust
(other than payments of principal and interest on the Notes). Amounts paid
under the Policy shall be transferred to the Payment Account in accordance
with the next paragraph and disbursed by the Indenture Trustee to Holders of a
Class of Notes in accordance with Section 8.03. Payments from draws on the
Policy need not be made by checks or wire transfers separate from the checks
or wire transfers used to pay other funds paid to Noteholders on the Payment
Date. The portion of any payment of principal of or interest on a Class of
Notes paid from funds transferred from the Policy Payments Account, however,
shall be noted in the statement to be furnished to Holders of the Insured
Notes pursuant to Section 7.04. Funds held in the Policy Payments Account
shall not be invested.
On any Payment Date (or the day on which a payment on the Policy is
received, if later) for which a claim has been made under the Policy, the
amount of any funds received by the Indenture Trustee as a result of any claim
under the Policy, to the extent required to make the Guaranteed Payment on the
Classes of Notes on the Payment Date, shall be withdrawn from the Policy
Payments Account and deposited in the Payment Account and applied by the
Indenture Trustee, together with the other funds to be paid from the Payment
Account pursuant to Section 8.03, directly to the payment in full of the
Guaranteed Payment due on the Principal Amount Notes. Any funds remaining in
the Policy Payments Account on the first Business Day following the later of
the Payment Date and the Business Day after the day on which a payment on the
Policy has been paid to the Holders of the Principal Amount Notes shall be
remitted to the Credit Enhancer, pursuant to the instructions of the Credit
Enhancer, by the end of the Business Day.
(c) The Indenture Trustee shall keep a complete and accurate record
of the amount of interest and principal paid on any Insured Note from moneys
received under the Policy. The
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Credit Enhancer may inspect the records at reasonable times during normal
business hours on one Business Day's notice to the Indenture Trustee.
(d) The Indenture Trustee shall promptly notify the Credit Enhancer
of any Preference Claim of which a Responsible Officer has actual knowledge.
Each Holder of Insured Notes by its purchase of Insured Notes, the Master
Servicer, and the Indenture Trustee agree that the Credit Enhancer may at any
time during the continuation of any proceeding relating to a Preference Claim
direct all matters relating to the Preference Claim, including the direction
of any appeal of any order relating to the Preference Claim and the posting of
any surety, supersedeas, or performance bond pending any appeal. In addition
and without limiting the foregoing, the Credit Enhancer shall be subrogated to
the rights of the Master Servicer, the Indenture Trustee, and each Holder of
Insured Notes in the conduct of any Preference Claim, including all rights of
any party to an adversary proceeding action with respect to any court order
issued in connection with any Preference Claim.
Section 8.06. Replacement Policy.
If a Credit Enhancer Default occurs, the Depositor may substitute new
surety bonds for the existing Policy so long as (i) the new rating of the
Notes would be an improvement over their then current rating, (ii) the new
surety bond will qualify as a "similar commercially available credit
enhancement contract" within the meaning of Treas. Reg. ss.
1.1001-3(e)(4)(iv)(B), and (iii) the Rating Agency Condition is satisfied. No
new credit enhancement may be substituted, however, unless the Indenture
Trustee receives a legal opinion, acceptable in form and substance to the
Indenture Trustee, from counsel to the provider of the new credit enhancement
with respect to its enforceability and any other matters the Indenture Trustee
reasonably requires. Within five Business Days after the Indenture Trustee
takes physical possession of the new credit enhancement and the opinion of
counsel, it will deliver the replaced Policy to the Credit Enhancer. Any other
form of credit enhancement may also be substituted for the Policy after a
Credit Enhancer Default if the new rating of the Notes would be an improvement
over their then current rating and the Indenture Trustee receives an Opinion
of Counsel to the effect that the substitution will not be treated as a
significant modification within the meaning of Treas. Reg. ss. 1.1001-3.
ARTICLE IX
Supplemental Indentures
Section 9.01. Supplemental Indentures.
(a) Without the consent of the Holders of any Notes but with the
consent of the Credit Enhancer (which shall not be unreasonably withheld) and
with prior notice to each Rating Agency, subject to Section 9.05, the Issuer
and the Indenture Trustee may enter into indentures supplemental to this
Indenture, in form satisfactory to the Indenture Trustee, for any of the
following purposes:
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(i) to correct or amplify the description of any property
subject to the lien of this Indenture, or to confirm unto the
Indenture Trustee any property subject or required to be subjected to
the lien of this Indenture, or to subject additional property to the
lien of this Indenture;
(ii) to evidence the succession of another person to the
Issuer pursuant to this Indenture, and the assumption by the
successor of the covenants of the Issuer in this Indenture and the
Notes in compliance with the applicable provisions of this Indenture;
(iii) to add to the covenants of the Issuer, for the benefit
of the Noteholders or the Credit Enhancer, or to surrender any right
conferred on the Issuer in this Indenture;
(iv) to convey, transfer, assign, mortgage, or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity or mistake;
(vi) to correct or supplement any provision in this
Indenture or in any supplemental indenture that may be inconsistent
with any other provision in this Indenture or in any supplemental
indenture or the other Transaction Documents;
(vii) to conform this Indenture to the final prospectus
supplement issued in respect of the Notes referred to in the Adoption
Annex;
(viii) to modify, eliminate, or add to the provisions of
this Indenture as required by any Rating Agency or any other
nationally recognized statistical rating organization to maintain or
improve any rating of the Notes without taking the Policy into
account;
(ix) to modify, eliminate, or add to the provisions of this
Indenture to comply with any requirement imposed by the Code;
(x) to modify, eliminate, or add to the provisions of this
Indenture to the extent appropriate to maintain the qualification of
the Trust as a REMIC under the Code or to avoid or minimize the risk
of the imposition of any tax on the Trust pursuant to the Code that
would be a claim against the Trust at any time before the final
redemption of the Notes;
(xi) to modify, eliminate, or add to the provisions of this
Indenture to the extent necessary to comply with any rules or
regulations of the Securities and Exchange Commission;
(xii) to modify, eliminate, or add to the provisions of this
Indenture to the extent necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute
hereafter enacted and to add to this Indenture other provisions
expressly required by the TIA; or
(xiii) to provide for the acceptance of the appointment of a
successor trustee under this Indenture and to add to or change any of
the provisions of this Indenture necessary to facilitate the
administration of the trusts under this Indenture by more than one
trustee, pursuant to the requirements of Article VI.
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The Indenture Trustee is authorized to join in the execution of any
supplemental indenture and to make any further appropriate agreements and
stipulations that may be contained in it.
(b) Without the consent of any of the Noteholders but with
satisfaction of the Rating Agency Condition (in connection with which the
consent of the Credit Enhancer shall not be unreasonably withheld), subject to
Section 9.05, the Issuer and the Indenture Trustee may enter into indentures
supplemental to this Indenture to change this Indenture in any manner or to
modify the rights of the Noteholders or the Credit Enhancer under this
Indenture that does not adversely affect in any material respects the
interests of any Noteholder, except that, without the consent of each affected
Noteholder by an Act of the applicable Noteholders delivered to the Issuer and
the Indenture Trustee and without the consent of the Credit Enhancer and
subject to Section 9.05, no supplemental indenture under this Section 9.01(b)
shall:
(i) change the date of payment of any installment of
principal of any Principal Amount Note or interest on any Interest
Bearing Note, or reduce the principal amount of any Principal Amount
Note, the interest rate on any Interest Bearing Note, or its
redemption price, or change any place of payment where, or the coin
or currency in which, any Note or its interest is payable;
(ii) impair the right to institute suit for the enforcement
of the provisions of this Indenture requiring the application of
available funds to the payment of any amount due on the Notes after
their due dates (or, in the case of redemption, after the redemption
date), as provided in Article V;
(iii) reduce the percentage of the Outstanding Amount the
consent of the Holders of which is required for any supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or
certain defaults under this Indenture and their consequences or to
direct the liquidation of the Collateral;
(iv) modify any provision of Section 9.01(b)(i), (ii),
(iii), (iv), or (v) except to increase any percentage specified in
this Indenture or provide that certain additional provisions of this
Indenture or the Transaction Documents cannot be modified or waived
without the consent of the Holder of each Note affected by it; modify
any of the provisions of this Indenture in a manner affecting the
calculation of the amount of any payment of interest or principal due
on any Note on any Payment Date (including the calculation of any of
the individual components of the calculation) or affect the rights of
the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes in this Indenture; or
(v) permit the creation of any lien ranking before or on a
parity with the lien of this Indenture with respect to any part of
the Collateral (except any change in any mortgage's lien status in
accordance with the Sale and Servicing Agreement) or, except as
otherwise permitted or contemplated in this Indenture, terminate the
lien of
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this Indenture on any property at any time subject to this Indenture
or deprive the Holder of any Note of the security provided by the
lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and that
determination shall be conclusive on the Holders of all Notes, whether
authenticated and delivered under this Indenture before or after that. The
Indenture Trustee shall not be liable for any determination made in good
faith.
An Act of Noteholders under this Section need not approve the
particular form of any proposed supplemental indenture, but is sufficient if
it approves the substance of the supplemental indenture.
Promptly after the execution by the Issuer and the Indenture Trustee
of any supplemental indenture pursuant to this Section, the Indenture Trustee
shall mail to the Noteholders to which the supplemental indenture relates a
notice stating in general terms the substance of the supplemental indenture.
Any failure of the Indenture Trustee to mail a notice, or any defect in it,
shall not, however, in any way impair or affect the validity of the
supplemental indenture.
Section 9.02. Execution of Supplemental Indentures.
In executing any supplemental indenture permitted by this Article,
the Indenture Trustee may require and, subject to Sections 6.01 and 6.03,
shall be fully protected in relying on an Opinion of Counsel (addressed to the
Indenture Trustee and the Credit Enhancer) stating that the execution of the
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but need not, enter into any supplemental indenture
that affects the Indenture Trustee's own rights or obligations under this
Indenture or otherwise.
Section 9.03. Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture pursuant to this
Indenture, this Indenture shall be changed in accordance with the supplemental
indenture, and the Indenture Trustee, the Issuer, and the Noteholders shall
bound by the supplemental indenture.
Section 9.04. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in the supplemental indenture. If the
Issuer so determines, new Notes so modified as to conform, in the opinion of
the Indenture Trustee and the Issuer, to the supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
Section 9.05. Tax Opinion.
This Indenture may not be amended under this Article or otherwise
unless, in connection with the amendment, an Opinion of Counsel is furnished
to the Indenture Trustee
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and the Credit Enhancer that the amendment will not result in a tax on any
REMIC created in under the Trust Agreement pursuant to the REMIC Provisions or
cause any REMIC created under the Trust Agreement to fail to qualify as a
REMIC at any time that any Securities are outstanding.
ARTICLE X
Redemption of Notes
Section 10.01. Redemption.
(a) The Principal Amount Notes are subject to optional redemption by
the Issuer with the consent of the Credit Enhancer and the Master Servicer in
whole on any Payment Date from the Payment Date immediately before which the
aggregate Note Principal Balance of each Class of Principal Amount Notes is
less than or equal to 10% of the aggregate Original Note Principal Balance of
each Class of the Principal Amount Notes. If the Issuer does not exercise this
option to redeem the Principal Amount Notes, the Credit Enhancer, with the
consent of the Issuer (which consent may not be unreasonably withheld), may
require the Issuer to redeem all Classes of Principal Amount Notes if the
Credit Enhancer provides the funds required by Section 10.01(b). The
redemption price for each Class of Principal Amount Notes shall be the Note
Principal Balance for that Class plus accrued aggregate Note Interest for that
Class through the day before the redemption date plus interest accrued on the
aggregate Unpaid Investor Interest Shortfall for that Class of Notes, to the
extent legally permissible. No premium or penalty will be payable by the
Issuer in any redemption of the Notes.
(b) The Issuer or the Credit Enhancer, as applicable, shall notify
the Indenture Trustee of its election to redeem the Principal Amount Notes not
later than the first day of the month preceding the month of the redemption.
The Indenture Trustee shall first notify the Credit Enhancer and the Master
Servicer and then notify the Noteholders by letter mailed or sent by facsimile
transmission not earlier than the 15th day and not later than the 25th day of
the month before the month of the redemption.
Payment on the Principal Amount Notes will only be made on
presentation and surrender of the Notes at the office or agency of the
Indenture Trustee specified in the redemption notice. By the redemption date,
the Issuer or the Credit Enhancer, as applicable, shall deposit in the Payment
Account in immediately available funds an amount that, when added to the funds
on deposit in the Payment Account and the Collection Account that are payable
to the Noteholders, equals the redemption price for each Class of Principal
Amount Notes, whereupon all the Notes called for redemption shall be payable
on the redemption date.
(c) On presentation and surrender of the Principal Amount Notes, the
Indenture Trustee shall pay to the Holders of Notes on the redemption date an
amount equal to their redemption price. On the redemption date, the Indenture
Trustee shall, based on the information
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in the Servicing Certificate for the relevant Payment Date, withdraw from the
Payment Account and remit to the Credit Enhancer the lesser of
(i) the amount available for distribution on the redemption
date, net of the amount needed to pay the redemption price and
(ii) the unpaid amounts due to the Credit Enhancer for
unpaid premiums and unreimbursed draws on the Policy (together with
interest on them as provided under the Insurance Agreement) and any
other sums owed under the Insurance Agreement.
If all of the Noteholders do not surrender their Principal Amount
Notes for final payment and cancellation by the redemption date, the Indenture
Trustee shall hold in the Payment Account, for the benefit of the Noteholders
and the Issuer, the remaining amounts representing the redemption price not
distributed in redemption to Noteholders.
(d) Any election to redeem Principal Amount Notes pursuant to Section
10.01(a) shall be evidenced by an Issuer Order. The Issuer Order shall specify
the items required in the notice of redemption to be mailed to Noteholders.
The Issuer shall notify each Rating Agency of the redemption.
Section 10.02. Form of Redemption Notice.
Notice of redemption under Section 10.01 shall be given by the
Indenture Trustee by first-class mail, postage prepaid, or by facsimile or
other reliable electronic means (promptly confirmed by mail) to each Holder of
Principal Amount Notes and to the Credit Enhancer as of the close of business
on the Record Date preceding the redemption date, at the Holder's address or
facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) the amount of interest accrued to the redemption date;
(iv) the place where Principal Amount Notes are to be
surrendered for payment of the redemption price (which shall be the
office or agency of the Issuer maintained pursuant to Section 3.02);
and
(v) that on the redemption date, the redemption price will
become payable on each Principal Amount Note and that interest on the
Principal Amount Notes shall cease to accrue beginning on the
redemption date.
Notice of redemption of the Principal Amount Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer. Failure to
give notice of redemption, or any defect in it, to any Holder of any Principal
Amount Note shall not affect the validity of the redemption of any other
Principal Amount Note.
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Section 10.03. Notes Payable on Redemption Date.
Following notice of redemption as required by Section 10.02, on the
redemption date the Principal Amount Notes shall become payable at the
redemption price and (unless the Issuer defaults in the payment of the
redemption price) no interest shall accrue on the redemption price for any
period after the date to which accrued interest is calculated for purposes of
calculating the redemption price.
ARTICLE XI
Miscellaneous
Section 11.01. Compliance Certificates and Opinions, etc.
(a) Whenever the Issuer requests the Indenture Trustee to take any
action under this Indenture, the Issuer shall furnish to the Indenture Trustee
and the Credit Enhancer (i) an Officer's Certificate stating that any
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and (ii) an Opinion of Counsel stating that in
its opinion any conditions precedent have been complied with.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of the certificate or
opinion has read the covenant or condition and the definitions in
this Indenture relating to it;
(ii) a brief statement as to the nature and scope of the
examination or investigation on which the statements or opinions in
the certificate or opinion are based;
(iii) a statement that, in the opinion of each signatory,
the signatory has made any examination or investigation necessary for
the signatory to express an informed opinion about whether or not the
covenant or condition has been complied with;
(iv) a statement as to whether, in the opinion of each
signatory, the condition or covenant has been complied with; and
(v) if the signer of the certificate is required to be
Independent, the statement required by the definition of Independent.
(b)
(i) Before the deposit of any Collateral or other property
with the Indenture Trustee that is to be made the basis for the
release of any property subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section
11.01(a) or elsewhere in this Indenture, furnish to the Indenture
Trustee and the Credit Enhancer an Officer's Certificate stating the
opinion of each person signing the
62
certificate as to the fair value (within 90 days of the deposit) to
the Issuer of the Collateral or other property to be deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate stating the opinion of any
signer as to the matters described in clause (b)(i), the Issuer shall
also deliver to the Indenture Trustee and the Credit Enhancer an
Independent Certificate as to the same matters, if the fair value to
the Issuer of the property to be deposited as the basis of any
release and of all other property made the basis of any release since
the commencement of the then-current calendar year as described in
the certificates delivered pursuant to clause (b)(i) is 10% or more
of the aggregate Outstanding Amount of all Classes of Principal
Amount Notes, but the certificate need not be furnished for any
securities deposited, if their fair value to the Issuer as described
in the related Officer's Certificate is less than $25,000 or less
than 1% of the then aggregate Outstanding Amount of all Classes of
Principal Amount Notes.
(iii) Whenever any property is to be released from the lien
of this Indenture, the Issuer shall also furnish to the Indenture
Trustee and the Credit Enhancer an Officer's Certificate stating the
opinion of each person signing the certificate as to the fair value
(within 90 days of the release) of the property proposed to be
released and stating that in the opinion of that person the proposed
release will not impair the security under this Indenture in
contravention of the provisions of this Indenture.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate stating the opinion of any
signer as to the matters described in clause (b)(iii), the Issuer
shall also furnish to the Indenture Trustee and the Credit Enhancer
an Independent Certificate as to the same matters if the fair value
of the property and of all other property released from the lien of
this Indenture since the commencement of the then-current calendar
year, as described in the certificates required by clause (b)(iii)
and this clause (b)(iv), equals 10% or more of the aggregate
Outstanding Amount of all Classes of Principal Amount Notes, but the
certificate need not be furnished for any release of property if its
fair value as described in the related Officer's Certificate is less
than $25,000 or less than 1% of the then aggregate Outstanding Amount
of all Classes of Principal Amount Notes.
(v) Notwithstanding any provision of this Indenture, the
Issuer may, without compliance with the other requirements of this
Section, (A) collect, liquidate, sell, or otherwise dispose of
Collateral as and to the extent permitted by the Transaction
Documents, and (B) make cash payments out of the Collection Account
as and to the extent permitted by the Transaction Documents, so long
as the Issuer delivers to the Indenture Trustee and the Credit
Enhancer every six months, beginning six months after the date of
this Indenture, an Officer's Certificate of the Issuer stating that
all the dispositions of Collateral described in clauses (A) and (B)
that occurred during the
63
preceding six months were in the ordinary course of the Issuer's
business and that their proceeds were applied in accordance with the
Transaction Documents.
Section 11.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified person, all the matters need not be
certified by, or covered by the opinion of, only one person, or be certified
or covered by only one document. One person may certify or give an opinion
with respect to some matters and one or more other persons as to other
matters, and any person may certify or give an opinion as to one matter in one
or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based on a certificate or opinion of counsel insofar as it relates to legal
matters, unless the officer knows, or in the exercise of reasonable care
should know, that with respect to the matters on which the officer's
certificate or opinion is based the certificate or opinion is erroneous. Any
certificate of an Authorized Officer or Opinion of Counsel may be based on a
certificate or opinion of officers of any appropriate party to any of the
Transaction Documents insofar as it relates to factual matters, stating that
the information with respect to the factual matters is in the possession of
the party, unless the person signing knows, or in the exercise of reasonable
care should know, that the certificate or opinion is erroneous.
Where any person is required to deliver two or more documents under
this Indenture, they may, but need not, be consolidated into one document.
If the Issuer is required to deliver any document as a condition of
the granting of any request, or as evidence of its compliance with this
Indenture, the request may be denied or the certification of compliance will
be unacceptable if the document is inaccurate. This provision shall not,
however, affect the Indenture Trustee's right to rely on the accuracy of any
statement or opinion in any document as provided in Article VI.
Section 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver, or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by Noteholders in person or by agents duly
appointed in writing. Except as otherwise expressly provided in this Indenture
the action shall become effective when the instruments are delivered to the
Indenture Trustee and, if expressly required, to the Issuer. The instruments
(and the action embodied in them) are referred to as the "Act" of the
Noteholders signing the instruments. Proof of execution of any instrument or
of a writing appointing an agent for a Noteholder shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any
instrument may be proved by an affidavit of a witness to the execution or the
certificate of any notary public or
64
other person authorized by law to acknowledge the execution of deeds. Any
certificate on behalf of a jural entity executed by a person purporting to
have authority to act on behalf of the jural entity shall itself be sufficient
proof of the authority of the person executing it to act. The fact and date of
the execution by any person of any instrument may also be proved in any other
manner that the Indenture Trustee deems sufficient.
(c) The Note Register shall prove the ownership of Notes.
(d) Any Act by the Holder of a Note shall bind every Holder of the
same Note and every Note issued on its transfer or in exchange for it or in
lieu of it, in respect of anything done, omitted, or suffered to be done by
the Indenture Trustee or the Issuer in reliance on the Act, whether or not
notation of the action is made on the Note.
Section 11.04. Notices.
Any request, demand, authorization, direction, notice, consent,
waiver, Act, or other action or other documents provided or permitted by this
Indenture to be given to:
(i) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose under this Indenture if given
in writing and delivered by first-class mail, postage prepaid,
overnight courier, personally delivered, or facsimile (followed by
the original by any other means authorized by this Section) to the
Indenture Trustee at its Corporate Trust Office, or
(ii) the Issuer by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose under this Indenture
if given in writing and delivered by first-class mail, postage
prepaid, overnight courier, personally delivered, or facsimile
(followed by the original by any other means authorized by this
Section) to the Issuer addressed as provided in the Adoption Annex or
at any other address previously furnished in writing to the Indenture
Trustee by the Issuer; or
(iii) the Credit Enhancer by the Issuer, the Indenture
Trustee, or by any Noteholder shall be sufficient for every purpose
under this Indenture if given in writing and delivered by first-class
mail, postage prepaid, overnight courier, personally delivered, or
facsimile (followed by the original by any other means authorized by
this Section) (unless otherwise specifically provided) to the Credit
Enhancer addressed as provided in the Adoption Annex or at any other
address previously furnished in writing to the Indenture Trustee by
the Credit Enhancer, except that whenever a notice or other
communication to the Credit Enhancer refers to an Event of Default,
Event of Servicing Termination, a claim under the Policy, or with
respect to which failure on the part of the Credit Enhancer to
respond would constitute consent or acceptance, then a copy of the
notice or other communication shall also be sent to the attention of
the General Counsel of the Credit Enhancer and shall be marked to
indicate "URGENT MATERIAL ENCLOSED"; or
65
(iv) to each Rating Agency by the Issuer or the Indenture
Trustee shall be sufficient for every purpose under this Indenture if
given in writing and delivered by first-class mail, postage prepaid,
overnight courier, personally delivered, or facsimile (followed by
the original by any other means authorized by this Section) to the
parties at the addresses as provided in the Adoption Annex or at any
other address previously furnished in writing to the Indenture
Trustee and the Issuer.
Any consent or waiver under this Indenture or any other Transaction
Document by the Credit Enhancer must be in writing and signed by the Credit
Enhancer to be effective.
Section 11.05. Notices to Noteholders; Waiver.
Where this Indenture provides for notice to Noteholders of any event,
the notice shall be sufficiently given (unless otherwise expressly provided in
this Indenture) if in writing and mailed, first-class, postage prepaid to each
Noteholder affected by the event, at the Holder's address as it appears on the
Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of the notice. Whenever notice to
Noteholders is given by mail, neither the failure to mail the notice nor any
defect in a notice mailed to any particular Noteholder shall affect the
sufficiency of the notice with respect to other Noteholders. Any notice that
is mailed in the manner provided in this Indenture shall conclusively be
presumed to have been duly given.
Where this Indenture provides for notice in any manner, any person
entitled to receive it may waive the notice in writing, either before or after
the event, and the waiver shall be the equivalent of notice. Waivers of notice
by Noteholders shall be filed with the Indenture Trustee but the filing shall
not be a condition precedent to the validity of any action taken in reliance
on a waiver.
If it is impractical to mail notice of any event to Noteholders when
the notice is required to be given pursuant to this Indenture because of the
suspension of regular mail service as a result of a strike, work stoppage, or
similar activity, then any manner of giving the notice satisfactory to the
Indenture Trustee shall be considered to be a sufficient giving of the notice.
Where this Indenture provides for notice to each Rating Agency,
failure to give the notice shall not affect any other rights or obligations
created under this Indenture, and shall not under any circumstance constitute
an Incipient Default.
Section 11.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes
to the contrary, the Issuer may enter into any agreement with any Holder of a
Note providing for a method of payment, or notice by the Indenture Trustee or
any Paying Agent to the Holder, that is different from the methods provided
for in this Indenture. The agreement may not accelerate the timing or increase
the amount of any payments to the Noteholder; cause any release of or other
change in any Collateral; or affect the timing, amount, or method of any
payments by the Credit Enhancer under the Policy. The Issuer will furnish to
the Indenture Trustee and the Credit
66
Enhancer a copy of each such agreement and the Indenture Trustee will cause
payments to be made and notices to be given in accordance with them.
Section 11.07. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies, or conflicts
with another provision of this Indenture that is required to be included in
this Indenture by the Trust Indenture Act, the required provision shall
control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically included in this Indenture
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically in this Indenture.
Section 11.08. Effect of Headings and Table of Contents.
The Article and Section headings and the Table of Contents are for
convenience only and shall not affect the construction of this Indenture.
Section 11.09. Successors and Assigns.
All agreements in this Indenture and the Notes by the Issuer shall
bind its successors and assigns, whether so expressed or not. All agreements
of the Indenture Trustee in this Indenture shall bind its successors, assigns,
co-trustees, and agents.
Section 11.10. Separability.
If any provision in this Indenture or in the Notes is invalid,
illegal, or unenforceable, the validity, legality, and enforceability of the
remaining provisions of this Indenture and the Notes shall not be affected in
any way.
Section 11.11. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any person, other than the parties to this Indenture and their
successors under this Indenture, the Master Servicer (under Article VIII), the
Credit Enhancer, any person with an ownership interest in the Trust, and the
Noteholders, any benefit or any legal or equitable right under this Indenture.
The Credit Enhancer is a third party beneficiary of this Indenture.
Section 11.12. Legal Holidays.
If the date on which any payment is due is not a Business Day, then
(notwithstanding any other provision of the Notes or this Indenture) payment
need not be made on that date, but may be made on the next Business Day with
the same force as if made on the date on which nominally due, and no interest
shall accrue for the period after the nominal due date.
Section 11.13. Governing Law.
THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT
WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
67
Section 11.14. Counterparts; Electronic Delivery.
This Indenture may be executed in any number of counterparts, each of
which so executed shall be considered an original, but all the counterparts
shall together constitute a single instrument. Any signature page to this
Indenture containing a manual signature may be delivered by facsimile
transmission or other electronic communication device capable of transmitting
or creating a printable written record, and when so delivered shall have the
effect of delivery of an original manually signed signature page.
Section 11.15. Recording of Indenture.
This Indenture is a Security Agreement under the UCC. If this
Indenture is subject to recording in any appropriate public recording offices,
the recording is to be effected by the Issuer but only at the request and
expense of Noteholders accompanied by an Opinion of Counsel (which may be
counsel to the Indenture Trustee or any other counsel reasonably acceptable to
the Indenture Trustee) to the effect that the recording materially and
beneficially affects the interests of the Noteholders or any other person
secured under this Indenture or the enforcement of any right granted to the
Indenture Trustee under this Indenture.
Section 11.16. No Petition.
The Indenture Trustee, by entering into this Indenture, any Paying
Agent, by accepting its appointment as such, the Issuer, and each Noteholder,
by accepting a Note, hereby covenant that they will not at any time institute
against the Issuer or the Depositor, or join in any institution against the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency, or
liquidation proceedings, or other proceedings under any United States federal
or State bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture, or any of the other Transaction Documents. This
Section shall survive the termination of this Indenture.
Section 11.17. Act on Instructions from Credit Enhancer.
Notwithstanding any provision of this Indenture to the contrary other
than Section 9.01(b)(i), (ii), (iii), (iv), or (v), so long as no Credit
Enhancer Default exists, the Credit Enhancer shall at all times be treated as
if it were the exclusive owner of all Insured Notes Outstanding for the
purposes of all approvals, consents, waivers, and the institution of any
action and the direction of all remedies, and the Indenture Trustee shall act
in accordance with the directions of the Credit Enhancer so long as it is
indemnified therefor to its reasonable satisfaction. The Credit Enhancer shall
not be treated as if it were the exclusive owner of any Notes (other than
those it may actually own) for the purposes of Section 9.01(b)(i), (ii),
(iii), (iv), or (v).
Section 11.18. Non-recourse.
The Issuer and each Noteholder, by its acceptance of its Note, agree
that the indebtedness represented by the Notes is non-recourse to the Issuer,
and is payable solely from the assets of the Trust.
68
Section 11.19. Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, or the Indenture Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection this Indenture, against (i) the Indenture Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer, or (iii) any partner, owner, beneficiary, agent, officer,
director, employee, or agent of the Indenture Trustee or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Issuer,
the Owner Trustee, or the Indenture Trustee or of any successor or assign of
the Indenture Trustee or the Owner Trustee in its individual capacity. For all
purposes of this Indenture, in the performance of any obligations of the
Issuer under this Indenture, the Owner Trustee shall be subject to, and
entitled to the benefits of, Articles VI, VII, and VIII of the Trust
Agreement.
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In Witness Whereof, the parties to this Indenture have caused this
Indenture to be duly executed by their officers, thereunto duly authorized,
all as of the day and year first above written.
CWHEQ Revolving Home Equity Loan Trust, series
2005-M
By: Wilmington Trust Company,
not in its individual capacity,
but solely as Owner Trustee
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
JPMorgan Chase Bank, N.A.
Indenture Trustee,
By: /s/ Xxxxx X. Xxxxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Attorney-In-Fact
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Exhibit A
Form of Notes
[Notes other than Class A-IO Notes] Each transferee or purchaser of
this Note that is a plan or is investing plan assets, by acceptance of this
Note or an interest in this Note, represents that the investment and holding
of this Note satisfy the conditions for exemptive relief under XXXX 00-00,
XXXX 00-0, XXXX 00-00, XXXX 00-00, XXXX 96-23, or a similar exemption. [Class
A-IO Notes: This Note may not be transferred to a plan or to an entity
investing plan assets] A "plan" is an employee benefit plan (as defined in
section 3(3) of ERISA) that is subject to Title I of ERISA, a plan (as defined
in and subject to section 4975 of the Code) and any entity whose underlying
assets include plan assets by reason of a plan's investment in the entity or
otherwise.
Any transfer in violation of either of the foregoing will be void ab
initio, and will not operate to transfer any rights to the transferee,
notwithstanding any instructions to the contrary.
A-1
CWHEQ Revolving Home Equity Loan Trust, Series 2005-M
Revolving Home Equity Loan Asset Backed Note
Series 2005-M
------------------------------------------------------------------------------
Registered Principal Amount: $[___________]
------------------------------------------------------------------------------
No. [____] Percentage Interest: [__]%
------------------------------------------------------------------------------
CUSIP No. [_______] Initial Payment Date: [___________]
------------------------------------------------------------------------------
Note Rate: Variable
------------------------------------------------------------------------------
Unless this Note is presented by an authorized representative of the
Depository to the Issuer or its agent for registration of transfer, exchange,
or payment, and any Note issued in exchange for this Note is registered in the
name of the Depository or in another name requested by an authorized
representative of the Depository (and any payment on this Note is made to the
Depository or to another entity requested by an authorized representative of
the Depository), any transfer, pledge, or other use of this Note for value or
otherwise by or to any person is wrongful inasmuch as the registered owner of
this Note, the Depository, has an interest in this Note.
The Issuer, CWHEQ Revolving Home Equity Loan Trust, Series 2005-M,
promises to pay to CEDE & CO. or registered assigns the Principal Amount,
payable on each Payment Date in an amount equal to the Percentage Interest of
the aggregate amount payable from the Payment Account as principal on the
Notes pursuant to Section 8.03 of the Indenture, dated as of December 29, 2005
(the "Indenture"), between the Issuer and JPMorgan Chase Bank, N.A., as
Indenture Trustee. The entire remaining outstanding principal balance of this
Note is payable on the Payment Date in [______]. Capitalized terms used in
this Note that are not otherwise defined have the meanings given to them in
the Indenture, and if not defined there, in the Sale and Servicing Agreement,
and if not defined there, in the Trust Agreement between the Issuer and
Wilmington Trust Company, as Owner Trustee.
Interest will be paid on the 15th day of each month or if that is not
a Business Day, then on the next Business Day (the "Payment Date"), commencing
on the first Payment Date specified above, to the person in whose name this
Note is registered at the close of business on the last day preceding the
Payment Date (the "Record Date") at the Note Rate. Interest will be computed
on the basis of the actual number of days in the Interest Period and a 360-day
year.
The "Note Rate" for the first Interest Period is a per annum rate
equal to the sum of (a) the interpolated one-month and two-month LIBOR and (b)
[INSERT SPREAD]%, and for any subsequent Interest Period, a per annum rate
equal to the least of: (i) the sum of (a) LIBOR as of the second LIBOR
Business Day before the first day of that Interest Period and (b) [INSERT
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SPREAD]%, (ii) the Maximum Rate for the [Class _____ ] Notes for that Interest
Period, and (iii) [______]%.
The interpolated one-month and two-month LIBOR shall be equal to
one-month LIBOR for the first Interest Period plus the product of
o the excess of two-month LIBOR for the first Interest
Period over one-month LIBOR for the first Interest Period, multiplied
by
o a fraction whose numerator is the number of days from the
one-month anniversary of the Closing Date to the first Payment Date
and whose denominator is 30.
The "Maximum Rate" for any Interest Period is the Weighted Average
Net Loan Rate for the Mortgage Loans for the Collection Period during which an
Interest Period begins (adjusted to an effective rate reflecting accrued
interest calculated on the basis of the actual number of days in the
Collection Period commencing in the month in which that Interest Period
commences and a year assumed to consist of 360 days).
"LIBOR" for any day means the rate for United States dollar deposits
for one month that appears on the Moneyline Telerate Screen Page 3750 as of
11:00 a.m., London time that day. If LIBOR does not appear on that page (or a
page replacing that page on that service or, if that service is no longer
offered, any other service for displaying LIBOR or comparable rates reasonably
selected by the Depositor after consultation with the Indenture Trustee and
after obtaining the consent of the Credit Enhancer), the rate will be the
reference bank rate.
The reference bank rate for an Interest Period means the arithmetic
mean (rounded upwards to the nearest one sixteenth of a percent) of the
offered rates for United States dollar deposits offered by three major banks
engaged in transactions in the London interbank market, selected by the
Depositor after consultation with the Indenture Trustee and after obtaining
the consent of the Credit Enhancer, as of 11:00 a.m., London time, on the
second LIBOR Business Day before the first day of the Interest Period, to
prime banks in the London interbank market for a period of one month in
amounts approximately equal to the outstanding Note Principal Balance if at
least two of the banks provide an offered rate.
If fewer than two offered rates are quoted, the reference bank rate
will be the arithmetic mean of the rates quoted by one or more major banks in
New York City, selected by the Depositor after consultation with the Indenture
Trustee and after obtaining the consent of the Credit Enhancer, as of 11:00
a.m., New York City time, on the second LIBOR Business Day before the first
day of the Interest Period, for loans in U.S. dollars to leading European
banks for a period of one month in amounts approximately equal to the
outstanding Note Principal Balance. If no such quotations can be obtained, the
reference bank rate shall be LIBOR for the preceding Interest Period.
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"LIBOR Business Day" means any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of New York or in the City
of London, England are required or authorized by law to be closed.
This Note is one of the Notes from a duly authorized issue of Notes
issued by CWHEQ Revolving Home Equity Loan Trust, Series 2005-M, designated as
Revolving Home Equity Loan Asset Backed Notes, Series 2005-M.
Payments on this Note will be made by the Indenture Trustee, or by
the Paying Agent appointed pursuant to the Indenture, by check mailed to the
person entitled thereto as its name and address appears on the Note Register
or, upon written request by the person delivered to the Indenture Trustee at
least five Business Days before the related Record Date, by wire transfer (but
only if the person owns of record Notes having principal denominations
aggregating at least $1,000,000), or by any other means of payment the person
and the Indenture Trustee agree to. Notwithstanding the above, the final
payment on this Note will be made after due notice by the Indenture Trustee or
the Paying Agent, and only upon presentation and surrender of this Note at the
office or agency appointed by the Indenture Trustee for that purpose.
This Note does not purport to summarize the Indenture and reference
is made to the Indenture for the rights and obligations under it.
Solely for U.S. federal income tax purposes, this Note is a "regular
interest " in a "Real Estate Mortgage Investment Conduit," as those terms are
defined in sections 860G and 860D of the Internal Revenue Code of 1986.
Without the consent of the Holders of any Notes but with the consent
of the Credit Enhancer, the Issuer and the Indenture Trustee may amend the
Indenture in certain limited ways. Without the consent of any of the
Noteholders but with satisfaction of the Rating Agency Condition, the Issuer
and the Indenture Trustee may amend the Indenture to change the Indenture in
any manner or to modify the rights of the Noteholders or the Credit Enhancer
under the Indenture except amendments that require the consent of each
affected Noteholder. No supplemental indenture may, without the consent of
each affected Noteholder:
(i) change the date of payment of any installment of
principal or interest on any Note, or reduce its principal amount,
its interest rate, or its redemption price, or change any place of
payment where, or the coin or currency in which, any Note or its
interest is payable;
(ii) impair the right to institute suit for the enforcement
of the provisions of the Indenture requiring the application of
available funds to the payment of any amount due on the Notes after
their due dates (or, in the case of redemption, after the redemption
date);
(iii) reduce the percentage of the Outstanding Amount the
consent of the Holders of which is required for any supplemental
indenture, or the consent of the
A-4
Holders of which is required for any waiver of compliance with
certain provisions of the Indenture or certain defaults under the
Indenture and their consequences or to direct the liquidation of the
Collateral;
(iv) modify any provision of the Section of the Indenture
covering indenture supplements only with the consent of affected
Noteholders except to increase any percentage specified in the
Indenture or provide that certain additional provisions of the
Indenture or the Transaction Documents cannot be modified or waived
without the consent of the Holder of each Note affected by it; modify
any of the provisions of the Indenture in a manner affecting the
calculation of the amount of any payment of interest or principal due
on any Note on any Payment Date (including the calculation of any of
the individual components of the calculation) or affect the rights of
the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes in the Indenture; or
(v) permit the creation of any lien ranking before or on a
parity with the lien of the Indenture with respect to any part of the
Collateral (except any change in any mortgage's lien status in
accordance with the Sale and Servicing Agreement) or, except as
otherwise permitted or contemplated in the Indenture, terminate the
lien of the Indenture on any property at any time subject to the
Indenture or deprive the Holder of any Note of the security provided
by the lien of the Indenture.
As provided in the Indenture, the transfer of this Note is
registrable in the Note Register of the Note Registrar on surrender of this
Note for registration of transfer at the office or agency maintained by the
Note Registrar for that purpose, accompanied by a written instrument of
transfer in form satisfactory to the Master Servicer, the Indenture Trustee,
and the Note Registrar duly executed by its Holder or the Holder's attorney
duly authorized in writing, and thereupon new Notes of the same Class and of
authorized denominations and evidencing the same aggregate Percentage Interest
of the Notes will be issued to the designated transferees. The Notes are
issuable only as registered Notes without coupons in denominations specified
in the Indenture. As provided in the Indenture, Notes are exchangeable for new
Notes of like tenor in authorized denominations and evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No service charge will be made for any registration of transfer or
exchange, but the Indenture Trustee or the Note Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Before due presentment for registration of transfer of this Note, the
Issuer, the Credit Enhancer, the Indenture Trustee, and any agent of the
Issuer or the Indenture Trustee may treat the person in whose name this Note
is registered as its owner for all purposes, whether or not this Note is
overdue, and none of the Issuer, the Credit Enhancer, the Indenture Trustee,
or any such agent shall be affected by notice to the contrary.
A-5
The Transferor with the consent of the Credit Enhancer and the Master
Servicer Issuer may effect an early retirement of all Classes of Notes by
paying the retransfer price and accepting retransfer of the Trust Assets on
any Payment Date after the Note Principal Balance of all Classes of Notes is
less than or equal to 10% of the Original Note Principal Balance of all
Classes of Notes.
Each Holder or beneficial owner of a Note, by acceptance of a Note
or, in the case of a beneficial owner of a Note, a beneficial interest in a
Note, agrees by accepting the benefits of the Indenture that will not at any
time institute against the Depositor, the Sponsor, the Master Servicer, or the
Issuer, or join in any institution against any of them of, any bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture, or the Transaction
Documents.
Anything in this Note to the contrary notwithstanding, none of
Wilmington Trust Company in its individual capacity, JPMorgan Chase Bank,
N.A., in its individual capacity, any owner of a beneficial interest in the
Issuer, or any of their respective partners, beneficiaries, agents, officers,
directors, employees, or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on this Note or performance of, or omission to perform, any of the
obligations under the Indenture. The holder of this Note by its acceptance of
this Note agrees that the holder shall have no claim against any of the
foregoing for any deficiency, loss, or claim. Nothing in this Note shall be
taken to prevent recourse to, and enforcement against, the assets of the
Issuer for any obligations under the Indenture or in this Note.
The Issuer and each Noteholder, by its acceptance of its Note, agree
that the indebtedness represented by the Notes is non-recourse to the Issuer,
and is payable solely from the assets of the Issuer and their proceeds.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Unless the certificate of authentication on this Note has been
executed by or on behalf of the Indenture Trustee, by manual or facsimile
signature, this Note shall not be entitled to any benefit under the Indenture,
or be valid for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
Dated:
Wilmington Trust Company
not in its individual capacity but solely as
Owner Trustee on behalf of the Trust
A-6
By: ____________________________
Certificate of Authentication:
This is one of the Notes referenced
in the within-mentioned Indenture.
JPMorgan Chase Bank, N.A. , not in its
individual capacity but solely
as Indenture Trustee
By: ________________________
Authorized Officer
A-7
STATEMENT OF INSURANCE
OBLIGATIONS:
CWHEQ Revolving Home Equity Loan Trust, Series 2005-M
Revolving Home Equity Loan Asset Backed Notes, Series 2005-M
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class
A-4 Notes ("the Obligations" or the "Principal Amount
Notes")
MBIA Insurance Corporation (the "Insurer") has issued a Note Guaranty
Insurance Policy (the "Policy") relating to the Obligations containing the
following provisions, the Policy being on file at the Corporate Trust Office
of the Indenture Trustee.
The Insurer, in consideration of the payment of the premium and
subject to the terms of the Policy, thereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Credit
Enhancement Draw Amount will be received from the Insurer by JPMorgan Chase
Bank, N.A., or its successors, as indenture trustee for the Owners (the
"Indenture Trustee"), on behalf of the Owners, for distribution by the
Indenture Trustee to each Owner of each Owner's proportionate share of the
Credit Enhancement Draw Amount, except as otherwise provided below with
respect to Preference Amounts. The Insurer's obligations under the Policy with
respect to a particular Credit Enhancement Draw Amount shall be discharged to
the extent funds equal to the applicable Credit Enhancement Draw Amount are
received by the Indenture Trustee, whether or not such funds are properly
applied by the Indenture Trustee. Payments of Credit Enhancement Draw Amounts
shall be made only at the time set forth in the Policy, and no accelerated
Credit Enhancement Draw Amounts shall be made regardless of any acceleration
of the Obligations, unless such acceleration is at the sole option of the
Insurer.
Notwithstanding the foregoing paragraph, the Policy does not cover
shortfalls, if any, attributable to the liability of the Issuer or the
Indenture Trustee for withholding taxes, if any (including interest and
penalties in respect of any such liability for withholding taxes).
The Insurer will pay any Credit Enhancement Draw Amount that is a
Preference Amount on the Business Day following receipt on a Business Day by
the Fiscal Agent (as described below) of (a) a certified copy of the order
requiring the return of a preference payment, (b) an opinion of counsel
satisfactory to the Insurer that such order is final and not subject to
appeal, (c) an assignment in such form as is reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and claims of the
Owner relating to or arising under the Obligations against the debtor which
made such preference payment or otherwise with respect to such preference
payment and (d) appropriate instruments to effect the appointment of the
Insurer as agent for such Owner in any legal proceeding related to such
A-8
preference payment, such instruments being in a form satisfactory to the
Insurer, provided that if such documents are received after 12:00 noon, New
York City time, on such Business Day, they will be deemed to be received on
the following Business Day. Any Credit Enhancement Draw Amount that is a
Preference Amount shall be distributed by the Indenture Trustee to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations
to such receiver or trustee in bankruptcy, in which case such payment shall be
distributed by the Indenture Trustee to such Owner.
The Insurer will pay any other amount payable under the Policy no
later than 12:00 noon, New York City time, on the later of the Payment Date on
which the related Guaranteed Payment is due or the second Business Day
following receipt in New York, New York on a Business Day by U.S. Bank Trust
National Association, as Fiscal Agent for the Insurer, or any successor fiscal
agent appointed by the Insurer (the "Fiscal Agent"), of a Notice (as described
below), provided that if such Notice is received after 12:00 noon, New York
City time, on such Business Day, it will be deemed to be received on the
following Business Day. If any such Notice received by the Fiscal Agent is not
in proper form or is otherwise insufficient for the purpose of making claim
under the Policy, it shall be deemed not to have been received by the Fiscal
Agent for purposes of this paragraph, and the Insurer or the Fiscal Agent, as
the case may be, shall promptly so advise the Indenture Trustee and the
Indenture Trustee may submit an amended Notice.
Credit Enhancement Draw Amounts due under the Policy, unless
otherwise stated in the Policy, will be disbursed by the Fiscal Agent to the
Indenture Trustee on behalf of the Owners by wire transfer of immediately
available funds in the amount of the Credit Enhancement Draw Amount less, in
respect of Credit Enhancement Draw Amounts related to Preference Amounts, any
amount held by the Indenture Trustee for the payment of such Credit
Enhancement Draw Amount and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the Fiscal
Agent shall in no event be liable to Owners for any acts of the Fiscal Agent
or any failure of the Insurer to deposit, or cause to be deposited, sufficient
funds to make payments due under the Policy.
Subject to the terms of the Agreement, the Insurer shall be
subrogated to the rights of each Owner to receive payments under the
Obligations to the extent of any payment by the Insurer under the Policy.
As used in the Policy, the following terms shall have the following
meanings:
"Agreement" means the Indenture dated as of December 29, 2005 among
CWHEQ Revolving Home Equity Loan Trust, Series 2005-M, as Issuer, and the
Indenture Trustee, as
A-9
indenture trustee, without regard to any amendment or supplement thereto,
unless such amendment or supplement has been approved in writing by the
Insurer.
"Business Day" means any day other than (a) a Saturday or a Sunday or
(b) a day on which banking institutions in New York, California, or Illinois
or the state in which the Insurer has its principal place of business or in
the city in which the corporate trust office of the Indenture Trustee under
the Agreement is located are authorized or obligated by law or executive order
to close.
"Credit Enhancement Draw Amount" for the Principal Amount Notes and
each Payment Date or other applicable date in accordance with the Policy
means, an amount equal to the sum of (a) the excess of the Guaranteed Payment
over the Available Investor Interest and (b) for each applicable date in
accordance with the third paragraph of the Policy, any Preference Amount to be
paid pursuant to the terms of the Policy.
"Guaranteed Payment" for each Payment Date and the Principal Amount
Notes means the sum of the related Guaranteed Principal Payment Amount and the
Aggregate Investor Interest for the Payment Date (after giving effect to the
distribution of all amounts actually distributed on the related Class of
Principal Amount Notes as interest on that date).
"Guaranteed Principal Payment Amount" for the Principal Amount Notes,
means (a) on the Payment Date in February 2036, the amount needed to pay the
outstanding Note Principal Balance of the Principal Amount Notes (after giving
effect to all allocations and payments for that Class of Principal Amount
Notes on that Payment Date), (b) for any other Payment Date, if the Available
Transferor Subordinated Amount has been reduced to zero or below, the amount
of the excess of the outstanding Note Principal Balance of the Principal
Amount Notes (after giving effect to all allocations and payments of principal
to be made on the Principal Amount Notes on the Payment Date) over the Loan
Pool Balance (at the end of the related Collection Period), and (c) for any
other Payment Date, zero. All calculations under the Policy are made with
respect to each Class of Principal Amount Notes after giving effect to all
other amounts payable and allocable to principal on such Class of Principal
Amount Notes for the Payment Date.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by facsimile substantially in the form of Exhibit A
attached to the Policy, the original of which is subsequently delivered by
registered or certified mail, from the Indenture Trustee specifying the Credit
Enhancement Draw Amount which shall be due and owing on the applicable Payment
Date.
A-10
"Owner" means each holder of the Principal Amount Notes (other than
the Indenture Trustee, the Sponsor or the Master Servicer) who, on the
applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment thereunder.
"Preference Amount" means any amount previously paid to an Owner on
the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time in accordance with a final
nonappealable order of a court having competent jurisdiction.
Capitalized terms used in the Policy and not otherwise defined in the
Policy shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment to or modification of the Agreement unless such amendment or
modification has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the Fiscal Agent
may be made at the address listed below for the Fiscal Agent or such other
address as the Insurer shall specify in writing to the Indenture Trustee.
The notice address of the Fiscal Agent is 15th Floor, 00 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Municipal Registrar and Paying Agency, or
such other address as the Fiscal Agent shall specify to the Indenture Trustee
in writing.
THE POLICY IS BEING ISSUED UNDER AND PURSUANT TO, AND SHALL BE
CONSTRUED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason except by delivery to the
Indenture Trustee of a replacement policy in accordance with the Agreement and
provided that the Policy shall remain in effect with respect to any claims for
a Credit Enhancement Draw Amount relating to Preference Amounts resulting from
distributions made on the Obligations prior to the effective date of the
cancellation of this Policy. The premium on this Policy is not refundable for
any reason, including payment, or provision being made for payment, prior to
maturity of the Obligations.
MBIA INSURANCE CORPORATION
A-11
EXHIBIT B
FORM OF CUSTODIAL AGREEMENT
------------------------------------------------------------------------------
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 2005-M
Issuer
COUNTRYWIDE HOME LOANS, INC.
Master Servicer
JPMORGAN CHASE BANK, N.A.
Indenture Trustee
TREASURY BANK, a division of Countrywide Bank, N.A.
Custodian
------------------------------
CUSTODIAL AGREEMENT
Dated as of [___________], 20[__]
20[__]-[_]
------------------------------
------------------------------------------------------------------------------
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Custodial Agreement
This Custodial Agreement, dated as of [______________], 20[__] (this
"Agreement"), among CWHEQ, Inc. (the "Depositor"), Countrywide Home Loans,
Inc., as master servicer (the "Master Servicer"), CWHEQ Revolving Home Equity
Loan Trust, Series 2005-M (the "Issuer"), and Treasury Bank, a division of
Countrywide Bank, N.A., as agent, custodian, and bailee for the Owner Trustee
as owner and the Indenture Trustee as secured party (when acting for the
Issuer, the "Trust Custodian," and when acting for the Indenture Trustee, the
"Indenture Custodian," and when referring to both capacities, the
"Custodian"), and JPMorgan Chase Bank, N.A., as indenture trustee (in that
capacity the "Indenture Trustee"),
Witnesseth:
Whereas, the Depositor will sell all of its interest in the Mortgage
Loans to the Issuer pursuant to the Sale and Servicing Agreement; and
Whereas, the Issuer will Grant a Security Interest to the Indenture
Trustee for the benefit of the Secured Parties in all of the Issuer's interest
in the Collateral; and
Whereas, the Issuer wants to hold its assets through a custodian
acting as its agent and bailee under a custodial agreement, and authorize the
custodian to deliver the Collateral to the Indenture Trustee; and
Whereas, the Indenture Trustee wants to hold the Collateral through a
custodian acting as its agent and bailee under a custodial agreement in
connection with the Issuer's delivery of the Collateral to the Indenture
Trustee;
Now, Therefore, the parties agree as follows.
Section 1. Defined Terms and Rules of Construction.
Capitalized terms used but not otherwise defined in this Agreement
have the meanings given to them in the Indenture, dated as of
[______________], 20[__] (the "Indenture"), between CWHEQ Revolving Home
Equity Loan Trust, Series 2005-M and the Indenture Trustee, and if not defined
there, in the Sale and Servicing Agreement. In addition, Section 1.04 (Rules
of Construction) of the Indenture is incorporated by reference with
appropriate substitution of this Agreement for references in that Section to
the Indenture so that the language of that Section will read appropriately as
applying to this Agreement.
Section 2. Acknowledgment of Receipt and Certification;
Appointment as Custodian.
(a) Appointment as Custodian; Acknowledgment of Receipt.
The Issuer appoints the Trust Custodian to act as its agent,
custodian, and bailee to accept delivery of the items transferred to it under
the Sale and Servicing Agreement and to hold them for the Issuer, and deliver
any of them to the Indenture Trustee as called for under the
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Indenture. The Indenture Trustee appoints the Indenture Custodian to act as
its agent, custodian, and bailee to maintain custody of the Mortgage Files for
the Indenture Trustee for the benefit of the Secured Parties. Treasury Bank, a
division of Countrywide Bank, N.A. accepts both of these appointments. The
Trust Custodian will maintain custody of the items transferred to it under the
Sale and Servicing Agreement that are not delivered to the Indenture Trustee
subject to instructions from the Issuer. The Indenture Custodian will maintain
continuous custody of the Mortgage Files at its office identified in Section 3
until (i) the Indenture Trustee delivers to the Indenture Custodian an
Officer's Certificate to the effect that the conditions for the release of
Collateral have been satisfied or (ii) the conditions specified in Section
4(b) for the release of the Mortgage Files to the Master Servicer have been
met. In performing its duties under this Agreement, the Custodian agrees to
act with the degree of care and skill consistent with the degree of care and
skill that the Custodian exercises with respect to the loan files relating to
similar loans owned, serviced, or held as custodian by the Custodian, and the
Custodian agrees to follow its customary policies and procedures.
(b) Review and Certification.
In connection with the transfers under Sections 2.01(a) and 2.01(b)
of the Sale and Servicing Agreement by the Depositor, the Depositor is
required to effect certain deliveries to the Issuer and the Indenture Trustee
under Section 2.01(d) of the Sale and Servicing Agreement. The Trust Custodian
shall accept those deliveries for the Issuer, and shall make the deliveries to
the Indenture Trustee required of the Issuer. The Indenture Custodian acting
as custodian for the Indenture Trustee shall accept those deliveries.
On the Closing Date, the Custodian will execute and deliver to the
Depositor, the Master Servicer, and the Sponsor (with a copy to the Issuer,
the Indenture Trustee, and the Credit Enhancer) an Initial Certification in
the form of Exhibit A. Based on its review and examination, the Custodian will
acknowledge that the documents identified in the Initial Certification appear
regular on their face (i.e. are not mutilated, damaged, defaced, torn, or
otherwise physically altered) and relate to each Mortgage Loan. No later than
thirty-two days after the Closing Date, if Mortgage Loans have been delivered
after the Closing Date pursuant to Section 2.01(d) of the Sale and Servicing
Agreement, the Custodian will execute and deliver to the Depositor, the Master
Servicer, and the Sponsor (with a copy to the Issuer, the Indenture Trustee,
and the Credit Enhancer) a Delay Delivery Certification in the form of Exhibit
B. Based on its review and examination, the Custodian will acknowledge that
the documents identified in the Delay Delivery Certification appear regular on
their face (i.e. are not mutilated, damaged, defaced, torn, or otherwise
physically altered) and relate to each Mortgage Loan.
Not later than 180 days after the Closing Date, the Custodian will
deliver to the Depositor, the Master Servicer, and the Sponsor (with a copy to
the Issuer, the Indenture Trustee, and the Credit Enhancer) a Final
Certification in the form of Exhibit C, noting any applicable exceptions. For
the purpose of the Final Certification, the title policy required for the
Mortgage File is any of the final original title policy, a signed binder or
commitment for a title
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policy, or a preliminary title report (in those states in which preliminary
title reports are the customary form of title policy commitment). For any
Mortgage File whose Final Certification is based on a signed binder or
commitment for a title policy or a preliminary title report (in those states
in which preliminary title reports are the customary form of title policy
commitment), the Custodian will deliver to the Depositor, the Master Servicer,
and the Sponsor (with a copy to the Issuer, the Indenture Trustee, and the
Credit Enhancer), not later than the one year anniversary of the Closing Date,
a further Final Certification in the form of Exhibit D, noting any applicable
exceptions. For the purpose of this further Final Certification, the title
policy required for the Mortgage File must be the final original title policy.
If, in the course of its review in connection with the Final
Certification, the Custodian finds any document constituting a part of a
Mortgage File that does not meet the requirements of Section 2.02 of the Sale
and Servicing Agreement, the Custodian shall list the defect as an exception
in the Final Certification.
The Custodian is not obligated to examine the documents delivered to
it to determine that they are genuine, enforceable, or appropriate for the
represented purpose, or that they have actually been recorded in the real
estate records, or that they are other than what they purport to be on their
face.
In reviewing any Mortgage File pursuant to this Section, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction,
or whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether
any signature on any document is genuine, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
The Sponsor will deliver and the Indenture Custodian will maintain
continuous custody at its office identified in Section 3 of the documents
required to be held by the Indenture Trustee in accordance with Section 2.01
of the Sale and Servicing Agreement with respect to any Eligible Substitute
Mortgage Loans.
The Master Servicer shall promptly deliver to the Indenture
Custodian, and the Indenture Custodian will maintain continuous custody at its
office identified in Section 3 of the originals of any other documents
constituting the Mortgage File that come into the possession of the Master
Servicer from time to time.
Section 3. Maintenance of Office.
The Custodian agrees to maintain the items for which it acts as Trust
Custodian or Indenture Custodian at the office of the Indenture Custodian
located in California.
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Section 4. Duties of Custodian.
(a) Safekeeping. The Indenture Custodian shall (i) segregate the
Mortgage Files from all other documents in the Indenture Custodian's
possession; (ii) identify the Mortgage Files as being held, and hold the
Mortgage Files, for the Indenture Trustee as secured party for the benefit of
all present and future Noteholders and the Credit Enhancer; (iii) maintain at
all times a current inventory of the Mortgage Files; and (iv) secure the
Mortgage Files in fire resistant facilities and conduct periodic physical
inspections of them in accordance with customary standards for custody of this
type. The Indenture Custodian will promptly report to the Issuer and the
Indenture Trustee any failure on its part to hold the Mortgage Files as
provided in this Agreement and promptly take appropriate action to remedy the
failure.
(b) Release of Documents. On receipt by the Indenture Custodian of
the certification of the Master Servicer, substantially in the form of Exhibit
D to the Sale and Servicing Agreement, the Indenture Custodian shall release
to the Master Servicer the related Mortgage Files for the Mortgage Loan
covered by the certification. The certification may be delivered to the
Indenture Custodian in a mutually agreed electronic format, and to the extent
the request originates on its face from a servicing officer, need not be
manually signed.
Section 5. Access to Records.
The Custodian shall permit the Indenture Trustee, the Issuer, the
Master Servicer, the Credit Enhancer, or their respective duly authorized
officers, attorneys, or auditors, and the supervisory agents and examiners of
each of them, to inspect the items delivered to it under this Agreement and
the books and records maintained by the Custodian pursuant to this Agreement,
without charge but only after not less than two Business Days' prior notice
and during normal business hours at the offices of the Custodian.
Section 6. Instructions; Authority to Act.
The Indenture Custodian may follow any instructions with respect to
the Collateral received in the form of an Officer's Certificate of the
Indenture Trustee. The instructions may be general or specific in terms. An
executed incumbency certificate of the Indenture Trustee certifying the
authority of certain officers to take specified actions may be accepted by the
Indenture Custodian as conclusive evidence of the authority of the officers to
act and may be considered in full force until receipt of written notice to the
contrary by the Indenture Custodian from the Indenture Trustee.
The Trust Custodian may follow any instructions with respect to any
items held exclusively for the Issuer received in the form of an Officer's
Certificate of the Issuer. The instructions may be general or specific in
terms. An executed incumbency certificate of the Issuer certifying the
authority of certain officers to take specified actions may be accepted by the
Trust Custodian as conclusive evidence of the authority of the officers to act
and may be
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considered in full force until receipt of written notice to the contrary by
the Trust Custodian from the Issuer.
Section 7. Advice of Counsel.
The Custodian may rely and act on the advice of counsel, including
in-house counsel, with respect to its performance under this Agreement as
Custodian and shall not be liable for any action reasonably taken pursuant to
advice of counsel.
Section 8. Representations and Warranties.
The Custodian represents and warrants that on the Closing Date:
(a) it is a corporation duly organized, validly existing, and in good
standing under the laws of its place of incorporation;
(b) it has full power and authority to execute, deliver, and perform
this Agreement, and has taken all necessary action to authorize the execution,
delivery, and performance by it of this Agreement;
(c) the consummation of the transactions contemplated by this
Indenture and the fulfillment of its terms do not conflict with, result in any
breach of, or constitute (with or without notice or lapse of time) a default
under, the certificate of incorporation or bylaws of the Custodian or any
agreement or other instrument to which it is a party or by which it is bound;
(d) to the Custodian's best knowledge, no proceedings or
investigations concerning the Custodian are pending or threatened before any
court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over it or its properties:
(1) asserting the invalidity of this Agreement,
(2) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, or
(3) seeking any determination that might affect its
performance of its obligations under this Agreement or the validity
or enforceability of this Agreement; and
(e) it is acting solely as the agent for the Indenture Trustee.
Section 9. Effective Period, Termination, and Amendment, and Interpretive
and Additional Provisions.
This Agreement shall become effective as of its date and shall
continue in full force until terminated in accordance with its terms. This
Agreement may be terminated by either the Indenture Trustee with the consent
of the Issuer and the Credit Enhancer or by the Custodian in a writing
delivered or mailed, postage prepaid, to the other parties and the Credit
Enhancer. The termination shall take effect no sooner than sixty days after
the date of delivery or mailing. Concurrently with, or as soon as practicable
after, the termination of this Agreement, the
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Indenture Custodian shall deliver the Collateral to the Indenture Trustee (or
to a person designated by the Indenture Trustee) anywhere the Indenture
Trustee reasonably designates with the consent of the Credit Enhancer, and the
Trust Custodian shall deliver any items held exclusively for the Issuer to the
Issuer (or to a person designated by the Issuer) anywhere the Issuer
reasonably designates with the consent of the Credit Enhancer.
Section 10. Limitation of Liability.
(a) The Custodian undertakes to perform only the obligations
specified in this Agreement. The Issuer, the Owner Trustee, Master Servicer,
and Indenture Trustee acknowledge that no implied obligations exist under this
Agreement. Neither the Custodian nor any of its affiliates, officers,
directors, employees, or agents shall be liable, directly or indirectly, for
any damages or expenses arising out of the services performed under this
Agreement other than damages that result from their gross negligence, willful
misconduct, or bad faith. The Custodian and its officers, directors,
employees, and agents will not be liable for any consequential, indirect,
punitive, or special damages.
(b) Except as provided in Section 2, the Custodian makes no warranty
or representation and has no responsibility for the completeness, validity,
sufficiency, value, genuineness, ownership, or transferability of the Mortgage
Loans or any of the documents in the Mortgage Files.
(c) The Custodian need not expend or risk its own funds or otherwise
incur financial liability in the performance of any of its duties under this
Agreement, or in the exercise of its rights, if the Custodian believes that
repayment of the funds or adequate indemnity against the risk or liability is
not reasonably assured to it.
(d) Without limiting the generality of the foregoing, the Custodian
may rely on and shall be protected in acting in good faith on any notice or
other communication received by it that it reasonably believes to be genuine
and duly authorized with respect to all matters pertaining to this Agreement
and its duties under this Agreement.
(e) The Custodian shall not be responsible or liable for, and makes
no representation or warranty with respect to, the validity, adequacy, or
perfection of any lien on or security interest in any Mortgage Loan.
(f) Any other provision of this Agreement to the contrary
notwithstanding, the Custodian shall have no notice of, and shall not be bound
by, any other document or agreement executed or delivered in connection with,
or intended to control any part of, the transactions anticipated by or
referred to in this Agreement unless the Custodian is a signatory party to
that document or agreement. Notwithstanding the foregoing sentence, the
Custodian shall be deemed to have notice of the terms (including definitions
not otherwise set forth in full in this Agreement) of other documents and
agreements executed or delivered in connection with, or intended to control
any part of, the transactions anticipated by or referred to in this Agreement,
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to the extent the terms are referenced, or are incorporated by reference, into
this Agreement only as long as the Indenture Trustee has provided a copy of
the document or agreement to the Custodian.
(g) The Custodian shall have only the obligations expressly set forth
in this Agreement or in a written amendment to this Agreement executed by the
parties to this Agreement or their successors and assigns. If any provision of
this Agreement implies or requires that action or forbearance be taken by a
party, but is silent as to which party has the duty to act or refrain from
acting, the parties agree that the Custodian shall not be the party required
to take the action or refrain from acting. In no event shall the Custodian
have any responsibility to ascertain or take action except as expressly
provided in this Agreement.
(h) Nothing in this Agreement shall impose on the Custodian any duty
to qualify to do business in any jurisdiction, other than (i) any jurisdiction
where any Mortgage File is or may be held by the Custodian from time to time
under this Agreement, and (ii) any jurisdiction where its ownership of
property or conduct of business requires such qualification and where failure
to qualify could have a material adverse effect on the Custodian or its
property or business or on the ability of the Custodian to perform its duties
under this Agreement.
(i) The Custodian may execute any of its duties under this Agreement
through any of its agents, attorneys-in-fact, or affiliates. Any agent,
attorney-in-fact, or affiliate of the Custodian (and any affiliate's
directors, officers, agents, and employees) that performs duties in connection
with this Agreement shall be entitled to the same benefits of the
indemnification, waiver, and other protective provisions to which the
Custodian is entitled under this Agreement, but the Custodian shall remain
responsible for the performance of those duties.
(j) The Custodian shall not be responsible for delays or failures in
performance resulting from acts beyond its control. Acts beyond its control
include acts of God, strikes, lockouts, riots, acts of war or terrorism,
epidemics, nationalization, expropriation, currency restrictions, governmental
regulations superimposed after the fact, fire, communication line failures,
computer viruses, power failures, earthquakes, or other disasters.
Section 11. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS
THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 12. Amendment.
This agreement may not be amended without the written consent of all
the parties and the Credit Enhancer.
B-8
Section 13. Notices.
All notices, demands, instructions, consents, and other
communications required or permitted under this Agreement shall be in writing
and shall be personally delivered or sent by first class or express mail
(postage prepaid), national overnight courier service, or by facsimile
transmission or other electronic communication device capable of transmitting
or creating a written record (confirmed by first class mail) and shall be
considered to be given for purposes of this Agreement on the day that the
writing is delivered when personally delivered or sent by facsimile or
overnight courier or three Business Days after it was sent to its intended
recipient if sent by first class mail. Unless otherwise specified in a notice
sent or delivered in accordance with the provisions of this Section, notices,
demands, instructions, consents, and other communications in writing shall be
given to or made on the respective parties at their respective addresses
indicated below:
if to the Issuer at:
CWHEQ Revolving Home Equity Loan Trust, Series 2005-M
Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration
if to the Depositor at:
CWHEQ, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
if to the Master Servicer at
Countrywide Home Loans, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
if to the Indenture Trustee at
the Corporate Trust Office
if to the Custodian at
Treasury Bank, a division of Countrywide Bank, N.A.
0000 Xxxx Xxx Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Document Custodian
B-9
if to the Credit Enhancer at
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Insured Portfolio Management-Structured
Finance ("IPM-SF")
(CWHEQ Revolving Home Equity Loan Trust,
Series 2005-M)
Section 14. Binding Effect.
This Agreement shall be binding on and inure to the benefit of the
parties to this Agreement and their respective successors and assigns. Except
as contemplated in this Agreement, none of the parties may assign any of its
rights and obligations under this Agreement or any interest in this Agreement
without the consent of the other parties and the Credit Enhancer. The
Custodian may assign its rights and obligations under this Agreement, in whole
or in part, to any affiliate with the consent of the Credit Enhancer. The
Custodian agrees to notify the other parties and the Credit Enhancer of any
assignment. An affiliate is any entity that directly or indirectly is under
common control with the Custodian, or is under contract to be under common
control with the Custodian, and includes a subsidiary or parent company of the
Custodian.
Section 15. Counterparts.
This Agreement may be executed in one or more counterparts and by the
different parties to this Agreement on separate counterparts, each of which,
when so executed, shall be an original and all of which shall constitute one
agreement.
Section 16. Severability of Provisions.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of the prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of the provision in any other jurisdiction.
Section 17. Third Party Beneficiary.
The Credit Enhancer is a third party beneficiary of this Agreement.
Section 18. Merger of Custodian.
Any entity into which the Custodian may be merged or converted or
with which it may be consolidated, or any entity resulting from any merger,
conversion, or consolidation to which the Custodian is a party, or any entity
succeeding to the business of the Custodian, shall be the successor of the
Custodian under this Agreement, without the execution or filing of any paper
or any further act on the part of any of the parties to this Agreement,
anything in this Agreement to the contrary notwithstanding.
Section 19. Indemnification.
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The Issuer agrees to indemnify the Custodian and its affiliates,
directors, officers, agents, and employees, against any losses, claims,
damages, or liabilities of any kind, including reasonable attorneys' fees,
that may arise against Custodian or its affiliates, directors, officers,
agents, or employees, in any way arising out of this Agreement or any action
taken or not taken by Custodian or its permitted successors and assigns under
this Agreement unless they arise because of the breach by the Custodian of its
obligations under this Agreement, which breach was caused by the gross
negligence, lack of good faith, or willful misconduct on the part of Custodian
or any of its affiliates, directors, officers, agents, or employees.
The Custodian agrees to indemnify the Issuer against any losses,
claims, damages, or liabilities of any kind, including reasonable attorneys'
fees, it suffers arising out of the gross negligence, lack of good faith, or
willful misconduct on the part of Custodian or any of its affiliates,
directors, officers, agents, or employees.
The foregoing indemnifications shall survive any termination or
expiration of this Agreement or the resignation or removal of the Custodian.
Section 20. Dispute Resolution, Arbitration.
This Agreement evidences a transaction involving interstate commerce.
Any disputes arising from this Agreement shall be decided by binding
arbitration which shall be conducted, at the request of any party, in New
York, New York, before one arbitrator designated by the American Arbitration
Association (the "AAA"), in accordance with the Commercial Arbitration Rules
of the AAA, and to the maximum extent applicable, the United States
Arbitration Act (Title 9 of the United States Code). Notwithstanding anything
in this Agreement to the contrary, any party may proceed to a court of
competent jurisdiction to obtain equitable relief at any time. An arbitrator
shall have no authority to award punitive damages or other damages not
measured by the prevailing party's actual damages. To the maximum extent
practicable, an arbitration proceeding under this Agreement shall be concluded
within 180 days of the filing of the dispute with the AAA. This arbitration
clause shall survive any termination, amendment, or expiration of the
Agreement and if any provision of this arbitration clause is found to be
unenforceable, the remaining parts of the arbitration clause shall not be
affected and shall remain fully enforceable.
Section 21. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of the Issuer, in the
exercise of the powers and authority conferred and vested in it under the
Trust Agreement, (b) each of the representations, undertakings and agreements
herein made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but
is made and intended for the purpose of binding only the Issuer and (c) under
no circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or
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be liable for the breach or failure of any obligations, representation,
warranty or covenant made or undertaken by the Issuer under this Agreement or
the other related documents.
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In Witness Whereof, each of the parties has caused this Agreement to
be executed by a duly authorized officer as of the day and year first above
written.
CWHEQ, Inc.
By: _______________________________
Name:
Title:
CWHEQ Revolving Home Equity Loan Trust,
Series 2005-M
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee
By: _______________________________
Name:
Title:
JPMorgan Chase Bank, N.A.,
not in its individual capacity but
solely as Indenture Trustee
By: _______________________________
Name:
Title:
Treasury Bank, a Division of Countrywide
Bank, N.A.,
as Custodian for the Indenture Trustee
By: _______________________________
Name:
Title:
Treasury Bank, a Division of Countrywide
Bank, N.A.,
as Custodian for the Issuer
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By: _______________________________
Name:
Title:
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EXHIBIT A
TO THE CUSTODIAL AGREEMENT
FORM OF INITIAL CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Credit Enhancer]
---------------------
---------------------
Re: Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer,
CWHEQ Revolving Home Equity Loan Trust, Series 2005-M, as the
Trust, and JPMorgan Chase Bank, N.A., as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes, Series 2005-M
-------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Custodian for the Indenture Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule delivered pursuant to
Section 2.01(d) of the Sale and Servicing Agreement (other than any Mortgage
Loan paid in full or any Mortgage Loan listed on the attached Document
Exception Report) it has received, among other things:
(i) the original Mortgage Note endorsed in blank or, if the
original Mortgage Note has been lost or destroyed and not replaced,
an original lost note affidavit from the Sponsor stating that the
original Mortgage Note was lost, misplaced or destroyed, together
with a copy of the related Mortgage Note; and
(ii) unless the Mortgage Loan is registered on the MERS(R)
System, an original Assignment of Mortgage in blank in recordable
form.
B-A-1
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face (i.e. are not
mutilated, damaged, defaced, torn, or otherwise physically altered) and
related to such Mortgage Loan.
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction,
or whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether
any signature on any document is genuine, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
Treasury Bank, a Division of Countrywide Bank,
N.A.,
as Custodian for the Indenture Trustee
By:____________________________
Name:
Title:
B-A-2
EXHIBIT B
TO THE CUSTODIAL AGREEMENT
FORM OF DELAY DELIVERY CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Credit Enhancer]
---------------------
---------------------
Re: Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer,
CWHEQ Revolving Home Equity Loan Trust, Series 2005-M, as the
Trust, and JPMorgan Chase Bank, N.A., as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes, Series 2005-M
------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Custodian for the Indenture Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule delivered pursuant to
Section 2.01(d) of the Sale and Servicing Agreement (other than any Mortgage
Loan paid in full or any Mortgage Loan listed on the attached Document
Exception Report) it has received, among other things:
(i) the original Mortgage Note endorsed in blank or, if the
original Mortgage Note has been lost or destroyed and not replaced,
an original lost note affidavit from the Sponsor stating that the
original Mortgage Note was lost, misplaced or destroyed, together
with a copy of the related Mortgage Note; and
(ii) unless the Mortgage Loan is registered on the MERS(R)
System, an original Assignment of Mortgage in blank in recordable
form.
B-B-1
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face (i.e. are not
mutilated, damaged, defaced, torn, or otherwise physically altered) and
related to such Mortgage Loan.
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction,
or whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether
any signature on any document is genuine, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
Treasury Bank, a Division of Countrywide Bank,
N.A.,
as Custodian for the Indenture Trustee
By:____________________________
Name:
Title:
B-B-2
EXHIBIT C
TO THE CUSTODIAL AGREEMENT
FORM OF FINAL CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Credit Enhancer]
---------------------
---------------------
Re: Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer,
CWHEQ Revolving Home Equity Loan Trust, Series 2005-M, as the
Trust, and JPMorgan Chase Bank, N.A., as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes, Series 2005-M
------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Custodian for the Indenture Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attached Document Exception
Report) it has received:
(i) the original Mortgage Note endorsed in blank or, if the
original Mortgage Note has been lost or destroyed and not replaced,
an original lost note affidavit from the Sponsor stating that the
original Mortgage Note was lost, misplaced or destroyed, together
with a copy of the related Mortgage Note;
(ii) unless the Mortgage Loan is registered on the MERS(R)
System, an original Assignment of Mortgage in blank in recordable
form;
B-C-1
(iii) the original recorded Mortgage, noting the presence of
the MIN of the Mortgage Loan and language indicating that the
Mortgage Loan is a MOM Loan if the Mortgage Loan is a MOM Loan, or,
if, in connection with any Mortgage Loan, the original recorded
Mortgage with evidence of recording thereon cannot be delivered on or
before the Closing Date because of a delay caused by the public
recording office where such original Mortgage has been delivered for
recordation or because such original Mortgage has been lost, an
accurate copy of such Mortgage, together with (i) in the case of a
delay caused by the public recording office, an Officer's Certificate
of the Sponsor which may be in the form of a blanket certificate of
the Sponsor covering more than one Mortgage stating that such
original Mortgage has been dispatched to the appropriate public
recording official or (ii) in the case of an original Mortgage that
has been lost, a copy certified by the appropriate county recording
office where such Mortgage is recorded;
(iv) if applicable, the original of each intervening
assignment needed for a complete chain of title for the mortgage from
its original mortgagee or beneficiary to the Trust (or if the
Mortgage Loan is registered on the MERS(R) System to MERS and noting
the presence of a MIN) with evidence of recording thereon, or, if any
such original intervening assignment has not been returned from the
applicable recording office or has been lost, a true and correct copy
thereof, together with (i) in the case of a delay caused by the
public recording office, an Officer's Certificate of the Sponsor or
the Depositor, which may be a blanket certificate covering more than
one intervening assignment, stating that such original intervening
assignment has been dispatched to the appropriate public recording
official for recordation or (ii) in the case of an original
intervening assignment that has been lost, a copy certified by the
appropriate county recording office where such Mortgage is recorded;
(v) a title policy, a signed binder or commitment for a
title policy, or a preliminary title report (in those states in which
preliminary title reports are the customary form of title policy
commitment) for each Mortgage Loan with a Credit Limit in excess of
$100,000;
(vi) the original of any guaranty executed in connection
with the Mortgage Note;
(vii) the original of each assumption, modification,
consolidation or substitution agreement, if any, relating to the
Mortgage Loan; and
(viii) any security agreement, chattel mortgage or
equivalent instrument executed in connection with the Mortgage.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face (i.e. are not
mutilated, damaged, defaced, torn, or otherwise physically altered) and
related to such Mortgage Loan, and (b) the information set
B-C-2
forth in items (ii), (iii), and (iv), of the itemization of contents of the
"Mortgage Loan Schedule" in the Adoption Annex to the Indenture accurately
reflects information set forth in the Mortgage File, and (c) the information
set forth in item (v) of the itemization of contents of the "Mortgage Loan
Schedule" in the Adoption Annex to the Indenture was delivered to the
Custodian.
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction,
or whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether
any signature on any document is genuine, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
Treasury Bank, a Division of Countrywide Bank,
N.A.,
as Custodian for the Indenture Trustee
By:____________________________
Name:
Title:
B-C-3
EXHIBIT D
TO THE CUSTODIAL AGREEMENT
FORM OF FURTHER FINAL CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Credit Enhancer]
---------------------
---------------------
Re Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer,
CWHEQ Revolving Home Equity Loan Trust, Series 2005-M, as the
Trust, and JPMorgan Chase Bank, N.A., as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes, Series 2005-M
------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Custodian for the Indenture Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attached Document Exception
Report) it has received:
(i) for each Mortgage Loan with a Credit Limit in excess of
$100,000, a final original title policy.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face (i.e. are not
mutilated, damaged, defaced, torn, or otherwise physically altered) and
related to such Mortgage Loan.
B-D-1
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction,
or whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether
any signature on any document is genuine, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
Treasury Bank, a Division of Countrywide Bank,
N.A.,
as Custodian for the Indenture Trustee
By: ________________________
Name:
Title:
B-D-2
Annex 1
Definitions
"Accelerated Principal Payment Amount" for each Payment Date after
the sixth Payment Date and each Class of Notes means the amount of Investor
Interest Collections applied on that Payment Date as a payment of principal to
decrease the Note Principal Balance of the Classes of Notes until the
difference between the Note Principal Balance and the Loan Pool Balance is an
amount equal to the Required Transferor Subordinated Amount for the Payment
Date.
"Act" has the meaning specified in Section 11.03(a).
"Additional Balance" as to any Mortgage Loan means the aggregate
amount of all additional borrowings by the mortgagor under the relevant Credit
Line Agreement after the Cut-off Date or the related Subsequent Cut-off Date,
as applicable, for the Mortgage Loan.
"Additional Home Equity Loans" means the Mortgage Loans funded after
the Cut-off Date acquired by the Trust on a Subsequent Closing Date pursuant
to Section 2.01(b) of the Sale and Servicing Agreement.
"Additional Loan Account" means the trust account maintained by the
Indenture Trustee into which is deposited on the Closing Date the amount
specified in the Adoption Annex. The account will be an Eligible Account, and
will be available only for purchases of Additional Home Equity Loans.
"Adjustment Date" for any Interest Period commencing with the second
Interest Period, the second LIBOR Business Day preceding the first day of the
Interest Period.
"Administration Agreement" means the Administration Agreement
specified in the Adoption Annex.
"Administrator" means the person acting as such under the
Administration Agreement.
"Adoption Annex" means Annex 2 to this Indenture.
"Aggregate Investor Interest" for each Payment Date and each Class of
Principal Amount Notes means the Note Interest for that Class of Principal
Amount Notes for the Payment Date and the Unpaid Investor Interest Shortfall
(other than any Basis Risk Carryforward) for the Payment Date.
"Alternative Principal Payment" for each Payment Date means the
Investor Fixed Allocation Percentage of the excess of the Principal
Collections for the Payment Date over the aggregate of Additional Balances
created during the related Collection Period.
"Applied Realized Loss Amounts" for the purpose of determining and
paying any amounts of principal or interest owed by the Credit Enhancer under
the Policy with respect to
Xxx-1-1
any Class of Principal Amount Notes means zero, and otherwise on any Payment
Date means the excess of
o the aggregate Note Principal Balance of Principal Amount
Notes (after any amount paid by the Note Insurer pursuant to the
Policy for the Payment Date) over
o the sum of the Loan Pool Balance and the amount on deposit
in the related Additional Loan Account.
"Asset Balance" on any day for any Mortgage Loan other than a
liquidated mortgage loan means its Cut-off Date Asset Balance, plus any
Additional Balance for the Mortgage Loan, minus all collections credited as
principal against the Asset Balance of the Mortgage Loan in accordance with
the related Credit Line Agreement. A liquidated mortgage loan is any Mortgage
Loan that as of the end of the related Collection Period the Master Servicer
has determined in accordance with the servicing standards in the Sale and
Servicing Agreement that all liquidation proceeds that it expects to recover
on the Mortgage Loan or the related Mortgaged Property have been recovered.
"Assignment of Mortgage" for any mortgage means an assignment, notice
of transfer, or equivalent instrument, in recordable form, sufficient under
the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the mortgage to the Trust, which assignment,
notice of transfer, or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged
Properties located in the same jurisdiction.
"Authorized Officer" for any corporation or other entity establishing
such designations means the Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer, President, Executive Vice President, any Vice
President, the Secretary, or the Treasurer of the corporation, for any
partnership means any of its general partners, and for any person means any
person who is identified on a list of Authorized Officers delivered by the
person to the Indenture Trustee on the Closing Date. These lists may be
updated from time to time.
"Available Investor Interest" for any Payment Date means the sum of
the following amounts, but in each case only to the extent they will be
available to be applied to make payments to the Classes of Interest Bearing
Notes pursuant to Section 8.03(a) on the Payment Date:
o Investor Interest Collections on deposit in the Collection
Account or the Payment Account as of the close of business on the
third Business Day preceding the Payment Date,
o the funds to be deposited into the Collection Account or
the Payment Account as a single deposit on the Business Day preceding
the Payment Date in accordance with Section 3.03(i) and Section
3.03(ii) (but only to the extent of Interest Collections) of the Sale
and Servicing Agreement, as reported by the Master Servicer to
Xxx-1-2
the Credit Enhancer in the servicing certificate delivered on the
related Determination Date,
o the amount on deposit in the Collection Account or the
Payment Account for the Payment Date as of the close of business on
the preceding Determination Date for optional advances by the Master
Servicer made pursuant to Section 4.03 of the Sale and Servicing
Agreement, and
o the Subordinated Transferor Collections on deposit in the
Collection Account or the Payment Account on the third Business Day
preceding the Payment Date.
"Available Transferor Subordinated Amount" for any Payment Date means
an amount equal to the lesser of the Required Transferor Subordinated Amount
for the Payment Date and the Transferor Interest.
"Basis Risk Carryforward" for any Payment Date and Class of Principal
Amount Notes means the sum of
o Basis Risk Carryforward for that Class of Principal Amount
Notes remaining unpaid from prior Payment Dates,
o in any Interest Period in which the related Note Rate is
the Maximum Rate, the excess of
(a) the amount of interest that would have accrued on that
Class of Principal Amount Notes during the related Interest Period
had interest been determined pursuant to the Interest Formula Rate
over
(b) the interest actually accrued at the related Note Rate
on that Class of Principal Amount Notes during the Interest Period,
and
o interest at the related Interest Formula Rate (as adjusted
from time to time) on Basis Risk Carryforward for that Class of
Principal Amount Notes remaining unpaid from prior Payment Dates for
the period from previous Payment Date to the current the Payment
Date.
Basis Risk Carryforward will not be included in interest payments on
a Class of Notes for any Payment Date whose related Note Rate is the Maximum
Rate and will be paid on future Payment Dates only to the extent funds are
available therefor under Section 8.03(a)(x).
"Basis Risk Carryforward Reserve Fund" means the Eligible Account
established and maintained by the Indenture Trustee on behalf of and for the
benefit of the Principal Amount Notes pursuant to Section 8.01(c).
"Billing Cycle" for any Mortgage Loan and Collection Period means the
billing period specified in the related Credit Line Agreement and with respect
to which amounts billed are received during the Collection Period.
Xxx-1-3
"Book-Entry Notes" has the meaning given to it in the Adoption Annex.
"Business Day" means any day other than a Saturday, a Sunday, or a
day on which banking institutions in New York, California, or Illinois are
authorized or obligated by law, regulation, or executive order to remain
closed.
"Class" means a Class of Notes listed in the Adoption Annex.
"Class A-IO Note" has the meaning given to it in the Adoption Annex.
"Class A-IO Note Rate" has the meaning given to it in the Adoption
Annex.
"Closing Date" means the Closing Date stated in the Adoption Annex.
"Code" means the Internal Revenue Code of 1986 and Treasury
regulations promulgated under the Code.
"Collateral" has the meaning given to it in the Granting Clause.
"Collection Account" means the account so designated established by
the Master Servicer pursuant to the Sale and Servicing Agreement.
"Collection Period" for any Payment Date and any Mortgage Loan means
the calendar month preceding the month of the Payment Date (or, in the case of
the first Collection Period, the period from the Cut-off Date through the date
specified in the Adoption Annex).
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business is
administered specified in the Adoption Annex, or at any other address the
Indenture Trustee designates by notice to the Noteholders and the Issuer, or
the principal corporate trust office of any successor Indenture Trustee at the
address designated by the successor Indenture Trustee by notice to the
Noteholders and the Issuer.
"Credit Enhancement Draw Amount" for each Class of Principal Amount
Notes means (a) for each Payment Date, the excess of the Guaranteed Payment
for the Payment Date over the Available Investor Interest for the Payment Date
and (b) for each applicable date in accordance with the Policy, the Preference
Amount for the relevant date.
"Credit Enhancer" means the Credit Enhancer identified in the
Adoption Annex.
"Credit Enhancer Default" means the failure by the Credit Enhancer to
make a payment required under the Policy in accordance with its terms.
"Credit Limit" means the maximum Asset Balance for each Mortgage Loan
permitted under the terms of the related Credit Line Agreement.
"Credit Line Agreement" means the related credit line account
agreement for a Mortgage Loan executed by the related mortgagor and any
amendment or modification of it.
Xxx-1-4
"Custodial Agreement" means the Custodial Agreement specified in the
Adoption Annex.
"Cut-off Date" means the Cut-off Date specified in the Adoption Annex.
"Cut-off Date Asset Balance" for any Initial Mortgage Loan acquired
by the Trust on the Closing Date means its unpaid principal balance as of the
close of business on the Initial Cut-off Date, and for any Additional Home
Equity Loan means its unpaid principal balance as of the close of business on
the relevant Subsequent Cut-off Date.
"Depositor" means CWHEQ, Inc., a Delaware corporation, or its
successor in interest.
"Depository" means a financial institution or other person
maintaining ownership records and effecting book-entry transfers and pledges
of the Notes deposited with it pursuant to an agreement with the Issuer. The
Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(a)(5) of the UCC of the State of New York.
"Determination Date" for any Payment Date means the third Business
Day before the Payment Date.
"Eligible Account" means
(a) an account that is maintained with a depository institution whose
debt obligations throughout the time of any deposit in it have one of the two
highest short-term debt ratings by Standard & Poor's and the highest
short-term debt rating by Moody's,
(b) an account with a depository institution having a minimum
long-term unsecured debt rating of "AA-" by Standard & Poor's and "Baa3" by
Moody's, which accounts are fully insured by either the Savings Association
Insurance Fund or the Bank Insurance Fund of the Federal Deposit Insurance
Corporation,
(c) a segregated trust account maintained with the Indenture Trustee
or an affiliate of the Indenture Trustee in its fiduciary capacity, or
(d) an account otherwise acceptable to each Rating Agency and the
Credit Enhancer, as evidenced at closing by delivery of a rating letter by
each Rating Agency and thereafter by delivery of a letter from
(i) each Rating Agency to the Indenture Trustee, within 30
days of receipt of notice of the deposit, to the effect that the
deposit will not cause the Rating Agency to reduce or withdraw its
then-current rating of the Notes (without regard to the Policy) and
(ii) from the Credit Enhancer to the Indenture Trustee,
within 30 days of receipt of notice of the deposit, to the effect
that the account is acceptable to it.
"Eligible Investments" means
Xxx-1-5
(a) obligations of, or guaranteed as to principal and interest by,
the United States or any U.S. agency or instrumentality that is backed by the
full faith and credit of the United States;
(b) general obligations of or obligations guaranteed by any State
receiving the highest long-term debt rating of each Rating Agency, or any
lower rating that will not result in a downgrade or withdrawal of the rating
then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(c) commercial paper issued by Countrywide Home Loans, Inc. or any of
its affiliates if it is rated no lower than A-1 by Standard & Poor's and P-2
by Moody's, and the long-term debt of Countrywide Home Loans, Inc. is rated at
least A3 by Moody's, or any lower ratings that will not result in a downgrade
or withdrawal of the rating then assigned to the Notes by any Rating Agency
(without regard to the Policy);
(d) commercial or finance company paper that is then receiving the
highest commercial or finance company paper rating of each Rating Agency, or
any lower ratings that will not result in a downgrade or withdrawal of the
rating then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(e) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company incorporated
under the laws of the United States or any State and subject to supervision
and examination by federal or State banking authorities, if the commercial
paper or long term unsecured debt obligations of the depository institution or
trust company (or in the case of the principal depository institution in a
holding company system, the commercial paper or long-term unsecured debt
obligations of the holding company, but only if Xxxxx'x is not a Rating
Agency) are then rated in one of the two highest long-term and the highest
short-term ratings of each Rating Agency for the securities, or any lower
ratings that will not result in a downgrade or withdrawal of the rating then
assigned to the Notes by any Rating Agency (without regard to the Policy);
(f) demand or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that the deposits
are fully insured by the FDIC;
(g) guaranteed reinvestment agreements issued by any bank, insurance
company, or other corporation that, at the time of the issuance of the
agreements, will not result in a downgrade or withdrawal of the rating then
assigned to the Notes by any Rating Agency (without regard to the Policy);
(h) repurchase obligations with respect to any security described in
clauses (a) and (b) above, in either case entered into with a depository
institution or trust company (acting as principal) described in clause (e)
above;
(i) securities (other than stripped bonds, stripped coupons, or
instruments sold at a purchase price in excess of 115% of its face amount)
bearing interest or sold at a discount
Xxx-1-6
issued by any corporation incorporated under the laws of the United States or
any State that, at the time of the investment, have one of the two highest
ratings of each Rating Agency (except if the Rating Agency is Moody's, the
rating must be the highest commercial paper rating of Moody's for the
securities), or any lower ratings that will not result in a downgrade or
withdrawal of the rating then assigned to the Notes by any Rating Agency
(without regard to the Policy) as evidenced by a signed writing delivered by
each Rating Agency;
(j) interests in any money market fund that, at the date of
acquisition of the interests in the fund and throughout the time the interests
are held in the fund, have the highest applicable rating by each Rating
Agency, or any lower ratings that will not result in a downgrade or withdrawal
of the rating then assigned to the Notes by any Rating Agency (without regard
to the Policy);
(k) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the United States
or any State that, on the date of acquisition, have been rated by each Rating
Agency in their respective highest applicable rating category, or any lower
ratings that will not result in a downgrade or withdrawal of the rating then
assigned to the Notes by any Rating Agency (without regard to the Policy); and
(l) any other investments having a specified stated maturity and
bearing interest or sold at a discount acceptable to each Rating Agency that
will not result in a downgrade or withdrawal of the rating then assigned to
the Notes by any Rating Agency (without regard to the Policy), as evidenced by
a signed writing delivered by each Rating Agency and that is a cash flow
investment within the meaning of Section 860G(a)(5)(A) of the Code and Section
1.860G-2(g)(1) of the Treasury Regulations promulgated under the Code;
No Eligible Investment may evidence either the right to receive (a)
only interest on the obligations underlying these instruments or (b) both
principal and interest payments from obligations underlying these instruments
where the interest and principal payments on the instruments provide a yield
to maturity at par greater than 120% of the yield to maturity at par of the
underlying obligations. No Eligible Investment may be purchased at a price
greater than par if that instrument may be prepaid or called at a price less
than its purchase price before stated maturity.
In addition, no amount beneficially owned by any REMIC (including any
amounts collected by the Master Servicer but not yet deposited in the
Collection Account) may be invested in investments (other than money market
funds) treated as equity interests for federal income tax purposes, unless the
Master Servicer receives an Opinion of Counsel to the effect that the
investment will not adversely affect the status of any REMIC created under the
Trust Agreement as a REMIC under the Code or result in imposition of a tax on
it.
"ERISA" means the Employee Retirement Income Security Act of 1974.
Xxx-1-7
"Event of Default" has the meaning specified in Section 5.01.
"Excess Overcollateralization Amount" for a Payment Date means the
lesser of
(a) the Scheduled Principal Collections Payment Amount
before reduction for the current Excess Overcollateralization Amount
and
(b) the excess of
(i) the Transferor Interest over
(ii) the Required Transferor Subordinated Amount.
"Exchange Act" means the Securities Exchange Act of 1934.
"Grant" means mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, and xxxxx x xxxx on and a Security
Interest in and a right of set-off against, deposit, set over, and confirm
pursuant to the Indenture. A Grant of the Collateral or of any other agreement
or instrument includes all rights (but none of the obligations) of the
granting party under the agreement or instrument, including the immediate and
continuing right after an Event of Default to claim for, collect, receive, and
give receipt for principal and interest payments on the Collateral and all
other moneys payable on the Collateral, to require the repurchase of Mortgage
Loans, to give and receive notices and other communications, to make waivers
or other agreements, to exercise all rights, to bring Proceedings in the name
of the granting party or otherwise, and generally to do and receive anything
that the granting party is or may be entitled to do or receive regarding the
Collateral.
"Guaranteed Payment" for each Class of Notes and any Payment Date
means the sum of the Guaranteed Principal Payment Amount plus the Aggregate
Investor Interest for the Principal Amount Notes for that Payment Date.
"Guaranteed Principal Payment Amount" for each Class of Principal
Amount Notes means:
(a) on their Scheduled Maturity Date, the outstanding Note Principal
Balance (after giving effect to all other allocations and payments that
Payment Date)
(b) for any other Payment Date, if the Available Transferor
Subordinated Amount has been reduced to zero or below, the excess of
o the Note Principal Balance (after giving effect to all
allocations and payments on the Principal Amount Notes from all
sources other than the Policy on that Payment Date) over
o the sum of the Loan Pool Balance (at the end of the
related Collection Period) and the amount in the related Additional
Loan Account; and
(c) on any other Payment Date, zero.
Xxx-1-8
"Holder" or "Noteholder" means the person in whose name a Note is
registered in the Note Register.
"Incipient Default" means any occurrence that is, or with notice or
lapse of time or both would become, an Event of Default.
"Indenture" means this Indenture.
"Indenture Trustee" means the Indenture Trustee identified in the
Adoption Annex, as Indenture Trustee under this Indenture, or any successor
Indenture Trustee under this Indenture.
"Independent" means that a person
o is in fact independent of the Issuer, any other obligor on
the Notes, the Transferor, and any affiliate of any of them,
o does not have any direct financial interest or any
material indirect financial interest in the Issuer, any other obligor
on the Notes, the Transferor, or any affiliate of any of them, and
o is not connected with the Issuer, any other obligor on the
Notes, the Transferor, or any affiliate of any of them as an officer,
employee, promoter, underwriter, trustee, partner, director, or
person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee made by an Independent appraiser or other
expert appointed by an Issuer Order and approved by the Indenture Trustee in
the exercise of reasonable care and the Credit Enhancer, and the opinion or
certificate states that the Issuer has read the definition of "Independent" in
this Indenture and that the signer is Independent.
"Initial Cut-off Date" means the Initial Cut-off Date specified in
the Adoption Annex.
"Initial Mortgage Loan" means any Mortgage Loan transferred to the
Trust on the Closing Date.
"Insolvency Event" regarding a specified person means
(a) the person generally fails to pay its debts as they become due or
admits in writing its inability to pay its debts generally as they become due;
(b) the person has a decree or order for relief by a court or agency
or supervisory authority having jurisdiction in the premises entered against
it or any substantial part of its property in an involuntary case under any
applicable bankruptcy, insolvency, or other similar law and the decree or
order remains unstayed and in effect for a period of 60 days;
(c) the person has a conservator, receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official appointed for it or for
all or any substantial part of its property in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities, or other
Xxx-1-9
similar proceedings, and the decree or order remains unstayed and in effect
for a period of 60 days;
(d) the person's business is ordered to be wound-up or liquidated or
the person's business is subject to readjustment of debt, marshalling of
assets and liabilities, or other similar proceedings, and the decree or order
or the proceedings remain unstayed and in effect for a period of 60 days; or
(e) the person commences a voluntary case under any applicable
bankruptcy, insolvency, or other similar law, or consents to the entry of an
order for relief in an involuntary case under any such law, or consents to the
appointment of or taking possession by a conservator, receiver, liquidator,
assignee for the benefit of creditors, a custodian, trustee, sequestrator, or
similar official for the person or for all or any substantial part of its
property, or the person makes any general assignment for the benefit of
creditors.
"Insurance Agreement" means the insurance agreement identified in the
Adoption Annex.
"Insured Notes" has the meaning given to it in the Adoption Annex.
"Interest Bearing Notes" has the meaning given to it in the Adoption
Annex.
"Interest Collections" for each Payment Date and each Class of Notes
means
o the sum of all payments effected by mortgagors of Mortgage
Loans and any other amounts constituting interest collected by the
Master Servicer under the Mortgage Loans during the related
Collection Period plus
o any optional advance made by the Master Servicer pursuant
to Section 4.03 of the Sale and Servicing Agreement for which the
Master Servicer has not been reimbursed minus
o the Servicing Fee for the Collection Period.
These amounts include any net liquidation proceeds and net proceeds
from any insurer pursuant to any insurance policy covering a Mortgage Loan
allocable to interest on the applicable Mortgage Loan. These amounts exclude
any fees (including annual fees) or late charges or similar administrative
fees paid by the mortgagors. The related Credit Line Agreement shall determine
the portion of each payment on the Mortgage Loan that constitutes principal or
interest. Net liquidation proceeds are liquidation proceeds net of insurance
policy recoveries and out-of-pocket expenses (exclusive of overhead) that are
incurred by the Master Servicer in connection with the liquidation of any
Mortgage Loan.
"Interest Formula Rate" has the meaning given to it in the Adoption
Annex.
"Interest Period" for the first Payment Date means the period
beginning on the Closing Date and ending on the day preceding the first
Payment Date and for any other Payment Date
Xxx-1-10
means the period beginning on the preceding Payment Date and ending on the day
before the Payment Date.
"Investor Fixed Allocation Percentage" for any Payment Date is
calculated as provided in the Adoption Annex.
"Investor Floating Allocation Percentage" for any Payment Date means
the lesser of 100% and a fraction whose numerator is the aggregate Note
Principal Balance of the Classes of Principal Amount Notes and whose
denominator is the Loan Pool Balance, calculated as of the beginning of the
related Collection Period, plus the amount of funds in the Additional Loan
Account.
"Investor Interest Collections" for any Payment Date means the
deposits by the Master Servicer pursuant to Section 3.03 of the Sale and
Servicing Agreement plus the product of the Interest Collections received
during the related Collection Period and the Investor Floating Allocation
Percentage for the Payment Date.
"Investor Loss Amount" for any Payment Date means the product of the
Investor Floating Allocation Percentage for the Payment Date and the aggregate
of the liquidation loss amounts on the Mortgage Loans for the Payment Date.
Liquidation loss amounts for any Payment Date and any Mortgage Loan that
becomes a liquidated Mortgage Loan during the related Collection Period are
the unrecovered Asset Balance of the Mortgage Loan at the end of the
Collection Period after reducing the Asset Balance for the net liquidation
proceeds. Net liquidation proceeds are liquidation proceeds net of insurance
policy recoveries and out-of-pocket expenses (exclusive of overhead) that are
incurred by the Master Servicer in connection with the liquidation of any
Mortgage Loan.
"Investor Loss Reduction Amount" for a Payment Date means the portion
of the Investor Loss Amount for all prior Payment Dates that has not been
o paid to the Holders of the Classes of Principal Amount
Notes on the Payment Date pursuant to Section 8.03(a)(iv) or (v) or
pursuant to Section 8.03(c),
o accounted for by reducing the Transferor Interest pursuant
to Section 8.03(c), or
o funded by a Credit Enhancement Draw Amount.
"Investor Principal Collections" for a Payment Date means the
Investor Fixed Allocation Percentage of Principal Collections for the Payment
Date.
"Issuer" means CWHEQ Revolving Home Equity Loan Trust, Series 2005-M
until a successor replaces it and, after that, means its successor.
"Issuer Order" or "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Latest Subsequent Closing Date" means the date specified in the
Adoption Annex.
Xxx-1-11
"LIBOR" for any day means the rate for United States dollar deposits
for one month that appears on the Moneyline Telerate Screen Page 3750 as of
11:00 a.m., London time that day. If LIBOR does not appear on that page (or a
page replacing that page on that service or, if that service is no longer
offered, any other service for displaying LIBOR or comparable rates reasonably
selected by the Depositor after consultation with the Indenture Trustee and
obtaining the consent of the Credit Enhancer), the rate will be the Reference
Bank Rate.
"LIBOR Business Day" means any day other than of a Saturday, a
Sunday, or a day on which banking institutions in the State of New York or in
the City of London, England are required or authorized by law to be closed.
"Loan Pool Balance" for any Payment Date is the aggregate of the
Asset Balances of all Mortgage Loans as of the last day of the related
Collection Period.
"Loan Rate" for any Mortgage Loan and on any day means the per annum
rate of interest applicable under the Credit Line Agreement to the calculation
of interest for the day on the Asset Balance of the Mortgage Loan.
"Managed Amortization Period" means the period from the Closing Date
to the Rapid Amortization Commencement Date.
"Master Servicer" means Countrywide Home Loans, Inc., a New York
corporation and any successor.
"Maximum Principal Payment" for any Payment Date means the Investor
Fixed Allocation Percentage of the Principal Collections for the Payment Date.
"MERS" means Mortgage Electronic Registration Systems, Inc., a
Delaware corporation, or any successor to it.
"MERS(R) System" means the system of recording transfers of mortgages
electronically maintained by MERS.
"MIN" means the Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
"MOM Loan" means any Mortgage Loan as to which MERS is acting as
mortgagee, solely as nominee for the originator of the Mortgage Loan and its
successors and assigns.
"Moneyline Telerate Screen Page 3750" means the display designated as
page 3750 on the Moneyline Telerate Information Services, Inc. (or any page
replacing that page on that service for the purpose of displaying London
inter-bank offered rates of major banks).
"Moody's" means Xxxxx'x Investors Service, Inc. or its successor in
interest.
A "mortgage" is any conveyance to secure the performance of an
obligation including a deed of trust to secure debt and other comparable
security instruments.
"Mortgage File" for each of the Mortgage Loans means the following
documents:
Xxx-1-12
(i) the original Mortgage Note endorsed in blank or, if the
original Mortgage Note has been lost or destroyed and not replaced,
an original lost note affidavit from the Sponsor stating that the
original Mortgage Note was lost, misplaced, or destroyed, together
with a copy of the Mortgage Note;
(ii) unless the Mortgage Loan is registered on the MERS(R)
System, an original Assignment of Mortgage for the Mortgage Loan in
blank in recordable form;
(iii) the original recorded mortgage with evidence of
recording on it (noting the presence of the MIN of the Mortgage Loan
and language indicating that the Mortgage Loan is a MOM Loan if the
Mortgage Loan is a MOM Loan) or, if the original recorded mortgage
with evidence of recording on it cannot be delivered by the Closing
Date because of a delay caused by the public recording office where
the original mortgage has been delivered for recordation or because
the original mortgage has been lost, an accurate copy of the
mortgage, together with (i) in the case of a delay caused by the
public recording office, an Officer's Certificate of the Sponsor or
the Depositor, which may be a blanket certificate covering more than
one mortgage, stating that the original mortgage has been dispatched
to the appropriate public recording official for recordation or (ii)
in the case of an original mortgage that has been lost, a certificate
by the appropriate county recording office where the mortgage is
recorded;
(iv) if applicable, the original of each intervening
assignment needed for a complete chain of title for the mortgage from
its original mortgagee or beneficiary to the Trust or in blank (or,
if the Mortgage Loan is registered on the MERS(R) System, to MERS and
noting the presence of a MIN) with evidence of recording on them, or,
if any original intervening assignment has not been returned from the
applicable recording office or has been lost, a true copy of it,
together with in the case of a delay caused by the public recording
office, an Officer's Certificate of the Sponsor or the Depositor,
which may be a blanket certificate covering more than one intervening
assignment, stating that the original intervening assignment has been
dispatched to the appropriate public recording official for
recordation;
(v) a title policy for each Mortgage Loan with a Credit
Limit in excess of $100,000 or a copy of the lender's title policy or
a printout of the electronic equivalent and all riders thereto;
(vi) the original of any guaranty executed in connection
with the Mortgage Note;
(vii) the original of each assumption, modification,
consolidation, or substitution agreement relating to the Mortgage
Loan; and
(viii) any security agreement, chattel mortgage, or
equivalent instrument executed in connection with the Mortgage Loan;
Xxx-1-13
An optical image or other representation of a document specified in
clauses (iii) through (viii) above for a Mortgage Loan may be held by the
Indenture Trustee or assignee in lieu of the physical documents specified if
(a) as evidenced by an Opinion of Counsel delivered to and in form
and substance satisfactory to the Indenture Trustee and the Credit Enhancer,
(x) an optical image or other representation of the related
documents specified in clauses (iii) through (viii) above are
enforceable in the relevant jurisdictions to the same extent as the
original of the document and
(y) the optical image or other representation does not
impair the ability of an owner of the Mortgage Loan to transfer its
interest in the Mortgage Loan, and
(b) written confirmation that the retention of the documents in that
format will not result in a reduction in the then current rating of the Notes,
without regard to the Policy. A copy of any Opinion of Counsel shall in each
case be addressed and delivered to the Credit Enhancer.
"Mortgage Loan" means each of the mortgage loans, including
Additional Balances for it, that are transferred to the Trust pursuant to
Section 2.01(a) and (b) of the Sale and Servicing Agreement, together with all
related Mortgage Files, exclusive of Mortgage Loans that are retransferred to
the Depositor, the Master Servicer, or the Sponsor or purchased by the Master
Servicer pursuant to Section 2.02, 2.04, 2.06, or 3.06 of the Sale and
Servicing Agreement, held as a part of the Trust. The Mortgage Loans
originally so held are identified in the Mortgage Loan Schedule delivered on
the Closing Date. The Mortgage Loans shall also include any Eligible
Substitute Mortgage Loan (as defined in the Sale and Servicing Agreement)
substituted by the Sponsor for a defective Mortgage Loan pursuant to Section
2.07(a) of the Sale and Servicing Agreement.
"Mortgage Loan Schedule" on any date means the schedule of Mortgage
Loans included in the Trust on the date identifying each Mortgage Loan and
specifying the items identified in the Adoption Annex. The initial schedule of
Mortgage Loans as of the Cut-off Date is Exhibit A of the Sale and Servicing
Agreement. The Mortgage Loan Schedule will automatically include any
Additional Balances. The Indenture Trustee is not responsible for preparing
the Mortgage Loan Schedule.
"Mortgage Note" means the Credit Line Agreement for a Mortgage Loan
pursuant to which the related mortgagor agrees to pay the indebtedness
evidenced by it and secured by the related mortgage.
"Mortgaged Property" means the underlying property securing a
Mortgage Loan.
"Note" has the meaning given to it in the Adoption Annex.
"Note Interest" for any Class of Principal Amount Notes and Payment
Date means interest for the related Interest Period at the applicable Note
Rate on the related Note Principal
Xxx-1-14
Balance as of the first day of the Interest Period (after giving effect to the
distributions made on the first day of the Interest Period).
"Note Owner" means the beneficial owner of a Book-Entry Note, as
reflected on the books of the Indenture Trustee as agent for the Depository.
"Note Principal Balance" for any Payment Date and Class of Principal
Amount Notes means the related Original Note Principal Balance less the
aggregate of amounts actually distributed as principal on that Class of
Principal Amount Notes before the Payment Date less the Applied Realized Loss
Amounts allocated to that Class.
"Note Rate" for a Class of the Interest Bearing Notes means the
related rate specified in the Adoption Annex.
"Note Register" and "Note Registrar" have the meanings specified in
Section 2.03.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer or other specified party under the circumstances
described in, and otherwise complying with, the applicable requirements of
Section 11.01 and delivered to the Indenture Trustee.
"Opinion of Counsel" means written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be an employee of or
counsel to the Issuer, the Depositor, the Sponsor, the Master Servicer, or the
Transferor (except that any opinion pursuant to Section 8.06 or relating to
taxation must be an opinion of independent outside counsel) and who is
reasonably acceptable to the parties to whom it is to be delivered. The
opinions shall be addressed to the Indenture Trustee as Indenture Trustee, any
other designated party, shall comply with any applicable requirements of
Section 11.01, and shall be in form and substance reasonably satisfactory to
the parties to whom it is to be delivered. Copies of all Opinions of Counsel
shall be delivered to the Credit Enhancer.
"Original Note Principal Balance" means the Original Note Principal
Balance of all Classes of Principal Amount Notes as reflected in the Adoption
Annex.
"Outstanding" as of the date of determination means all Notes that
have been authenticated and delivered under this Indenture except:
(i) Notes that have been cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation or that by their
terms have expired;
(ii) Notes or portions thereof the payment for which money
in the necessary amount has been deposited with the Indenture Trustee
or any Paying Agent in trust for the Noteholders, and if the Notes
are to be redeemed, notice of the redemption has been duly given
pursuant to this Indenture or notice has been provided for in a
manner satisfactory to the Indenture Trustee; and
Xxx-1-15
(iii) Notes in exchange for or instead of which other Notes
have been authenticated and delivered pursuant to this Indenture
unless proof satisfactory to the Indenture Trustee is presented that
those Notes are held by a Protected Purchaser.
In determining whether the Holders of the requisite Outstanding
Amount have Acted under this Indenture or under any Transaction Document,
Notes owned by the Issuer, the Depositor, a Seller, or the Transferor, or any
of their affiliates shall be disregarded and treated as not being Outstanding,
except that, in determining whether the Indenture Trustee shall, if the Notes
have first been transferred to a non-affiliate, be protected in relying on any
Act, only Notes that a Responsible Officer knows to be so owned shall be
disregarded. Notes so owned that have been pledged in good faith, or for whose
owner the Issuer, the Depositor, a Seller, or the Transferor, or any of their
affiliates is acting as trustee or nominee, may be regarded as Outstanding if
the pledgee or other person establishes to the satisfaction of the Indenture
Trustee the pledgee's or other person's right to Act for the Notes and that
the pledgee or other person is not the Issuer, the Depositor, or the
Transferor, or any of their affiliates.
To effectuate the Credit Enhancer's right of subrogation under
Section 4.03, all Notes that have been paid with funds provided under the
Policy shall be Outstanding until the Credit Enhancer has been paid all
amounts due to it pursuant to the Insurance Agreement with respect to those
Notes.
"Outstanding Amount" means the aggregate principal amount of all
Principal Amount Notes, or of a Class of Principal Amount Notes, as
applicable, that are Outstanding at the date of determination. For the
purposes of voting, the Outstanding Amount of notional amount securities
relative to Principal Amount Notes shall be as specified in the Adoption
Annex.
"Paying Agent" means the Indenture Trustee or any other person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.08 and is authorized by the Issuer to make payments to and distributions
from the Payment Account, including payments of principal or interest on the
Notes on behalf of the Issuer.
"Payment Account" means the Eligible Account established and
maintained by the Indenture Trustee on behalf of and for the benefit of the
Secured Parties pursuant to Section 8.01.
"Payment Date" means the day of each month specified in the Adoption
Annex, or if that is not a Business Day, then the next Business Day.
"Policy" means the note guaranty insurance policy identified in the
Adoption Annex and all its endorsements, dated as of the Closing Date, issued
by the Credit Enhancer to the Indenture Trustee for the benefit of the
Noteholders.
"Policy Payments Account" means a separate special purpose trust
account that is an Eligible Account, for the benefit of Holders of the Notes
and the Credit Enhancer over which the Indenture Trustee has exclusive control
and sole right of withdrawal.
Xxx-1-16
"Preference Amount" has the meaning given to it in the Policy.
"Preference Claim" means any proceeding or the institution of any
action seeking the avoidance as a preferential transfer under applicable
bankruptcy, insolvency, receivership, or similar law of any distribution made
with respect to the Notes (other than Basis Risk Carryforward).
"Principal Amount Notes" has the meaning given to it in the Adoption
Annex.
"Principal Collections" for the Mortgage Loans and any Payment Date
means the sum of all payments effected by the mortgagors and any other amounts
constituting principal collected by the Master Servicer under the Mortgage
Loans during the related Collection Period. These amounts include any net
liquidation proceeds and net proceeds from any insurer pursuant to any
insurance policy covering a Mortgage Loan allocable to principal of the
applicable Mortgage Loan and Transfer Deposit Amounts (as defined in the Sale
and Servicing Agreement), but exclude foreclosure profits. The terms of the
related Credit Line Agreement shall determine the portion of each payment on a
Mortgage Loan that constitutes principal or interest. Net liquidation proceeds
are liquidation proceeds net of out-of-pocket expenses (exclusive of overhead)
that are incurred by the Master Servicer in connection with the liquidation of
any Mortgage Loan. Foreclosure profits on a liquidated Mortgage Loan are the
excess of its net liquidation proceeds over the Asset Balance of the Mortgage
Loan before the final recovery on it (plus accrued and unpaid interest thereon
at the Loan Rate from the date interest was last paid to the end of the
Collection Period during which the Mortgage Loan became a liquidated Mortgage
Loan).
"Principal Reserve Fund" means the Eligible Account established and
maintained by the Indenture Trustee pursuant to Section 8.01(d).
"Proceeding" means any suit in equity, action at law, or other
judicial or administrative proceeding.
"Purchase Agreement" means the Purchase Agreement of even date with
this Indenture between Countrywide Home Loans, Inc., as a seller, the other
sellers named therein, as sellers, and the Depositor, as purchaser, with
respect to the Mortgage Loans.
"Rapid Amortization Commencement Date" means the earlier of the
Payment Date in the month specified in the Adoption Annex and the Payment Date
after the Collection Period in which a Rapid Amortization Event occurs.
"Rapid Amortization Event" has the meaning given to it in Section
5.16.
"Rapid Amortization Period" means the period beginning on the Rapid
Amortization Commencement Date until the termination of the Indenture.
"Rating Agency" means any statistical credit rating agency, or its
successor, that rated the Notes at the request of the Depositor at the time of
the initial issuance of the Notes. If a
Xxx-1-17
particular Rating Agency is no longer in existence, "Rating Agency" will means
a statistical credit rating agency, or other comparable person, designated by
the Depositor and the Credit Enhancer. The Indenture Trustee will be notified
of any such designation. References to the highest short-term unsecured rating
category of a Rating Agency mean A-1+ or better in the case of Standard &
Poor's and P-1 or better in the case of Moody's and in the case of any other
Rating Agency mean the ratings it deems equivalent to these. References to the
highest long-term rating category of a Rating Agency mean "AAA" in the case of
Standard & Poor's and "Aaa" in the case of Moody's and in the case of any
other Rating Agency, the rating it deems equivalent to these.
"Rating Agency Condition" for any action means that each Rating
Agency has been given 10 days (or any shorter period acceptable to each Rating
Agency) notice of the action and that each of the Rating Agencies has notified
the Issuer in writing that the action, with and without taking the Policy into
account, will not result in a reduction or withdrawal of its then current
rating of the Notes and the Credit Enhancer has consented to the action.
"Record Date" for a Payment Date or redemption date has the meaning
given to it in the Adoption Annex
"Reference Bank Rate" for an Interest Period means the arithmetic
mean (rounded upwards to the nearest one sixteenth of a percent) of the
offered rates for United States dollar deposits offered by three major banks
engaged in transactions in the London interbank market, selected by the
Depositor after consultation with the Indenture Trustee and obtaining the
consent of the Credit Enhancer, as of 11:00 a.m., London time, on the
Adjustment Date immediately preceding the Interest Period, to prime banks in
the London interbank market for a period of one month in amounts approximately
equal to the outstanding Note Principal Balance if at least two of the banks
provide an offered rate. If fewer than two offered rates are quoted, the
Reference Bank Rate will be the arithmetic mean of the rates quoted by one or
more major banks in New York City, selected by the Depositor after
consultation with the Indenture Trustee and obtaining the consent of the
Credit Enhancer, as of 11:00 a.m., New York City time, on the Adjustment Date
immediately preceding the Interest Period, for loans in U.S. dollars to
leading European banks for a period of one month in amounts approximately
equal to the outstanding Note Principal Balance. If no such quotations can be
obtained, the Reference Bank Rate shall be LIBOR for the preceding Interest
Period.
"Registered Holder" means the person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"REMIC Provisions" means Section 860A through 860G of the Code and
related provisions, and regulations and rulings promulgated under those
sections.
Xxx-1-18
"Required Amount" for a Payment Date means the amount by which the
sum of the amounts distributable pursuant to Sections 8.03(a)(i) through
8.03(a)(v) on the Payment Date exceed Investor Interest Collections.
"Required Transferor Subordinated Amount" means the Required
Transferor Subordinated Amount as defined in the Insurance Agreement
"Responsible Officer" any officer of the Indenture Trustee with
direct responsibility for the administration of this Indenture and also, with
respect to a particular matter, any other officer to whom a matter is referred
because of the officer's knowledge of and familiarity with the particular
subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
specified in the Adoption Annex.
"Scheduled Maturity Date" means the date specified in the Adoption
Annex.
"Scheduled Principal Collections Payment Amount" for any Payment Date
during the Managed Amortization Period means the lesser of the Maximum
Principal Payment and the Alternative Principal Payment, and is reduced by any
Excess Overcollateralization Amount. For any Payment Date in the Rapid
Amortization Period the Scheduled Principal Collections Payment Amount means
the Maximum Principal Payment reduced (but only if a Rapid Amortization Event
has not occurred) by any Excess Overcollateralization Amount.
"Secured Parties" with respect to the Collateral means the Holders of
the Notes and the Credit Enhancer.
"Securities Act" means the Securities Act of 1933.
"Seller" any seller of the Mortgage Loans pursuant to the Purchase
Agreement.
"Servicing Certificate" means the certificate delivered each month
pursuant to the Sale and Servicing Agreement to the Indenture Trustee
completed and executed by any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished
to the Indenture Trustee (with a copy to the Credit Enhancer) by the Master
Servicer on the Closing Date, as it may be amended from time to time.
"Servicing Fee" for any Payment Date means the product of
o the Servicing Fee Rate specified in the Adoption Annex
divided by 12 and
o the Loan Pool Balance as of the first day of the
Collection Period preceding the Payment Date (or as of the close of
business on the Cut-off Date for the first Payment Date).
"Sponsor" means Countrywide Home Loans, Inc., a New York corporation
and any successor.
Xxx-1-19
"Standard & Poor's" means Standard & Poor's, a division of The
XxXxxx-Xxxx Companies, Inc., or its successor in interest.
"State" means any one of the 00 xxxxxx xx xxx Xxxxxx Xxxxxx or the
District of Columbia.
"Subordinated Transferor Collections" for a Payment Date means
interest collections and principal collections from the Mortgage Loans
allocable to the portion of the Transferor Interest not in excess of the
Available Transferor Subordinated Amount for that Payment Date.
"Subsequent Closing Date" means any date designated by the Depositor
on which the Trust acquires Additional Home Equity Loans pursuant to Section
2.01(b) of the Sale and Servicing Agreement.
"Subsequent Cut-off Date" means the cut-off date designated by the
Depositor in a Transfer Document in connection with the acquisition of
Additional Home Equity Loans by the Trust pursuant to Section 2.01(b) of the
Sale and Servicing Agreement, which is the later of the first day of the month
that the Additional Home Equity Loan was transferred to the Trust and the date
of the origination of the Additional Home Equity Loan.
"Transaction Documents" means this Indenture, the Notes, the Sale and
Servicing Agreement, the Purchase Agreement, the Custodial Agreement, the
Administration Agreement, the Trust Agreement, the Policy, and the Insurance
Agreement.
"Transferor" has the meaning given to it in the Adoption Annex.
"Transferor Certificates" has the meaning given to it in the Adoption
Annex.
"Transferor Interest" has the meaning given to it in the Adoption
Annex.
"Transferor Principal Collections" for any Payment Date means
Principal Collections received during the related Collection Period minus the
amount of those Principal Collections required to be distributed to Holders of
the Principal Amount Notes pursuant to Section 8.03(b).
"Trust" means the trust specified in the Adoption Annex.
"Trust Agreement" means the Trust Agreement between Countrywide Home
Loans, Inc., the Depositor and the Owner Trustee.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force on the date of this Indenture, unless otherwise specifically
provided.
"UCC" means the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction, unless the context otherwise requires.
"Unpaid Investor Interest Shortfall" for any Payment Date and the
Principal Amount Notes means the aggregate amount of Note Interest on the
Notes that was accrued for a prior Payment Date and has not been paid to
Holders of the Notes.
Xxx-1-20
"Weighted Average Net Loan Rate" for any Collection Period means the
average of the daily Net Loan Rate (specified in the Adoption Annex) for each
Mortgage Loan (assuming that each Mortgage Loan is fully indexed) for each day
during the related Billing Cycle, weighted on the basis of the daily average
of the Asset Balances outstanding for each day in the Billing Cycle for each
Mortgage Loan as determined by the Master Servicer in accordance with the
Master Servicer's normal servicing procedures.
Xxx-0-00
Xxxxx 0
Xxxxxxxx Xxxxx
The Indenture Trustee shall issue under Section 2.02(b):
o Class A-1 Notes in an aggregate principal amount of
$500,000,000.
o Class A-2 Notes in an aggregate principal amount of
$899,198,000.
o Class A-3 Notes in an aggregate principal amount of
$307,961,000.
o Class A-4 Notes in an aggregate principal amount of
$302,841,000, and
o Class A-IO Notes in an aggregate notional amount equal to
the Class A-IO Notional Balance.
The amount deposited in the "Additional Loan Account" on the Closing
Date is $282,011,736.62.
The "Administration Agreement" is the Administration Agreement of
even date with this Indenture among the Issuer, the Master Servicer, and the
Indenture Trustee.
The "Book-Entry Notes" are the Class A Notes and the Class A-IO
Notes.
A "Class" of Notes is any of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes, or the Class A-IO Notes.
The "Class A Notes" is any of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, or Class A-4 Notes.
A "Class A-1 Note" is any note executed by the Owner Trustee and
authenticated by the Indenture Trustee substantially in the form of Exhibit A.
The "Class A-1 Note Rate" for the first Interest Period is a per
annum rate equal to the sum of the interpolated one-month and two-month LIBOR
and 0.24%, and for any subsequent Interest Period, a per annum rate equal to
the least of
o the sum of LIBOR as of the Adjustment Date for that
Interest Period and 0.24%,
o the Maximum Rate for the Class A Notes for that Interest
Period, and
o 11.50%.
A "Class A-2 Note" is any note executed by the Owner Trustee and
authenticated by the Indenture Trustee substantially in the form of Exhibit A.
Xxx-2-1
The "Class A-2 Note Rate" for the first Interest Period is a per
annum rate equal to the sum of the interpolated one-month and two-month LIBOR
and 0.12%, and for any subsequent Interest Period, a per annum rate equal to
the least of
o the sum of LIBOR as of the Adjustment Date for that
Interest Period and 0.12%,
o the Maximum Rate for the Class A Notes for that Interest
Period, and
o 11.50%.
A "Class A-3 Note" is any note executed by the Owner Trustee and
authenticated by the Indenture Trustee substantially in the form of Exhibit A.
The "Class A-3 Note Rate" for the first Interest Period is a per
annum rate equal to the sum of the interpolated one-month and two-month LIBOR
and 0.24%, and for any subsequent Interest Period, a per annum rate equal to
the least of
o the sum of LIBOR as of the Adjustment Date for that
Interest Period and 0.24%,
o the Maximum Rate for the Class A Notes for that Interest
Period, and
o 11.50%.
A "Class A-4 Note" is any note executed by the Owner Trustee and
authenticated by the Indenture Trustee substantially in the form of Exhibit A.
The "Class A-4 Note Rate" for the first Interest Period is a per
annum rate equal to the sum of the interpolated one-month and two-month LIBOR
and 0.33%, and for any subsequent Interest Period, a per annum rate equal to
the least of
o the sum of LIBOR as of the Adjustment Date for that
Interest Period and 0.33%,
o the Maximum Rate for the Class A Notes for that Interest
Period, and
o 16.00%.
The "Class A-IO Note Interest Rate" is zero on the first Payment Date
and zero on each Payment Date after the sixth Payment Date and on each of the
Payment Dates beginning on the second Payment Date and ending on the sixth
Payment Date (inclusive) is equal to the lesser of
o 4.00% and
o the Weighted Average Net Loan Rate minus the weighted
average (by Note Principal Balance) of the Class A-1 Note Rate, the
Class A-2 Note Rate, the Class A-3 Note Rate, and the Class A-4 Note
Rate for that Interest Period, adjusted to an effective rate
reflecting the accrual of interest based on a 360-day year consisting
of twelve 30-
Xxx-2-2
day months times a fraction whose numerator is the outstanding
principal balance of the Mortgage Loans at the beginning of the
related Collection Period (less Net Draws) and whose denominator is
the Class A-IO Notional Balance.
The "Class A-IO Notional Balance" for the second through the sixth
Payment Date is the lesser of the Class A-IO Scheduled Balance below and the
outstanding principal balance of the Mortgage Loans at the beginning of the
related Collection Period (less Net Draws). On the first Payment Date and each
Payment Date after the sixth Payment Date, the Class A-IO Notional Balance
will be zero.
Payment Date Class A-IO Scheduled Balance ($)
Second 1,730,910,480
Third 1,373,812,734
Fourth 1,302,565,248
Fifth 1,130,182,746
Sixth 1,117,433,424
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The "Closing Date" is December 29, 2005.
The last day of the first "Collection Period" is the last day of
January 2006.
The "Corporate Trust Office" of the Indenture Trustee at the date of
execution of this Indenture is located at 0 Xxx Xxxx Xxxxx, 0xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Worldwide Securities Services/Structured
Finance Services, Countrywide HEL CWHEQ 2005-M.
The "Credit Enhancer" is MBIA Insurance Corporation and any successor
or replacement for the Credit Enhancer in accordance with Section 8.06.
The "Custodial Agreement" is the Custodial Agreement of even date
with this Indenture between the Indenture Trustee, the Issuer, the Depositor,
the Master Servicer, and Treasury Bank, a division of Countrywide Bank, N.A.,
as custodian.
The "Cut-off Date" refers to either the Initial Cut-off Date or
Subsequent Cut-off Date, as applicable.
The "Indenture Trustee" is JPMorgan Chase Bank, N.A., a national
banking association.
The "Initial Cut-off Date" is the later of December 22, 2005 and the
date of origination of the relevant Initial Mortgage Loan.
The "Insurance Agreement" is the insurance agreement of even date
with this Indenture among the Sponsor, the Master Servicer, the Depositor, the
Issuer, the Indenture Trustee, and the Credit Enhancer.
The "Insured Notes" are the Class A Notes.
Xxx-2-3
The "Interest Bearing Notes" are the Class A Notes and the Class A-IO
Notes.
The "Interest Formula Rate" for a Class of Principal Amount Notes is
the lesser of the rates in clauses (i) and (iii) of the definition of Class
A-1 Note Rate, Class A-2 Note Rate, Class A-3 Note Rate or Class A-4 Note
Rate, as applicable.
The "Investor Fixed Allocation Percentage" for any Payment Date is on
any date on which the Transferor Interest is less than the Required Transferor
Subordinated Amount, 100%; and on any date on which the Transferor Interest
equals or exceeds the Required Transferor Subordinated Amount, 98.3%.
The "Latest Subsequent Closing Date" is the earlier of January 31,
2006 and the date the amount in the Additional Loan Account is less than
$40,000.
The "Maximum Rate" for a Class of Principal Amount Notes for any
Interest Period is the Weighted Average Net Loan Rate for the Mortgage Loans
for the Collection Period during which the Interest Period begins (adjusted to
an effective rate reflecting accrued interest calculated on the basis of the
actual number of days in the Collection Period commencing in the month in
which the Interest Period commences and a year assumed to consist of 360
days).
The "Mortgage Loan Schedule" shall specify for each Mortgage Loan its
(i) account number, (ii) Credit Limit, (iii) Gross Margin, (iv) lifetime rate
cap, (v) Cut-off Date Asset Balance, (vi) current Loan Rate, (vii) combined
loan-to-value ratio, (viii) code specifying the property type, (ix) code
specifying documentation type, (x) code specifying lien position, and (xi)
code specifying whether the Mortgage Loan is a MOM Loan.
The "Net Draws" on any day are the aggregate amount of advances of
funds made by the Holder of the Class R-1 Certificates to purchase Additional
Balances minus the aggregate amount of Principal Collections on the Mortgage
Loans previously paid to the Class R-1 Certificates minus Liquidation Loss
Amount after the principal amount of the Class C Certificates has been reduced
to zero.
The "Net Loan Rate" for any Mortgage Loan on any day is the Loan Rate
less
o the Servicing Fee Rate,
o the Premium Percentage defined in the Insurance Agreement,
and
o commencing with the Payment Date in February 2007, 0.50%
per annum.
A "Note" is any Class A Note, or the Class A-IO Note executed by the
Issuer and authenticated by the Indenture Trustee substantially in the form of
Exhibit A-1 or A-2.
Xxx-2-4
The "Note Payment Convention" for each Payment Date is the payment of
the principal amounts payable on the Principal Amount Notes on the Payment
Date in the following order of priority:
First, to the Class A-1 Notes until their Note Principal
Balance is reduced to zero an amount equal to the product of
o a fraction whose numerator is the Note Principal
Balance of the Class A-1 Notes and whose denominator is the
aggregate Note Principal Balance of the Principal Amount
Notes and
o the principal amounts payable on the Principal
Amount Notes on the Payment Date, and
Second, sequentially to the Class A-2 Notes, Class A-3
Notes, and Class A-4 Notes, in that order, until their respective
Note Principal Balances are reduced to zero the remaining principal
amounts payable on the Principal Amount Notes on the Payment Date.
The "Note Rate" refers to either the Class A-1 Note Rate, Class A-2
Note Rate, Class A-3 Note Rate, Class A-4 Note Rate or the Class A-IO
Component Note Rate, as applicable.
The "Original Note Principal Balance" of the Class A-1 Notes is
$500,000,000 of the Class A-2 Notes is $889,198,000, of the Class A-3 Notes is
$307,961,000 and of the Class A-4 Notes is $302,841,000.
The "Outstanding Amount" of the Outstanding Class A-IO Notes as a
whole for the purposes of determining the exercise of voting privileges is
equal to 1.0% of the aggregate Note Principal Balance of the Principal Amount
Notes and of any portion of the Class A-IO Notes is their pro rata portion of
the total Outstanding Amount of Class A-IO Notes determined by notional
balance. The Outstanding Amount of Principal Amount Notes or a Class of
Principal Amount Notes that are Outstanding at the date of determination is
their aggregate principal amount.
The "Owner Trustee" is Wilmington Trust Company, or any successor
owner trustee under the Trust Agreement.
The "Payment Date" is the Business Day after the fourteenth day of
each month, beginning in February 2006.
The "Policy" is the note guaranty insurance policy number 47477,
issued by the Credit Enhancer.
The "Principal Amount Notes" are the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and the Class A-4 Notes.
Xxx-2-5
The Payment Date referred to in the definition of "Rapid Amortization
Commencement Date" is the Payment Date in January 2011.
The "Record Date" for a Payment Date or redemption date for
Book-Entry Notes (other than the Class A-IO Notes) is the close of business on
the day before the Payment Date or redemption date. The record date for the
Class A-IO Notes and for definitive Notes is the last day of the preceding
month before the Payment Date or redemption date.
The "Sale and Servicing Agreement" is the Sale and Servicing
Agreement of even date with this Indenture among the Sponsor, the Depositor,
the Trust, and the Indenture Trustee.
The "Scheduled Maturity Date" is the Payment Date in February 2036.
The "Servicing Fee Rate" is 0.50% per annum.
The "Transferor" is the Holder of the Class R-1 Certificates executed
and authenticated by the Owner Trustee under the Trust Agreement.
The "Transferor Certificates" are the Class C Certificates and the
Class R-1 Certificates executed and authenticated by the Owner Trustee under
the Trust Agreement.
The "Transferor Interest" is the interest in the Trust represented by
the Class C Certificates and the Class R-1 Certificates, and the amount of the
Transferor Interest for any Payment Date is calculated as the excess of
o the Loan Pool Balance as of the close of business on the
day before the Payment Date and any amounts retained in the Payment
Account pursuant to Section 8.03(e) plus any funds in the Additional
Loan Account over
o the aggregate Note Principal Balance of the Classes of
Principal Amount Notes on the Payment Date (after giving effect to
the payment of all amounts actually paid on the Notes on that Payment
Date).
The "Trust" is the CWHEQ Revolving Home Equity Loan Trust, Series
2005-M, a Delaware statutory trust established pursuant to the Trust
Agreement, dated as of December 27, 2005, between Countrywide Home Loans,
Inc., the Depositor, and Wilmington Trust Company.
The title of the Additional Loan Account is "JPMorgan Chase Bank,
N.A., as Indenture Trustee, Additional Loan Account for the registered holders
of Revolving Home Equity Loan Asset Backed Notes, Series 2005-M and MBIA
Insurance Corporation".
The date in each year by which the Issuer will furnish an Opinion of
Counsel pursuant to Section 3.06(b) is September 30 beginning in 2006.
The first year after which an annual compliance statement pursuant to
Section 3.09 is due is 2005.
The date in each year by which the Indenture Trustee will furnish
reports pursuant to Section 7.04 is March 15 beginning in 2006.
Xxx-2-6
The title of the Payment Account is "JPMorgan Chase Bank, N.A., as
Indenture Trustee, Payment Account for the registered holders of Revolving
Home Equity Loan Asset Backed Notes, Series 2005-M and MBIA Insurance
Corporation."
The Payment Date referred to in Section 8.03(b) is the Payment Date
in February 2036.
The date of the Prospectus Supplement is December 27, 2005.
Addresses for notices under Section 11.04 are:
For the Issuer at:
CWHEQ Revolving Home Equity Loan Trust, Series 2005-M
Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration;
For the Credit Enhancer at:
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Insured Portfolio Management-Structured Finance
("IPM-SF")
(CWHEQ Revolving Home Equity Loan Trust,
Series 2005-M)
For the Rating Agencies at:
in the case of Standard & Poor's:
Standard & Poor's,
a division of The McGraw Hill Companies, Inc.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
and in the case of Moody's,
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Xxx-2-7
