EXHIBIT 99.3
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CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2006-D
Issuer
JPMORGAN CHASE BANK, N.A.
Indenture Trustee
CHASE BANK USA, NATIONAL ASSOCIATION
Co-Trustee
___________________________
INDENTURE
Dated as of March 30, 2006
___________________________
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions and Other Provisions of General Application 3
Section 1.01. Definitions..............................................3
Section 1.02. Incorporation by Reference of Trust Indenture Act........3
Section 1.03. Other Terms..............................................4
Section 1.04. Rules of Construction....................................4
ARTICLE II The Notes 6
Section 2.01. Form.....................................................6
Section 2.02. Execution, Authentication, and Delivery..................6
Section 2.03. Registration; Registration of Transfer and Exchange......7
Section 2.04. Mutilated, Destroyed, Lost, or Stolen Notes..............8
Section 2.05. Persons Considered Owner.................................9
Section 2.06. Payment of Principal and Interest; Defaulted Interest....9
Section 2.07. Cancellation............................................10
Section 2.08. Book-Entry Notes........................................10
Section 2.09. Notices To Depository...................................11
Section 2.10. Definitive Notes........................................11
Section 2.11. Tax Treatment...........................................12
Section 2.12. Transfer Restrictions; Restrictive Legends..............12
ARTICLE III Covenants 13
Section 3.01. Payment of Principal and Interest.......................13
Section 3.02. Maintenance of Office or Agency.........................13
Section 3.03. Money For Payments To Be Held in Trust..................14
Section 3.04. Existence...............................................15
Section 3.05. Protection of the Collateral............................15
Section 3.06. Opinions About Collateral...............................16
Section 3.07. Performance of Obligations..............................17
Section 3.08. Negative Covenants......................................18
Section 3.09. Annual Compliance Statement.............................20
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.....20
Section 3.11. Successor or Transferee.................................21
Section 3.12. Further Instruments and Acts............................21
Section 3.13. Compliance with Laws....................................21
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Section 3.14. Master Servicer as Agent and Bailee of the
Indenture Trustee.......................................21
Section 3.15. Investment Company Act..................................21
Section 3.16. Representations.........................................22
ARTICLE IV Satisfaction and Discharge 23
Section 4.01. Satisfaction and Discharge of Indenture.................23
Section 4.02. Application of Trust Money..............................24
Section 4.03. Subrogation and Cooperation.............................24
Section 4.04. Release of Collateral...................................25
ARTICLE V Remedies 26
Section 5.01. Events of Default.......................................26
Section 5.02. Acceleration of Maturity; Rescission and Annulment......27
Section 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee....................................27
Section 5.04. Indenture Trustee May File Proofs of Claim..............28
Section 5.05. Remedies; Priorities....................................29
Section 5.06. Optional Preservation of the Collateral.................31
Section 5.07. Limitation of Suits.....................................32
Section 5.08. Unconditional Right to Receive Principal and Interest...32
Section 5.09. Restoration of Rights and Remedies......................33
Section 5.10. Rights and Remedies Cumulative..........................33
Section 5.11. Delay or Omission Not a Waiver..........................33
Section 5.12. Control by Credit Enhancer Noteholders..................33
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 37
Section 6.01. Duties of Indenture Trustee.............................37
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............................................42
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Section 6.08. Eligibility.............................................42
Section 6.09. Preferential Collection of Claims Against Issuer........42
Section 6.10. Replacement of Indenture Trustee........................43
Section 6.11. Acceptance of Appointment by Successor..................44
Section 6.12. Successor Indenture Trustee by Merger...................44
Section 6.13. Appointment of Co-Indenture Trustee or
Separate Indenture Trustee..............................45
Section 6.14. Representations and Warranties of Indenture Trustee.....46
Section 6.15. Co-Trustee and the Loan Insurance Policy................46
ARTICLE VII Noteholders' Lists and Reports 49
Section 7.01. Issuer to Furnish Names and Addresses of Noteholders....49
Section 7.02. Preservation of Information; Communications.............50
Section 7.03. Exchange Act Reports....................................50
Section 7.04. Reports by Indenture Trustee............................51
ARTICLE VIII Accounts, Cap Contract, Disbursements, and Releases 52
Section 8.01. Accounts................................................52
Section 8.02. Withdrawals from the Collection Account and the
Additional Loan Accounts................................54
Section 8.03. Payments................................................55
Section 8.04. Calculation of the Note Rate............................59
Section 8.05. Claims on the Policy; Policy Payments Account...........59
Section 8.06. Replacement Policy......................................62
Section 8.07. Cap Contract............................................63
Section 8.08. Cap Trust...............................................63
ARTICLE IX Supplemental Indentures 64
Section 9.01. Supplemental Indentures.................................64
Section 9.02. Execution of Supplemental Indentures....................66
Section 9.03. Effect of Supplemental Indenture........................67
Section 9.04. Reference in Notes to Supplemental Indentures...........67
Section 9.05. Tax Opinion.............................................67
Section 9.06. Tax Matters .............................................67
ARTICLE X Redemption of Notes 69
Section 10.01. Redemption..............................................69
Section 10.02. Form of Redemption Notice...............................71
Section 10.03. Notes Payable on Redemption Date........................71
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ARTICLE XI Miscellaneous 71
Section 11.01. Compliance Certificates and Opinions, etc...............71
Section 11.02. Form of Documents Delivered to Indenture Trustee........73
Section 11.03. Acts of Noteholders.....................................74
Section 11.04. Notices.................................................74
Section 11.05. Notices to Noteholders; Waiver..........................75
Section 11.06. Alternate Payment and Notice Provisions.................76
Section 11.07. Conflict with Trust Indenture Act.......................76
Section 11.08. Effect of Headings and Table of Contents................77
Section 11.09. Successors and Assigns..................................77
Section 11.10. Separability............................................77
Section 11.11. Benefits of Indenture...................................77
Section 11.12. Legal Holidays..........................................77
Section 11.13. Governing Law...........................................77
Section 11.14. Counterparts; Electronic Delivery.......................77
Section 11.15. Recording of Indenture..................................77
Section 11.16. No Petition.............................................78
Section 11.17. Non-recourse............................................78
Section 11.18. Act on Instructions from Credit Enhancer; Consents and
Waivers of Credit Enhancer..............................78
Section 11.19. Trust Obligation........................................78
ANNEXES
ANNEX 1 - MASTER GLOSSARY OF DEFINE D TERMS...........................XXX-1
EXHIBITS
EXHIBIT A - FORM OF NOTES...............................................A-1
EXHIBIT B - FORM OF CUSTODIAL AGREEMENT ................................B-1
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THIS INDENTURE, dated as of March 30, 2006, among CWHEQ Revolving Home
Equity Loan Trust, Series 2006-D, a Delaware statutory trust, the INDENTURE
TRUSTEE, as indenture trustee, and the CO-TRUSTEE, as co-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 Indenture Adoption Annex as of the Closing Date, as
Indenture Trustee for the benefit of the relevant Secured Parties, all of the
Issuer's interest existing now or in the future in:
o the Loan Group 1 Mortgage Loans including their Asset Balances
(including all Additional Balances) and the related Mortgage Files and
all property that secures the Loan Group 1 Mortgage Loans and all
property that is acquired by foreclosure or deed in lieu of foreclosure,
and all collections received on each Loan Group 1 Mortgage Loan after
the Cut-off Date (excluding payments due by the Cut-off Date);
o the Additional Loan Account related to Loan Group 1;
o the Additional Home Equity Loans related to Loan Group 1
acquired by the Trust from funds in the related Additional Loan Account;
o the Issuer's rights under hazard insurance policies and the Loan
Insurance Policy related to the Loan Group 1 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
Sponsor Loss Coverage Obligation payments to be made and to cause the
Loan Group 1 Mortgage Loans to be repurchased);
o all rights under any guaranty executed in connection with the
Loan Group 1 Mortgage Loans ;
o the Collection Account and the Payment Account maintained to
hold collections related to the Loan Group 1 Mortgage Loans and their
contents related to Loan Group 1;
o any Crossover Amount and Subordinated Transferor Collections the
Class of Notes related to Loan Group 1 are entitled to from Loan Group
2; and
o all present and future claims, demands, causes of action, and
chooses in action regarding any of the foregoing and all payments on and
all proceeds from any of
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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 "Group 1
Collateral").
The Issuer Grants to the Indenture Trustee for the Classes of Notes and
series referred to in the Indenture Adoption Annex as of the Closing Date, as
Indenture Trustee for the benefit of the relevant Secured Parties, all of the
Issuer's interest existing now or in the future in:
o the Loan Group 2 Mortgage Loans including their Asset Balances
(including all Additional Balances) and the related Mortgage Files and
all property that secures the Loan Group 2 Mortgage Loans and all
property that is acquired by foreclosure or deed in lieu of foreclosure,
and all collections received on each Loan Group 2 Mortgage Loan after
the Cut-off Date (excluding payments due by the Cut-off Date);
o the Additional Loan Account related to Loan Group 2;
o the Additional Home Equity Loans related to Loan Group 2
acquired by the Trust from funds in the related Additional Loan Account;
o the Issuer's rights under hazard insurance policies and the Loan
Insurance Policy related to the Loan Group 2 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
Sponsor Loss Coverage Obligation payments to be made and to cause the
Loan Group 2 Mortgage Loans to be repurchased);
o all rights under any guaranty executed in connection with the
Loan Group 2 Mortgage Loans ;
o the Collection Account and the Payment Account maintained to
hold collections related to the Loan Group 2 Mortgage Loans and their
contents related to Loan Group 2;
o any Crossover Amount and Subordinated Transferor Collections the
Class of Notes related to Loan Group 2 are entitled to from Loan Group
1; and
o all present and future claims, demands, causes of action, and
chooses 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,
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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 "Group 2 Collateral").
Additionally, the Class 2-A Notes will have the benefit of the Cap
Contract to the extent of the Cap Payment (Cap Trust Share) for payment of Cap
Shortfall. XX Xxxxxx Chase Bank, N.A. has accepted an assignment of the Cap
Contract as Cap Contract Administrator and hereby agrees to hold the Cap
Contract for the benefit of the Holders of the Class 2-A Notes pursuant to the
Cap Contract Administration Agreement.
The Class 1-A Notes and the Class 2-A 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 the Premium Letter, and shall continue for the benefit
of the Credit Enhancer until all amounts owed the Credit Enhancer have been
repaid in full.
The Indenture Trustee, as Indenture Trustee on behalf of the Secured
Parties, acknowledges the Grants, accepts the trusts under this Indenture in
accordance with this Indenture, and agrees to perform its duties required in
this Indenture in accordance with its terms and the terms of the Transaction
Documents.
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Indenture as defined in Master Glossary of Defined Terms attached
as Annex 1.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference into this Indenture. The following TIA terms used
in this Indenture have the following meanings:
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"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute, or defined by Commission rule
have the meanings so assigned to them.
Section 1.03. Other Terms.
Defined terms that are used only in one section or only in another
definition may be omitted from the Master Glossary of Defined Terms. Defined
terms used in this Indenture are sometimes defined after their first use
without a reference such as "(as hereinafter defined)."
Section 1.04. Rules of Construction.
Except as otherwise expressly provided in this Indenture or unless the
context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural as
well as the singular.
(b) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Indenture, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Indenture as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Indenture are a part of this Indenture. The words
"herein," "hereof," "hereto," "hereunder," and other words of similar import
refer to this Indenture as a whole and not to any particular article, section,
exhibit, or other subdivision of this Indenture.
(c) The headings of the various Articles and Sections in this Indenture
are for convenience of reference only and shall not define or limit any of the
provisions of this Indenture.
(d) Any term that relates to a document or a statute, rule, or
regulation includes any amendments, modifications, supplements, or any other
changes that may have occurred since the document, statute, rule, or
regulation came into being, including changes that occur after the date of
this Indenture, except in the case of the TIA. References to law are not
limited to statutes. References to statutes include any rules or regulations
promulgated under them by a governmental authority charged with the
administration of the statute. Any reference to any person includes references
to its successors and assigns.
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(e) Any party may execute any of the requirements under this Indenture
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under
this Indenture. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Indenture are implicitly available from
time to time.
(f) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or
B or both," not "either A or B but not both").
(g) A reference to "a [thing]" or "any [of a thing]" does not imply the
existence or occurrence of the thing referred to even though not followed by
"if any," and "any [of a thing]" is any and all of it. A reference to the
plural of anything as to which there could be either one or more than one does
not imply the existence of more than one (for instance, the phrase "the
obligors on a note" means "the obligor or obligors on a note"). "Until
[something occurs]" does not imply that it must occur, and will not be
modified by the word "unless." The word "due" and the word "payable" are each
used in the sense that the stated time for payment has passed. The word
"accrued" is used in its accounting sense, i.e., an amount paid is no longer
accrued. In the calculation of amounts of things, differences and sums may
generally result in negative numbers, but when the calculation of the excess
of one thing over another results in zero or a negative number, the
calculation is disregarded and an "excess" does not exist. Portions of things
may be expressed as fractions or percentages interchangeably. The word "shall"
is used in its imperative sense, as for instance meaning a party agrees to
something or something must occur or exist.
(h) All accounting terms used in an accounting context and not otherwise
defined, and accounting terms partly defined in this Indenture, to the extent
not completely defined, shall be construed in accordance with generally
accepted accounting principles in the United States. To the extent that the
definitions of accounting terms in this Indenture are inconsistent with their
meanings under generally accepted accounting principles, the definitions in
this Indenture shall control. Capitalized terms used in this Indenture without
definition that are defined in the Uniform Commercial Code of the relevant
jurisdiction are used in this Indenture as defined in that Uniform Commercial
Code.
(i) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means
"to and including." Likewise, in setting deadlines or other periods, "by"
means "on or before." The words "preceding," "following," and words of similar
import, mean immediately preceding or following. References to a month or a
year refer to calendar months and calendar years. The words "amended" and
"modified" and their
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derivatives as they relate to agreements refer to any changes in the agreement
and may be used interchangeably.
(j) Any reference to the enforceability of any agreement against a party
means that it is enforceable against the party in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(k) Generally only the registered holder of a Note is recognized, such
as in "Section 2.05. Persons Considered Owner" and payment provisions.
However, for the purposes of the transfer restrictions and related provisions,
such as agreements, representations, and warranties by holders of Notes,
references to Noteholders, holders, and the like refer equally to beneficial
owners who have an interest in a Note but are not reflected in the note
register as the owner and references to transfers of Notes include transfers
of interests in a Note.
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 Indenture Adoption Annex. The aggregate principal amount of each Class of
Notes outstanding at any time may not exceed
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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. 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.
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(e) Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
its Holder or any attorney for its Holder duly authorized in writing. The
endorsement signature shall be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or any other "signature guarantee program"
chosen by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Exchange Act.
(f) No Holder shall incur a service charge for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
on any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 2.04 or 9.04 not involving any transfer.
(g) The preceding provisions of this Section notwithstanding, the Note
Registrar need not register and the Issuer need not make transfers or
exchanges of Principal Amount Notes selected for redemption or transfers or
exchanges of any Note during the 15 days preceding the due date for any
payment on it.
Section 2.04. Mutilated, Destroyed, Lost, or Stolen Notes.
If (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 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 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
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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 enforceable by anyone at any time, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any other Notes duly issued under this Indenture.
The provisions of this Section are exclusive and shall preclude all
other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost, or stolen Notes.
Section 2.05. Persons Considered Owner.
Before due presentment for registration of transfer of any
Note, the Issuer, the Indenture Trustee, and any agent of the Issuer or the
Indenture Trustee may treat the person in whose name any Note is registered
(as of the day of determination) as the owner of the Note for the purpose of
receiving payments of principal and interest on the Note and for all other
purposes whatsoever, whether or not the Note is overdue. None of the Issuer,
the Indenture Trustee, or any agent of the Issuer or the Indenture Trustee
shall be affected by notice to the contrary.
Section 2.06. Payment of Principal and Interest; Defaulted Interest.
(a) 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 related 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
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name a Principal Amount Note is registered at the close of business on the
Record Date preceding the Scheduled Maturity Date. The notice shall be sent by
first-class mail, postage prepaid, or by facsimile (promptly confirmed by
mail) not later than ten days before the Scheduled Maturity Date to each
Holder of Principal Amount Notes as of the close of business on the Record
Date preceding the Scheduled Maturity Date, at the Holder's address or
facsimile number appearing in the Note Register, and shall specify that the
principal of the Note will be payable only on presentation and surrender of
the Note and shall specify the place where the Note may be presented and
surrendered for payment. Notices in connection with redemptions of Notes shall
be mailed to Noteholders as provided in Section 10.02.
(c) If the Issuer defaults in a payment of interest on 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;
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(ii) the Note Registrar and the Indenture Trustee may deal with
the Depository for all purposes of this Indenture (including the payment
of principal and interest on the Notes and accepting instructions under
this Indenture) as the sole holder of the Notes, and shall have no
obligation to the Note Owners;
(iii) to the extent that this Section conflicts with any other
provisions of this Indenture, this Section shall control;
(iv) the rights of Note Owners shall be exercised only through the
Depository and shall be limited to those established by law and
agreements between the Note Owners and the Depository;
(v) until definitive Notes are issued for the Book-Entry Notes
pursuant to Section 2.10, the Depository will make book-entry transfers
among the Depository's participants and receive and transmit payments of
principal and interest on the Book-Entry Notes to the Depository's
participants;
(vi) whenever this Indenture requires or permits actions to be
taken based on instructions from Holders of Notes evidencing a specified
percentage of the Outstanding Amount, the Depository shall be treated as
representing that percentage only to the extent that it has received
instructions to that effect from Note Owners owning the required
percentage of the beneficial interest in the Notes and has delivered the
instructions to the Indenture Trustee; and
(vii) the Indenture Trustee may conclusively rely on information
furnished by the Depository about its participants and furnished by the
participants about indirect participating firms and persons shown on the
books of the indirect participating firms as direct or indirect Note
Owners.
(b) The Book-Entry Notes may not be transferred except as a whole and
then only by the Depository to its nominee or by its nominee to the Depository
or another nominee of the Depository, or by the Depository or its nominee to a
successor to the Depository or the successor's nominee.
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
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(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,
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:
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"[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."
(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
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notices to and demands on the Issuer regarding the Notes and this Indenture
may be served. The Issuer initially appoints the Indenture Trustee to serve as
its agent for these purposes. The Indenture Trustee will give prompt notice to
the Issuer of the location, and of any change in the location, where the
Indenture Trustee maintains this office or agency. If the Issuer ever fails to
maintain the required office or agency, then surrenders, notices, and demands
may be made or served at the Corporate Trust Office.
Section 3.03. Money For Payments To Be Held in Trust.
All payments of amounts payable on any Notes pursuant to
Section 8.03, shall be made from amounts deposited in the Payment Account by
the Indenture Trustee or by another Paying Agent, and no amounts so deposited
in the Payment Account for payments of Notes shall be paid over to the Issuer
except as provided in this Section or Section 8.03.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which the
Paying Agent agrees with the Indenture Trustee that it will, and the Indenture
Trustee hereby agrees in its capacity as Paying Agent that it will:
(i) hold all sums held by it for the payment of amounts due on the
Notes in trust for the benefit of the persons entitled to them until
they are paid to the persons entitled to them or otherwise disposed of
as provided in this Indenture, and pay them to the persons entitled to
them as provided in this Indenture;
(ii) give the Indenture Trustee and the Credit Enhancer notice of
any payment default by the Issuer on the Notes of which it has actual
knowledge;
(iii) at any time during the continuance of any payment default on
the Notes, at the request of the Indenture Trustee, immediately pay to
the Indenture Trustee all sums held in trust by it for the payment of
the Notes;
(iv) immediately resign as a Paying Agent and immediately pay to
the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it 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.
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Subject to applicable laws on abandoned property, any money held in
trust by the Indenture Trustee or any Paying Agent for the payment of any
amount due on any Note remaining unclaimed for two years after it has become
payable shall be discharged from the trust and be paid to the Issuer on Issuer
Request. After that the Holder of the unpaid Note shall look only to the
Issuer for its payment as an unsecured general creditor (but only to the
extent of the amounts paid to the Issuer). On its payment to the Issuer all
liability of the Indenture Trustee or the Paying Agent with respect to that
trust money shall cease. The Indenture Trustee or the Paying Agent, before
being required to make the payment to the Issuer, shall at the expense and
direction of the Issuer cause to be published once a notice that the money
remains unclaimed and that, after a date specified in the notice not less than
30 days from the date of the publication, any unclaimed balance of the money
then remaining will be repaid to the Issuer. The notice shall be published in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York. The Indenture
Trustee may also adopt and employ, at the expense and direction of the Issuer,
any other reasonable means of notification of the repayment (including mailing
notice of the repayment to their last address of record to Holders whose
Principal Amount Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys payable but not claimed is
determinable from the records of the Indenture Trustee or of any Paying
Agent).
Section 3.04. Existence.
The Issuer will preserve its existence, rights, and franchises as a
Delaware statutory trust (unless it or any successor becomes organized under
the laws of any other State or of the United States, in which case the Issuer
will preserve its existence, rights, and franchises under the laws of that
other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which qualification to do business is
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral, and each other material agreement of the Issuer.
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;
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(ii) preserve the Security Interest (and its priority) created by
this Indenture or carry out more effectively the purposes of this
Indenture;
(iii) perfect, publish notice of, or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to any of the Collateral;
(v) preserve and defend title to the Collateral and the rights of
the Indenture Trustee, the Credit Enhancer, and the Noteholders in the
Collateral against all adverse claims; or
(vi) pay all taxes or assessments levied or assessed on the
Collateral when due.
(b) Except as otherwise provided in this Indenture or the other
Transaction Documents, the Indenture Trustee shall not remove any portion of
the Collateral that consists of money or is evidenced by an instrument,
certificate, or other writing from the jurisdiction in which it was held at
the date of the most recent Opinion of Counsel delivered pursuant to Section
3.06 unless the Indenture Trustee and the Credit Enhancer receive an Opinion
of Counsel to the effect that the lien and Security Interest created by this
Indenture will continue to be maintained on any removed property after giving
effect to its removal.
(c) The Issuer designates the Indenture Trustee its agent and
attorney-in-fact to execute any Financing Statement, Continuation Statement,
or other instrument required to be executed pursuant to this Section. The
Issuer authorizes the Indenture Trustee to file Financing Statements or
Continuation Statements, and amendments to them, relating to any part of the
Collateral without the signature of the Issuer where permitted by law. A
carbon, photographic, or other reproduction of this Indenture or any filed
Financing Statement covering the Collateral or any part of it shall be
sufficient as a Financing Statement where permitted by law. The Indenture
Trustee will promptly send to the Issuer any Financing Statements or
Continuation Statements that it files without the signature of the Issuer. Any
Financing Statement filed 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
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o with respect to the recording and filing of this
Indenture, any indentures supplemental to this Indenture, and any
other requisite documents and
o with respect to the execution and filing of
any Financing Statements and Continuation Statements
has been taken that is necessary to perfect the Security Interest of
this Indenture in the Mortgage Loans, and reciting the details of the
action.
(b) By the date specified in the Indenture Adoption Annex in each
calendar year beginning in the year specified in the Indenture 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 Indenture
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.
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(b) The Issuer may contract with other persons to assist it in
performing its duties under this Indenture, and the performance of those
duties by a person identified to the Indenture Trustee in an Officer's
Certificate shall be considered to be action taken by the Issuer.
(c) The Issuer will punctually perform all of its obligations under the
Transaction Documents, including properly filing all Financing Statements and
Continuation Statements required to be filed by the Transaction Documents.
Except as provided in Section 9.01, the Rating Agency Condition must be
satisfied in connection with any amendment, termination, or material change in
a Transaction Document. The Issuer shall not amend, terminate, or otherwise
change any Transaction Document without the consent of the Indenture Trustee
and the Credit Enhancer. The Issuer will provide notice of any termination,
amendment, or material change in any Transaction Document to the Rating
Agencies. The consent of the Indenture Trustee will not be required if the
Rating Agency Condition is satisfied with respect to the proposed action.
(d) Without derogating from the Grants to the Indenture Trustee under
this Indenture or the rights of the Indenture Trustee under this Indenture,
the Issuer agrees
(i) that it will not, without the prior consent the Credit
Enhancer and of 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;
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(b) claim any credit on, or make any deduction from the principal or
interest or other amounts payable on, the Notes (other than amounts properly
withheld from payments under the Code or applicable State law) or assert any
claim against any present or former Noteholder for the payment of the taxes
levied or assessed on any part of the Collateral;
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be changed (except as
otherwise provided in the Sale and Servicing Agreement), or permit any person
to be released from any obligations on the Notes or under this Indenture
except as expressly permitted by this Indenture, (ii) permit any lien, charge,
excise, claim, Security Interest, mortgage, or other encumbrance (other than
the lien of this Indenture and as otherwise provided in the Sale and Servicing
Agreement) to affect any part of the Collateral, or any interest in it or its
proceeds, or (iii) permit the lien of this Indenture not to constitute a valid
first priority Security Interest in the Collateral; or
(d) dissolve or liquidate in whole or in part;
(e) make any distributions on any ownership interest in the Issuer
(except as expressly provided for in the Transaction Documents), redeem,
purchase, or otherwise retire or acquire for value any ownership interest in
the Issuer (except as expressly provided for in the Transaction Documents), or
set aside any amounts for any of these purposes;
(f) engage in any business other than financing, purchasing, owning,
selling, and managing the Collateral; issuing the Notes; and activities
incidental to those contemplated businesses, in each case, in the manner
contemplated by the Transaction Documents;
(g) issue, incur, assume, guarantee, or otherwise have the Trust become
liable, directly or indirectly, for any indebtedness except for its
liabilities under the Transaction Documents and other expenses for which the
Issuer is entitled to reimbursement under this Indenture or the Sale and
Servicing Agreement;
(h) make any loan or advance of credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment
or performance on any obligation), endorse (except for endorsement of
instruments for collection in the ordinary course 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
19
and Servicing Agreement, or any other Transaction Document, if the action
would materially and adversely affect the interests of the Noteholders or the
Credit Enhancer; or
(k) take any other action or fail to take any action that would result
in the imposition of tax on the Issuer (including the tax on prohibited
transactions under Section 860F(a)(2) or contributions after the Startup Date,
as defined in Section 860G(d) of the Code) .
Section 3.09. Annual Compliance Statement.
Within 80 days after the end of each year (commencing with the
year specified in the Indenture 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;
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(v) any action that is necessary to maintain the Security Interest
created by this Indenture has been taken; and
(vi) the Issuer has delivered to the Indenture Trustee and the
Credit Enhancer an Officer's Certificate and an Opinion of Counsel each
stating that the consolidation or merger and the supplemental indenture
comply with this Article and that all conditions precedent in this
Indenture relating to the transaction have been complied with (including
any filing required by the Exchange Act).
Section 3.11. Successor or Transferee.
Upon any consolidation or merger of the Issuer or transfer of
all or substantially all of its properties or assets in accordance with
Section 3.10, the person formed by or surviving the consolidation or merger
(if other than the Issuer) or to which the transfer is made shall succeed to,
and be substituted for, and may exercise every right of, the Issuer under this
Indenture with the same effect as if it had been named as the Issuer in this
Indenture.
Section 3.12. Further Instruments and Acts.
On request of the Indenture Trustee or the Credit Enhancer, the
Issuer will execute and deliver any further instruments and do any further
acts that may be appropriate to carry out more effectively the purpose of this
Indenture.
Section 3.13. Compliance with Laws.
The Issuer shall comply with the requirements of all laws the
non-compliance with which would, individually or in the aggregate, materially
and adversely affect the ability of the Issuer to perform its obligations
under the Notes or any Transaction Document.
Section 3.14. Master Servicer as Agent and Bailee of the Indenture
Trustee.
Solely for the purposes of perfection under Section 9-313(c) of the UCC
or other similar applicable law, rule, or regulation of the State in which
property is held by the Master Servicer, the Master Servicer is acting as
agent and bailee of the Indenture Trustee in holding amounts subject to
deposit to the Collection Account, as well as its agent and bailee in holding
any Mortgage File released to the Master Servicer, and any other items of
Collateral that come into the possession of the Master Servicer. By the Master
Servicer's execution of the Sale and Servicing Agreement, the Indenture
Trustee, as a secured party of the Mortgage Loans, has 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
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as an "investment company" so long as it is in compliance with the conditions
imposed in the order.
Section 3.16. Representations.
(a) The Issuer represents and warrants to the Indenture Trustee and the
Credit Enhancer that as of the Closing Date, unless specifically stated
otherwise:
(i) This Indenture creates a valid and continuing Security
Interest in the Collateral in favor of the Indenture Trustee. The
Security Interest created by this Indenture is a first priority
perfected Security Interest and it is enforceable as such against
creditors of, and purchasers from, the Issuer.
(ii) The Mortgage Notes are "instruments" as defined in the UCC.
(iii) Before the Grants of the Security Interest pursuant to the
Granting Clause of this Indenture, the Issuer owns, and has good and
marketable title to, the Mortgage Loans free of any lien, claim, or
encumbrance of any person.
(iv) By the Closing Date with respect to the Mortgage Loans and
within 10 days of the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, the Issuer will file Financing
Statements in the proper filing office in the appropriate jurisdiction
to perfect the Security Interest in the Collateral Granted under this
Indenture.
(v) The Issuer has received a written acknowledgement from the
Custodian that the Custodian is acting solely as agent of the Indenture
Trustee.
(vi) The Issuer has not authorized the filing of and is not aware
of any Financing Statements against the Issuer that include a
description of collateral covering the Collateral other than any
financing statement (A) relating to the Security Interests granted to
the Indenture Trustee pursuant to this Indenture, (B) that has been
terminated, or (C) that names the Indenture Trustee as secured party.
(vii) The Mortgage Notes that constitute or evidence the
Collateral do not have any marks or notations indicating that they have
been pledged, assigned, or otherwise conveyed to any person other than
the Indenture Trustee. All Financing Statements filed or to be filed
against the Issuer in favor of the Indenture Trustee in 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.
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(b) The representations and warranties in this Section 3.16 shall
survive delivery of the respective Mortgage Files to the Custodian pursuant to
the Custodial Agreement and the termination of the Sale and Servicing
Agreement.
(c) The Indenture Trustee and the Credit Enhancer shall not, without the
prior written consent of the Rating Agencies, waive any of the representations
and warranties in Section 3.16(a).
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.
Except for rights of conversion or transfer or exchange of
Notes expressly provided for, the rights of the Indenture Trustee under
Section 6.07, the rights of Noteholders as beneficiaries of this Indenture,
and the rights of the Credit Enhancer both for itself and 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
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expense, of the Issuer or by their terms expire within one
year without the payment of a principal balance,
and the Issuer, in the case of (1), (2), or (3) above, has
irrevocably deposited with the Indenture Trustee cash or direct
obligations of or obligations guaranteed by the United States
(which will mature before the date the amounts are payable), in
trust for these purposes, in an amount sufficient to pay the
entire indebtedness when due on the unexpired Notes not previously
delivered to the Indenture Trustee for cancellation to the
applicable Scheduled Maturity Date or redemption date (if Notes
have been called for redemption pursuant to Section 10.01), as the
case may be;
(ii) the Issuer has paid all other sums payable under this
Indenture by the Issuer; and
(iii) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate, an Opinion of Counsel, and (if required by the
TIA, the Indenture Trustee, or the Credit Enhancer), an Independent
Certificate from a firm of certified public accountants, each meeting
the applicable requirements of Section 11.01, each stating that all
conditions precedent provided for in this Indenture relating to the
satisfaction and discharge of this Indenture have been complied with.
Section 4.02. Application of Trust Money.
All money deposited with the Indenture Trustee pursuant to
Section 4.01 shall be held in trust and applied by it, in accordance with the
Notes and this Indenture, to the payment to the Holders of the particular
Notes for the payment or redemption of which the money has been deposited with
the Indenture Trustee, of all sums due and to become due on them for principal
and interest. That money need not be segregated from other funds except to the
extent required in this Indenture or required by law.
Section 4.03. Subrogation and Cooperation.
(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 of the related Loan Group, any other
related Collateral, and any Crossover Amounts and Subordinated Transferor
Collections they are entitled to from the other Loan Group 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 form the assets of the Trust from the sources and in
the manner provided in this Indenture and in the Insurance Agreement.
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The Indenture Trustee shall cooperate in all respects at the expense of
the Trust with any reasonable request or direction by the Credit Enhancer to
take any of the following actions to preserve or enforce the Credit Enhancer's
interest under each of this Indenture and the Sale and Servicing Agreement,
consistent with this Indenture and without limiting the rights of the
Noteholders under this Indenture, including upon the occurrence and
continuance of a Credit Enhancer Default:
(i) institute Proceedings for the collection of all amounts then
payable on the Notes or under this Indenture with respect to the Notes
and all amounts payable under the Insurance Agreement and to enforce any
judgment obtained and collect from the Issuer monies adjudged due;
(ii) sell any part of Collateral or interests in it at one or more
public or private sales called and conducted in any manner permitted by
law;
(iii) file or record all Assignments of Mortgage that have not
previously been recorded;
(iv) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the interests
of the Credit Enhancer under this Indenture.
Following the payment in full of the 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 and the Issuer has paid all other sums
payable under this Indenture by the Issuer, the Indenture Trustee shall
release any remaining Collateral that secured the Notes from the lien of this
Indenture and release to the Issuer any funds then on deposit in any account
other than funds held in trust for the satisfaction of Notes that have not
been surrendered for payment. The Indenture Trustee shall release property
from the lien of this Indenture pursuant to this Section only on receipt of an
Issuer Request accompanied by an Officer's Certificate.
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(c) Whenever a Mortgage Loan has been substituted for or repurchased in
accordance with Section 2.02(b) or 2.04(d) of the Sale and Servicing
Agreement, purchased in accordance with Section 3.06 of the Sale and Servicing
Agreement, or designated for transfer in accordance with Section 2.06 of the
Sale and Servicing Agreement, the Indenture Trustee shall execute appropriate
documents to release the Mortgage Loan from the lien of this Indenture and
deliver the Mortgage File to the appropriate party.
(d) The Indenture Trustee shall release property from the lien of this
Indenture only on receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel, and Independent Certificates in accordance
with TIA Sections 314(c) and 314(d)(l) or an Opinion of Counsel in lieu of
Independent Certificates to the effect that the TIA does not require any
Independent Certificates.
ARTICLE V
REMEDIES
Section 5.01. Events of Default.
Any one of the following events is an "Event of Default"
whatever the reason:
(i) default by the Issuer in the payment of any interest on any
Interest Bearing Note when it becomes payable, and the default continues
for five days; or
(ii) default by the Issuer in the payment of the principal of any
Principal Amount Note when it becomes payable and the default continues
for five days; or
(iii) default in the performance of any obligation of the Issuer
under this Indenture (other than an obligation specifically dealt with
elsewhere in this Section), or any representation or warranty of the
Issuer made in this Indenture or in any certificate or other writing
delivered in connection with this Indenture proves to have been
materially incorrect as of the time when it was made, and the default or
the circumstance making the representation or warranty incorrect has not
been cured within 60 days after notice to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by the Credit
Enhancer (or, if a Credit Enhancer Default exists, by the Holders of at
least 25% of the Outstanding Amount of 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.
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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.
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
27
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 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
28
Trustee has made any demand pursuant to this Section, with the consent of the
Credit Enhancer the Indenture Trustee is authorized by intervention in the
Proceedings or otherwise:
(i) to file and prove claims for the entire amount of principal
owing on any Principal Amount Notes and interest owing on any Interest
Bearing Notes and other amounts owing on any Notes and to file any other
documents appropriate to have the claims of the Indenture Trustee, the
Credit Enhancer, and of the Noteholders allowed in the Proceedings
(including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Indenture Trustee
and each predecessor Indenture Trustee, except as a result of negligence
or bad faith);
(ii) to vote on behalf of the Holders of Notes in any election of
a trustee, a standby trustee, or person performing similar functions in
the Proceedings; and
(iii) to collect and receive any moneys or other property payable
on any claims and to distribute all amounts received on the claims of
the Noteholders, the Credit Enhancer, and of the Indenture Trustee on
their behalf;
and any trustee, receiver, liquidator, custodian, or other similar official in
any Proceeding is hereby authorized by each of the Noteholders to make
payments to the Indenture Trustee and, if the Indenture Trustee consents to
the Noteholders receiving payments directly, to pay to the Indenture Trustee
amounts sufficient to cover reasonable compensation to the Indenture Trustee,
each predecessor Indenture Trustee, and their respective agents and counsel,
and all other expenses and liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture Trustee except as a result of
negligence or bad faith, and to pay all amounts due to the Credit Enhancer.
(b) Nothing in this Indenture authorizes the Indenture Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder or the Credit Enhancer any plan of reorganization, arrangement,
adjustment, or composition affecting the Notes or the 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
29
Servicing Agreement, and enforce any judgment obtained, and collect from
the Issuer and any other obligor on the Notes moneys adjudged due;
(ii) institute Proceedings for the complete or partial foreclosure
of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights of
the Indenture Trustee, the Credit Enhancer, and the Noteholders;
(iv) exercise all rights of the Issuer in connection with the
Purchase Agreement and the Sale and Servicing Agreement against the
Sponsor, the Depositor, or the Master Servicer or otherwise; and
(v) sell any portion of the Collateral or interests in it as
directed by the Credit Enhancer, at one or more public or private sales
called and conducted in any manner permitted by law.
The Indenture Trustee, however, may not sell or otherwise liquidate Collateral
following an Event of Default unless
(A) the Indenture Trustee obtains (x) the consent of the Credit
Enhancer and (y) if a Credit Enhancer Default exists, 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 (x) the consent of the Credit
Enhancer (y) if a Credit Enhancer Default exists, 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.
30
(b) If the Indenture Trustee collects any money or property with respect
to a Loan Group under this Article, it shall pay out the money or property in
the following order with respect to the Loan Group:
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
and to the Co-Trustee for the fee of the Co-Trustee then due and any
expenses due to the Co-Trustee incurred by it under any of the
Transaction Documents, each with respect to the relevant Loan Group;
SECOND: any premium owing to the Credit Enhancer, with
respect to the relevant Loan Group;
THIRD: to the Noteholders of the related Classes of Notes
for interest due on the related Interest Bearing Notes (except
for Basis Risk Carryforward and Cap Shortfalls), pro rata
according to the amounts due on those Notes for interest;
FOURTH: to the related Noteholders for amounts due on the
related Principal Amount Notes for principal, pro rata
according to the principal due on those Notes, until the Note
Principal Balance of each Class of Notes is reduced to zero;
FIFTH: to the unrelated Noteholders, any amounts that if
they were being paid on a Payment Date pursuant to Section 8.03
would be Crossover Amounts payable on the unrelated Notes;
SIXTH: to the Credit Enhancer, any other amounts owed to
the Credit Enhancer under the Insurance Agreement with respect
to either Loan Group;
SEVENTH: to pay any related Basis Risk Carryforward owed
to each Class of Principal Amounts Notes to the Noteholders of
each Class of Principal Amount Notes, pro rata according to the
principal due on those Notes; and
EIGHTH: 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
31
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;
(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
32
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.
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 and Noteholders.
If no Credit Enhancer Default exists, then the Credit Enhancer,
otherwise the Holders of not less than 51% of the aggregate Outstanding Amount
of 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.
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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 or
Co-Trustee for any action taken, suffered, or omitted by it as Indenture
Trustee or Co-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, the Co-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,
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or impede the execution of any power granted in this Indenture to the
Indenture Trustee, but will permit the execution of every power as though the
law had not been enacted.
Section 5.16. Rapid Amortization Events.
If any one of the following events occurs during the Managed
Amortization Period:
(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 holder of the Class
R-1 Certificates or the Depositor, but for this purpose the 60-day periods in
the definition of Insolvency Event shall be 30 days;
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(f) The Trust becomes subject to registration as an "investment company"
under the Investment Company Act of 1940;
(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;
(h) The occurrence of an Event of Servicing Termination; or
(i) The Sponsor fails to pay any Sponsor Loss Coverage Obligation, which
failure remains unremedied for 30 days or more.
then, when any event described in subparagraph (a), (b), (c), (d), (h) or (i)
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 holder of the Class R-1
Certificates, the Depositor, and the Master Servicer (and to the Indenture
Trustee if given by either the Credit Enhancer or the Noteholders) may declare
that an early amortization event (a "Rapid Amortization Event") has occurred
as of the date of the notice, and in the case of any event described in
subparagraph (e), (f), or (g),, a Rapid Amortization Event shall occur without
any notice or other action on the part of the Indenture Trustee, the Credit
Enhancer, or the Noteholders, immediately upon its occurrence.
Section 5.17. Sale of Collateral.
(a) The power to effect any sale or other disposition (a "Sale") of any
portion of the Collateral pursuant to Section 5.05 is subject to this Section
5.17. The Indenture Trustee waives its right to any amount fixed by law as
compensation for any Sale.
(b) In connection with a Sale of any of the Collateral,
(i) any Holder of Notes may bid for the property offered for sale,
and on compliance with the terms of sale may own the property without
further accountability, and may, in paying its purchase price, deliver
any Principal Amount Notes or claims for interest on Interest Bearing
Notes rather than cash up to the amount that would be payable on them
from the distribution of the net proceeds of the sale, and the Notes
shall be returned to the Holders after being appropriately stamped to
show partial payment if the amount payable for the property is less than
the amount due on the Notes;
(ii) the Indenture Trustee may bid for and acquire the property
offered for Sale, and may purchase any portion of the Collateral in a
private sale, and rather than paying cash, may settle the purchase price
by crediting the gross Sale price against the amount that would be
distributable as a result of the Sale in accordance with Section 5.05(b)
on the next Payment Date after the Sale without being required to
produce the Notes to complete the Sale or for the net Sale price to be
credited against the Notes, and
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any property so acquired by the Indenture Trustee shall be held and
dealt with by it in accordance with this Indenture;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Collateral in connection with its Sale;
(iv) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Issuer to transfer its interest in any
portion of the Collateral in connection with its Sale, and to take all
action necessary to effect the Sale; and
(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
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(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed in them, on certificates,
opinions, or other documents furnished to the Indenture Trustee and
conforming to the requirements of this Indenture and the Sale and
Servicing Agreement, and the Indenture Trustee need not investigate into
any of the matters expressed in them; but in the case of certificates or
opinions specifically required to be furnished to the Indenture Trustee,
the Indenture Trustee must examine them to determine whether or not they
conform to the requirements of this Indenture 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
38
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.
(e) The limitations on the obligations of the Indenture Trustee under
this Indenture shall not affect any obligations of the Indenture Trustee
acting as Master Servicer under the Sale and Servicing whenever it may be so
acting.
(f) The Issuer hereby directs the Indenture Trustee to execute, deliver,
and perform its obligations under the Cap Administration Agreement (in its
capacity as Cap Trustee). The Sellers, the Depositor, the Master Servicer, and
the Holders of the Class 2-A Notes by their acceptance of the Notes
acknowledge and agree that the Indenture Trustee shall execute, deliver, and
perform its obligations under the Cap Administration Agreement and shall do so
solely in its capacity as Cap Trustee and not in its individual capacity.
Every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Indenture Trustee shall apply to
the Indenture Trustee's execution of the Cap Administration Agreement in its
capacity as Cap Trustee, and the performance of its duties and satisfaction of
its obligations under Cap Administration Agreement.
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 and the Co-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 or the Co-Trustee acts or refrains from
acting, it may require an Officer's Certificate or an Opinion of Counsel.
Neither the Indenture Trustee nor the Co-Trustee shall 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 and the Co-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 neither the Indenture Trustee nor the Co-Trustee shall be
responsible for any misconduct or negligence on the part of, or for the
39
supervision of, any agent, counsel, custodian, or nominee appointed with due
care by it under this Indenture.
(d) The Indenture Trustee and the Co-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.
(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.
Neither the Indenture Trustee nor the Co-Trustee shall be responsible
for and makes no representation as to the validity or adequacy of the
Collateral or any Transaction Document (other than the Indenture Trustee as to
the signature and authentication of the Indenture Trustee on the Notes).
Neither shall 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 with respect to its certificate of
authentication.
Neither the Indenture Trustee nor the Co-Trustee is 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. Neither the Indenture Trustee nor
the Co-Trustee shall be responsible for:
40
(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;
(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.
Neither the Indenture Trustee nor the Co-Trustee shall be responsible for
filing any Financing or Continuation Statement in any public office at any
time or otherwise to perfect or maintain the perfection of any Security
Interest or lien granted to the Indenture Trustee 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. The Co-Trustee, any other 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 or the Co-Trustee need not
be segregated from other funds except to the extent required by law or the
Transaction Documents. Neither the Indenture Trustee nor the Co-Trustee shall
be liable for interest on any money received by it except as it may agree in
writing.
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Section 6.07. Compensation.
(a) The compensation of the Indenture Trustee will be separately agreed
to between the Sponsor 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 Sponsor. 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.
(b) The compensation of the Co-Trustee will be separately agreed to
between the Sponsor and the Co-Trustee and, to the extent not otherwise paid,
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
Co-Trustee shall have no claim against the Issuer or any of the Collateral for
the payment of any of its fees and expenses. The Co-Trustee shall not fail to
perform its duties under this Indenture 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 Indenture Trustee shall be in a state for
which an Opinion of Counsel has been delivered to the successor Indenture
Trustee at the time it is appointed to the effect that the Trust will not be a
taxable entity under the laws of the state of its principal office. Whenever
an Indenture Trustee ceases to be eligible in accordance with the provisions
of this Section, the Indenture Trustee shall resign immediately in accordance
with Section 6.10.
Section 6.09. Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). An Indenture Trustee
who has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
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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;
(iii) the Indenture Trustee otherwise becomes incapable of acting;
or
(iv) during the period in which the Depositor is required to file
Exchange Act reports with respect to the Trust, the Indenture Trustee
fails to comply with its obligations under the last sentence of Section
6.01 of the Sale and Servicing Agreement, Article VII of the Sale and
Servicing Agreement, the preceding paragraph, or Section 6.12 and that
failure is not remedied within the lesser of 10 calendar days or the
period in which the applicable Exchange Act Report can be filed timely
(without taking into account any extensions).
As a condition to the effectiveness of a resignation by the Indenture
Trustee, at least 15 calendar days before the effective date of that
resignation, the Indenture Trustee must provide (x) written notice to the
Depositor of any successor pursuant to this Section and (y) in writing and in
form and substance reasonably satisfactory to the Depositor, all information
reasonably requested by the Depositor in order to comply with the Depositor's
reporting obligation under Item 6.02 of Form 8-K with respect to the
resignation of the Indenture Trustee.
If the Indenture Trustee fails to satisfy Section 6.08, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee. If a
successor Indenture Trustee does not take office within 60 days after the
retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer, the Transferor, the Depositor, the Master Servicer, the
Credit Enhancer, or the Holders of not less than 51% of the aggregate
Outstanding Amount of 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.
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Section 6.11. Acceptance of Appointment by Successor.
A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee and to the
Issuer, the Transferor, the Depositor, and the Master Servicer, and the Credit
Enhancer. The resignation or removal of the retiring Indenture Trustee shall
become effective on the later of (x) receipt of the written acceptance and (y)
the successor providing the Depositor in writing and in form and substance
reasonably satisfactory to the Depositor, all information reasonably requested
by the Depositor in order to comply with the Depositor's reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement trustee, and the
successor Indenture Trustee shall have all the rights and obligations, and
automatically succeed to the estate, of the Indenture Trustee under this
Indenture without any further act or transfer. The successor Indenture Trustee
shall mail a notice of its succession to the Noteholders. The retiring
Indenture Trustee shall promptly deliver any instruments of transfer with
respect to the trust estate requested by the Issuer or the successor Indenture
Trustee and deliver all property held by it as Indenture Trustee to the
successor Indenture Trustee. No proposed successor Indenture Trustee shall
accept its appointment unless at the time of its acceptance it is eligible
under Section 6.08.
In addition, if the Cap Contract is still outstanding, the person
appointed as successor indenture trustee, in its acceptance of its
appointment, shall acknowledge accepting its appointment as successor Cap
Contract Administrator under the Cap Contract Administration Agreement and
execute and deliver any other documentation necessary to become and act as
successor Cap Contract Administrator.
Section 6.12. Successor Indenture Trustee by Merger.
If the Indenture Trustee consolidates with, merges or converts
into, or transfers all or substantially all its corporate trust business or
assets to, another corporation or banking association, the resulting,
surviving, or transferee corporation shall be the successor Indenture Trustee
if it is otherwise eligible under Section 6.08 without any further act on the
part of anyone. The Indenture Trustee shall provide the Credit Enhancer and
each Rating Agency notice of any such transaction.
If any of the Notes have been authenticated but not delivered when the
successor Indenture Trustee takes over, it may adopt the certificate of
authentication of any predecessor Indenture Trustee and deliver the
authenticated Notes with the same effect as if it had authenticated the Notes.
At least 15 calendar days before the effective date of any merger or
consolidation of the Indenture Trustee, the Indenture Trustee will provide (x)
written notice to the Depositor of any successor pursuant to this Section and
(y) in writing and in form and substance reasonably satisfactory to the
Depositor, all information reasonably requested by the Depositor in order to
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comply with the Depositor's reporting obligation under Item 6.02 of Form 8-K
with respect to a replacement Indenture Trustee.
Section 6.13. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Indenture Trustee
and the Issuer, acting jointly, may execute and deliver instruments to appoint
one or more persons approved by the Master Servicer and the Credit Enhancer to
act as a co-trustees, or separate trustees, of any part of the Collateral, and
to vest in them, in that capacity and for the benefit of the Secured Parties,
title to any part of the Collateral and any rights and obligations the
Indenture Trustee considers appropriate, subject to the other provisions of
this Section. Pursuant to Section 6.15, the Co-Trustee has been appointed as a
co-trustee solely for the duties stated in Section 6.15 and no other. 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 (other than the Co-Trustee) jointly (the separate trustee or
co-trustee is not authorized to act without the Indenture Trustee
joining in the act), except to the extent that under any law of any
jurisdiction in which any particular acts are to be performed the
Indenture Trustee is unable to perform the acts, in which case the
rights and obligations (including holding title to any part of the
Collateral) shall be 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) Except with respect to the Co-Trustee, 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.
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(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee dies, becomes incapable of acting, resigns or is removed, all of
its estates, rights, and obligations shall vest in the Indenture Trustee, to
the extent permitted by law, without the appointment of a new trustee.
Section 6.14. Representations and Warranties of Indenture Trustee.
The Indenture Trustee represents and warrants that on the Closing Date:
(i) it is a corporation duly organized, validly existing, and in
good standing under the laws of its place of incorporation;
(ii) it has full power and authority to execute, deliver, and
perform this Indenture and the Sale and Servicing Agreement, and has
taken all necessary action to authorize the execution, delivery, and
performance by it of this Indenture and the Sale and Servicing
Agreement;
(iii) the consummation of the transactions contemplated by this
Indenture and the fulfillment of its terms do not conflict with, result
in any breach of, or constitute (with or without notice or lapse of
time) a default under, the certificate of incorporation or bylaws of the
Indenture Trustee or any agreement or other instrument to which it is a
party or by which it is bound;
(iv) it does not have notice of any adverse claim (as used in
Section 8-302 of the UCC in effect in Delaware) with respect to the
Mortgage Loans;
(v) it satisfies the requirements of Section 6.08; and
(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.
Section 6.15. Co-Trustee and the Loan Insurance Policy.
(a) The Co-Trustee has been appointed solely to (i) receive
and hold the Loan Insurance Policy on behalf of the Noteholders and (ii) make
aggregate premium payments with respect to the Loan Insurance Policy as
directed by the Master Servicer and take the other
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actions expressly provided for in this Section 6.15. The Co-Trustee, not in
its individual capacity but solely in its capacity as Co-Trustee on behalf of
the Noteholders, is hereby directed to hold the Loan Insurance Policy for the
benefit of the Noteholders. The Co-Trustee acknowledges receipt of the Loan
Insurance Policy and agrees to perform its duties in the manner described
below.
(b) The Co-Trustee's duties are limited to those expressly stated in
this Section 6.15, and the Co-Trustee shall not have any of the duties of the
Indenture Trustee under the Indenture or any other Transaction Document.
(c) On each Payment Date upon receipt of funds from the Master Servicer
in accordance with Section 8.02(a), the Co-Trustee shall pay the amount
received from the Master Servicer to the Loan Insurance Policy Provider on the
Payment Date by wire transfer of immediately available funds in accordance
with written instructions furnished by the Loan Insurance Policy Provider
pursuant to the Loan Insurance Policy. The Co-Trustee will establish and
maintain on behalf of the Noteholders an Eligible Account with the title
specified in the Indenture Adoption Annex. The Co-Trustee shall hold amounts
deposited in that account as trustee for the benefit of the Secured Parties.
The Co-Trustee shall have no obligation to verify the accuracy of any amount
to be paid as aggregate premium payable to the Loan Insurance Policy Provider
and may rely conclusively on the written instructions of the Master Servicer.
The Master Servicer shall make any claims pursuant to and in accordance with
the Loan Insurance Policy and, except for the duties of the Co-Trustee in
Section 6.15(a), shall perform all of the obligations of the insured under the
Loan Insurance Policy on behalf of the Co-Trustee and for the benefit of the
Noteholders. Payments by the Loan Insurance Policy Provider will be made
directly to the Master Servicer that will deposit them into the Collection
Account. However, if the Co-Trustee receives any payment under the Loan
Insurance Policy from the Loan Insurance Policy Provider, the Co-Trustee shall
pay them to the Master Servicer to be deposited in the Payment Account.
The wiring instructions for the Co-Trustee and the Indenture Trustee are
specified in the Indenture Adoption Annex.
(d) The Co-Trustee shall be entitled to the following rights and
immunities:
(i) the duties and obligations of the Co-Trustee shall be
determined solely by the express provisions of this Indenture. The
Co-Trustee shall not be liable, individually or as Co-Trustee, except
for its performance of the duties and obligations specifically provided
to be performed by the Co-Trustee in this Section 6.15, no implied
covenants or obligations shall be read into this Indenture or any other
Transaction Document against the Co-Trustee, and it may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished
to it and conforming to the requirements of this Indenture that it
47
reasonably believed in good faith to be genuine and to have been duly
executed by the proper authorities respecting any matters arising
hereunder;
(ii) the Co-Trustee shall not be liable, individually or as
Co-Trustee, for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Co-Trustee, unless the Co-Trustee
was grossly negligent or acted in bad faith or with willful misfeasance;
(iii) the Co-Trustee shall not be liable, individually or as
Co-Trustee, for any action taken, suffered or omitted by it in good
faith and believed by it to be authorized or within the discretion or
rights or powers conferred on it by this Indenture;
(iv) the Co-Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, or other paper or document;
(v) the Co-Trustee shall not be required to expend its own funds
or otherwise incur any financial liability in the performance of any of
its duties hereunder if it has reasonable grounds for believing that
repayment of such funds or adequate indemnity against such liability is
not assured to it;
(vi) the Co-Trustee in its individual or any other capacity may
become the owner or pledgee of Notes with the same rights as it would
have if it were not the Co-Trustee; and
(vii) the compensation and indemnification of the Co-Trustee shall
be separately agreed to between the Sponsor and the Co-Trustee.
(e) The Co-Trustee shall, at all times, be a corporation or association
organized and doing business under the laws of a state or the United States of
America, authorized under such laws to exercise corporate trust powers having
aggregate capital surplus and undivided profits of at least $50,000,000, and
subject to supervision or examination by a federal or state authority, and
otherwise acceptable to the Loan Insurance Policy Provider. If at any time the
Co-Trustee ceases to be eligible in accordance with this subsection, the
Co-Trustee shall resign immediately in the manner and with the effect
specified in Section 6.15(f). The corporation or national banking association
serving as Co-Trustee may have normal banking and trust relationships with the
Transferor and its affiliates.
(f) The Co-Trustee may at any time resign and be discharged from the
trusts hereby created (1) by giving written notice of resignation to the Loan
Insurance Policy Provider and the Indenture Trustee, not less than 60 days
before the date specified in the notice when the resignation is to take
effect, and (2) upon acceptance of appointment by a successor co-trustee in
accordance with this Subsection and meeting the qualifications in Section
6.15(e). If no successor co-trustee shall have been so appointed and have
accepted appointment within 60
48
days after the notice or resignation, the resigning Co-Trustee may petition
any court of competent jurisdiction for the appointment of a successor
co-trustee.
If at any time (i) the Co-Trustee ceases to be eligible in accordance
with Section 6.15(e) and fails to resign after written request by the Loan
Insurance Policy Provider or the Indenture Trustee, or (ii) the Co-Trustee
becomes incapable of acting, or is adjudged as bankrupt or insolvent, or a
receiver of the Co-Trustee or of its property is appointed, or any public
officer takes charge of the Co-Trustee or of its property or affairs for the
purpose of rehabilitation, conservation, or liquidation, then the Loan
Insurance Policy Provider or the Indenture Trustee may remove the Co-Trustee
and appoint a successor co-trustee by written instrument, with copies
delivered to the Co-Trustee, the Indenture Trustee, Loan Insurance Policy
Provider, and the successor co-trustee. Any successor co-trustee shall be paid
pursuant to an agreement with the Sponsor and the Collateral shall not be used
to satisfy any obligation to pay the compensation of the successor co-trustee.
Any resignation or removal of the Co-Trustee and appointment of a successor
co-trustee pursuant to this Subsection shall become effective only upon
acceptance of appointment by the successor co-trustee as provided in this
Subsection.
(g) Any successor co-trustee appointed as provided in Section 6.15(f)
shall execute, acknowledge, and deliver to the Loan Insurance Policy Provider,
the Indenture Trustee, and to its predecessor co-trustee an instrument
accepting its appointment and thereupon the resignation or removal of the
predecessor co-trustee shall become effective and the successor co-trustee,
without anything further, shall become fully vested with all the rights and
obligations of its predecessor hereunder, with the like effect as if
originally named as co-trustee. The Co-Trustee shall deliver the Loan
Insurance Policy and any amounts held in its possession for the benefit of the
Loan Insurance Policy Provider to the successor co-trustee upon the
appointment of the successor co-trustee.
(h) The Co-Trustee represents and warrants as to itself that it is duly
authorized under applicable law and its organizational documents to execute
and deliver this Indenture, and to perform its obligations under Section 6.15
of this Indenture, and that all action necessary or required therefor has been
duly and effectively taken or obtained and all federal and state governmental
consents and approvals, if any, required with respect thereto have been
obtained.
(i) The Co-Trustee shall surrender the Loan Insurance Policy to the Loan
Insurance Policy Provider for cancellation upon the satisfaction and discharge
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
49
or Credit Enhancer requests in writing, within 30 days after the Issuer
receives the request, a list of similar form and content as of a date not more
than ten days before the time the list is furnished. So long as the Indenture
Trustee is the Note Registrar, the Issuer need not furnish these lists.
Section 7.02. Preservation of Information; Communications.
(a) The Indenture Trustee shall preserve the names and
addresses of the Holders of Notes in the most recent list furnished to the
Indenture Trustee as provided in Section 7.01 and the names and addresses of
Holders of Notes received by the Indenture Trustee in its capacity as Note
Registrar in as current a form as is reasonably practicable. The Indenture
Trustee may destroy any list furnished to it under Section 7.01 on receipt of
a new list so furnished.
(b) Noteholders may communicate with other Noteholders with respect to
their rights under this Indenture or under the Notes in the manner provided
under TIA Section 312(b).
(c) The Issuer, the Indenture Trustee, and the Note Registrar shall have
the protections provided under TIA Section 312(c).
Section 7.03. Exchange Act Reports.
(a) The Indenture Trustee shall prepare for filing and file in
accordance with the Exchange Act within 15 days after each Payment Date
(subject to permitted extensions under the Exchange Act) with the Commission a
Form 10-D with copies of the Monthly Statement and, to the extent delivered to
the Indenture Trustee, no later than 5 days following the Payment Date, any
other information identified by the Issuer or the Master Servicer (the
"Additional Designated Information") to be filed with the Commission. If the
Issuer or Master Servicer directs that any Additional Designated Information
is to be filed with any Form 10-D, the Issuer or Master Servicer, as the case
may be, shall specify the item on Form 10-D to which the information is
responsive and, with respect to any exhibit to be filed on Form 10-D, the
exhibit number. Any Additional Designated Information to be filed on Form 10-D
shall be delivered to the Indenture Trustee in XXXXX-compatible form. If no
Additional Designated Information is provided to the Indenture Trustee by the
5th day after a Payment Date, the Indenture Trustee will not be required to
include such information in the Form 10-D filing for the Payment Date. The
Indenture Trustee shall prepare for filing and file any amendment to any Form
10-D previously filed with the Commission with respect to the Issuer at the
request of the Issuer or the Master Servicer. The Master Servicer shall sign
each Form 10-D filed on behalf of the Issuer. The Indenture Trustee shall
encode these filings to provide for automated filing notification instructions
to the Countrywide MBS Surveillance Group at its email address at
XXXxxxx@xxxxxxxxxxx.xxx (or at any other address designated in writing by the
Master Servicer) in its XXXXX submissions when making these filings.
(b) Other than the reports required to be filed on behalf of the Issuer
by the Indenture Trustee pursuant to Section 7.03(a), the Issuer shall:
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(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 Indenture Adoption Annex, beginning with
the date specified in the Indenture Adoption Annex, the Indenture Trustee
shall mail to each Noteholder as required by TIA Section 313(c) and to the
Credit Enhancer a brief report dated that date that complies with TIA Section
313(a). The Indenture Trustee also shall comply with TIA Section 313(b). A
copy of each report at the time of its mailing to Noteholders shall be filed
by the Indenture Trustee with the Commission and each securities exchange on
which the Notes are listed. The Issuer shall notify the Indenture Trustee and
the Credit Enhancer before the Notes are listed on any securities exchange.
The Indenture Trustee shall deliver to each Noteholder the information
necessary for the Holder to prepare its federal and State income tax returns.
On each Payment Date, the Indenture Trustee shall make available to each
Noteholder, the Master Servicer, the Credit Enhancer, and each Rating Agency
on its Internet website the statement for Noteholders prepared by the Master
Servicer and delivered to it pursuant to Section 4.04 of the Sale and
Servicing Agreement for the Payment Date.
If the statement for Noteholders is not accessible to any of the
Noteholders, the Master Servicer, the Credit Enhancer, or either Rating Agency
on the Indenture Trustee's internet website, the Indenture Trustee shall
forward a hard copy of it to each Noteholder, the Master Servicer, the Credit
Enhancer, and each Rating Agency immediately after the Indenture Trustee
becomes aware that it is not accessible to any of them via its website. The
address of the Indenture Trustee's internet website where the statement for
Noteholders will be accessible is
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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 Issuer, Internal Revenue Service
Form 1099 (or any successor form) and any other tax forms required to be filed
or furnished to Noteholders covering payments by the Indenture Trustee (or the
Paying Agent) on the Notes and shall file and distribute them as required by
law. In addition, the Indenture Trustee shall promptly furnish any information
reasonably requested by the Issuer that is reasonably available to the
Indenture Trustee to enable the Issuer to perform its federal and state income
tax reporting obligations.
ARTICLE VIII
ACCOUNTS, CAP CONTRACT, 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 Indenture Adoption Annex. The Indenture Trustee shall hold
amounts deposited in the Payment Account as Indenture Trustee for the benefit
of the Secured Parties. The Indenture Trustee will, promptly upon receipt,
deposit in the Payment Account and retain in it the aggregate amount remitted
by the Master Servicer, any Sponsor Loss Coverage Amount paid to it by the
Sponsor pursuant to the Sale and Servicing Agreement and any payments under
the Loan Insurance Policy received from the Master Servicer pursuant to
Section 6.15(c). 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.
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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 in each Loan Group 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 for each Loan Group with the title specified in the Indenture
Adoption Annex. Each 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 Accounts. The Additional Loan Accounts are
not assets of any REMIC created under the Trust Agreement. The Additional Loan
Accounts 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 consisting of two
subaccounts--the Basis Risk Account and the Cap Contract Accoun t 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 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).
The Indenture Trustee will withdraw funds from the Cap Contract Account
for payment pursuant to Section 8.03(a)(xv) and 8.08.
In addition, the Indenture Trustee may withdraw from the Basis Risk
Carryforward Reserve Fund any amount deposited in the Basis Risk Carryforward
Reserve Fund and not required to be deposited in it.
The Indenture Trustee shall invest amounts on deposit in the Basis Risk
Carryforward Reserve Fund at the written direction of the Master Servicer in
Eligible Investments payable on demand or maturing no later than the day
before the next Payment Date. 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
53
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 Accounts.
(a) Upon delivery of an Officer's Certificate to the
Indenture Trustee, the Master Servicer may withdraw funds with respect to the
relevant Loan Group from the Collection Account for the following purposes:
(i) to pay to the Master Servicer its Servicing Fee to the extent
that it has not been retained pursuant to Section 3.02(b) of the Sale
and Servicing Agreement;
(ii) to pay to the Master Servicer net earnings on amounts on
deposit in the Collection Account as provided in Section 8.01;
(iii) to pay from Principal Collections for the relevant Loan
Group the amounts provided for the purchase of Additional Balances
pursuant to Section 2.01 of the Sale and Servicing Agreement; and
(iv) to pay the aggregate premiums due under the Loan Insurance
Policy to the Co-Trustee in accordance with Section 6.15(c) and to pay
any other amounts due under the Loan Insurance Policy to the Loan
Insurance Policy Provider.
If the Master Servicer deposits in the Collection Account any amount not
required to be deposited or any amount representing payments by mortgagors
made by checks subsequently returned uncollected, it may at any time withdraw
that amount from the Collection Account upon delivery of an Officer's
Certificate to the Indenture Trustee.
(b) On the date on which the Indenture Trustee receives:
54
(i) 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,
(ii) the revised Mortgage Loan Schedule reflecting the addition of
the Additional Home Equity Loans covered by a Transfer Document, and
(iii) an Opinion of Counsel, substantially in the form delivered
on the Closing Date, 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 addressed to the Indenture Trustee relating to the perfection of
security interest in the Additional Home Equity Loans,
the Indenture Trustee shall withdraw from the applicable Additional Loan
Account, and release from the lien of this Indenture an amount equal to the
Cut-off Date Asset Balance of the Additional Home Equity Loans covered by the
Transfer Document.
(c) All earnings on funds in the Additional Loan 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 Accounts shall be invested
in Eligible Investments. If any funds remain in any Additional Loan Account on
the Latest Subsequent Closing Date, to the extent that they represent earnings
on the amounts originally deposited into that Additional Loan Account, the
Indenture Trustee shall distribute them to the order of the Master Servicer.
The remaining funds shall be transferred to the Collection Account and treated
as Investor Principal Collections.
(d) If at any time the Depositor becomes aware that the Cut-off Date
Asset Balance of Additional Home Equity Loans reflected on any Transfer
Document exceeds the actual Cut-off Date Asset Balance of the relevant
Additional Home Equity Loans, the Depositor shall so notify the Indenture
Trustee in writing and the Indenture Trustee shall redeposit into the
applicable 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 for a Loan
Group collected during the related Collection Period, the deposits by the
Master Servicer pursuant to Section 3.03 of the Sale and Servicing Agreement,
and any Crossover Amounts) the following amounts and in the following order of
priority to the following persons (based on the information in the Servicing
Certificate), for each Loan Group:
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(i) to pay the premium related to that Loan Group pursuant to the
Insurance Agreement to the Credit Enhancer;
(ii) on the second, third, fourth, fifth and sixth Payment Dates,
to pay the accrued monthly interest on related Class A-IO Component
Notional Balance at the related Class A-IO Component Note Rate;
(iii) to pay the Aggregate Investor Interest for that Class of
Principal Amount Notes for the Payment Date to the related Noteholders;
(iv) to pay the Investor Loss Amount for that Class of Principal
Amount Notes for the Payment Date to the related Noteholders as
principal in reduction of the related Note Principal Balance;
(v) to pay the Investor Loss Reduction Amount for that Class of
Principal Amount Notes to the related Noteholders in reduction of their
Note Principal Balance;
(vi) to pay any amounts described in item (iii) above that remain
unpaid to the Holders of the unrelated Class of Principal Amount Notes
on the Payment Date (after taking into account the allocation of 100% of
the Investor Interest Collections relating to the unrelated Class of
Notes on the Payment Date) to the Holders of the unrelated Class of
Principal Amount Notes;
(vii) to pay previously unreimbursed Credit Enhancement Draw
Amounts related to that Loan Group together with interest on such
amounts at the applicable rate in the Insurance Agreement to the Credit
Enhancer;
(viii) after the sixth Payment Date, to pay the related
Accelerated Principal Payment Amount to the related Class of Principal
Amount Noteholders as principal in reduction of the related Note
Principal Balance;
(ix) after the sixth Payment Date, to pay the unrelated
Accelerated Principal Payment Amount that remains unpaid (after taking
into account the allocation of 100% of the Investor Interest Collections
relating to the unrelated Class of Notes on the Payment Date) to the
unrelated Class of Principal Amount Noteholders as principal in
reduction of the unrelated Note Principal Balance;
(x) to pay any amounts described in items (iv) and (v) above that
remain unpaid to the Holders of the unrelated Class of Notes on the
Payment Date (after taking into account the allocation of 100% of the
Investor Interest Collections relating to the unrelated Class of Notes
on the Payment Date) to the Holders of the unrelated Class of Principal
Amount Notes;
(xi) to pay any amounts related to the Loan Group owed to the
Credit Enhancer pursuant to the Insurance Agreement to the Credit
Enhancer;
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(xii) to pay any amounts required to be paid to the Master
Servicer with respect to the related Class of 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;
(xiii) to pay previously unreimbursed Credit Enhancement Draw
Amounts related to the unrelated Class of Principal Amount Notes
together with interest on them at the applicable rate in the Insurance
Agreement and any other amounts owed under the Insurance Agreement with
respect to the unrelated Loan Group to the Credit Enhancer;
(xiv) on the second, third, fourth, fifth and sixth Payment Dates,
to pay accrued monthly interest on unrelated Class A-IO Component at the
applicable Class A-IO Component Note Rate (after taking into account the
allocation of 100% of the Investor Interest Collections relating to the
unrelated Class of Notes on the Payment Date);
(xv) to the Basis Risk Carryforward Reserve Fund, first the Basis
Risk Carryforward for each Class of Principal Amount Notes remaining
unpaid after application of amounts in the Basis Risk Carryforward
Reserve Fund under Section 8.03(f)(1), and second to restore the amount
in the Basis Risk Carryforward Reserve Fund to $5,000; and
(xvi) any remaining amount to the Issuer for distribution in
accordance with the Trust Agreement.
(b) Payment of Principal Collections. Except on the Payment Date in the
month specified in the Indenture 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 the Investor Principal Collections for
the related Loan Group but not in excess of the related Note Principal
Balance. On the Payment Date in the month specified in the Indenture Adoption
Annex, the Indenture Trustee shall distribute to the Holders of each Class of
Principal Amount Notes all Principal Collections from the related Loan Group
up to the related Note Principal Balance.
(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, and any
Crossover Amounts as provided in Section 8.03(a), any Required Amount remains
unpaid for a Class, the Indenture Trustee shall, based on information in the
Servicing Certificate for the Payment Date, apply Subordinated Transferor
Collections for the related Loan Group to pay the unpaid Required Amounts for
the Class.
If, after making those payments the Required Amount for the Class
remains unpaid, the Indenture Trustee shall apply any remaining Subordinated
Transferor Collections for the unrelated Loan Group (after application of
Subordinated Transferor Collections for the
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unrelated Loan Group pursuant to this subsection to pay Required Amounts for
the Class related to that unrelated Loan Group) to pay any unpaid Required
Amount for the Class.
If, after making both of those payments the Required Amount remains
unpaid, then the remaining Investor Loss Amount and the Investor Loss
Reduction Amount for that Class shall be allocated to reduce the related
Allocated Transferor Interest.
The portion of the Required Amount for a Loan Group in respect of any
Investor Loss Amount or Investor Loss Reduction Amount for the related Class
that, remains uncovered may be ultimately covered by proceeds from liquidation
of the Allocated Transferor Interest of the unrelated Loan Group to the extent
available. No allocation of Investor Loss Amounts or Investor Loss Reduction
Amounts for a Loan Group shall reduce the related Allocated Transferor
Interest below zero.
(d) Payment of the Credit Enhancement Draw Amount. The Indenture Trustee
will make payments to the related Class of Principal Amount Noteholders 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 either Class
of Principal Amount 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) any Net Draws Principal Payment for the Payment Date,
(ii) the Interest Collections for each Loan Group 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
(iii) the portion of Transferor Principal Collections for each
Loan Group for the related Collection Period that are not paid out as
Subordinated Transferor Collections under Section 8.03(c).
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For the purposes of this Section 8.03(e), payments of Subordinated
Transferor Collections under Section 8.03(c) shall be considered to be made
first from Interest Collections until they are reduced to zero, and then from
Principal Collections.
(f) Distributions of Basis Risk Carryforward. On each Payment Date, any
amounts in the Basis Risk Carryforward Reserve Fund shall be distributed by
the Indenture Trustee as follows:
(i) first, on the initial Payment Date, to the Classes of
Principal Amount Notes, pro rate based on their entitlement for Basis
Risk Carryforward for that Payment Date, the lesser of
(A) the amount available in the Basis Risk Carryforward
Reserve Fund from any prior Payment Dates (and with respect to the
first Payment Date the $5,000 on deposit therein), and
(B) the aggregate Basis Risk Carryforward with respect to
the Principal Amount Notes for that Payment Date, and
(ii) second, from amounts deposited on that Payment Date in the
Basis Risk Carryforward Reserve Fund for that purpose under Section
8.03(a)(xv), to the Principal Amount Notes, pro rata based on their
remaining entitlement for Basis Risk Carryforward for that Payment Date,
up to the remaining amount of Basis Risk Carryforward of each such
Class.
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 and Component of Interest Bearing Notes for the
related Payment Date.
Section 8.05. Claims on the Policy; Policy Payments Account.
(a) The Indenture Trustee shall establish the Policy Payments
Account. The Indenture Trustee shall deposit upon receipt any amount paid
under the Policy in the Policy Payments Account and pay that amount only to
pay the related Class of Notes the Credit Enhancement Draw Amounts for which a
claim was made and such amount may not be applied to satisfy 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, to the extent needed to pay any Insured Amount, shall
be transferred to the Payment Account on the related Payment Date, and the
portion thereof representing the Insured Amount shall be disbursed by the
Indenture Trustee to the related Noteholders, in each case as if it were a
payment to the related Noteholders pursuant to 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
59
used to pay other payments to Noteholders, as applicable, with other funds
available for the other payments. However, the amount of any payment of
principal of or interest on the related Class of Notes to be paid from funds
transferred from the Policy Payments Account shall be noted as provided in
paragraph (d) below and in the statement to be furnished to Holders of the
Notes pursuant to Section 7.04. Funds held in the Policy Payments Account
shall not be invested. 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 applicable Class of Notes shall be returned to the Credit
Enhancer, pursuant to the instructions of the Credit Enhancer, by the end of
the Business Day.
(b) If the Indenture Trustee has determined that an Insured Amount is
required to be paid under the Policy with respect to a Payment Date, it shall
deliver a notice (substantially in the form of the Payment Notice Under
Financial Guaranty Insurance Policy No. CA02871A included as Exhibit A to the
Policy) to the Credit Enhancer no later than 10:00 a.m., New York, New York
time on the Business Day preceding the Payment Date and shall provide a copy
of such notice to the Master Servicer at the time the Payment Notice is
delivered to the Credit Enhancer. That notice (substantially in the form of
the Payment Notice Under Financial Guaranty Insurance Policy No. CA02871A
included as Exhibit A to the Policy) shall constitute a claim for payment
pursuant to the Policy.
(c) If the Indenture Trustee receives a certified copy of an order of
the appropriate court (an "Order") that any prior payment made on the Notes
constitutes a Preference Amount, the Indenture Trustee shall so notify the
Credit Enhancer, shall comply with the Policy to obtain payment by the Credit
Enhancer of the Preference Amount, and shall, at the time it provides notice
to the Credit Enhancer, notify each holder of the affected Notes by mail that
(i) subject to the terms of the Policy, the Credit Enhancer will
disburse the Preference Amount directly to the receiver, conservator,
debtor-in-possession, or trustee in bankruptcy named in the Order
(unless an Owner has provided evidence satisfactory to the Credit
Enhancer that it has previously paid such amount to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the
Order, in which case such payment shall be disbursed to the Indenture
Trustee) on the fourth Business Day following the delivery to the
Indenture Trustee on behalf of the Noteholder of (1) a certificate of
the Noteholder that the Order has been entered and is not subject to any
stay, (2) an opinion of counsel (obtained at the expense of the Issuer)
satisfactory to the Credit Enhancer that the Order is final and is not
subject to appeal, and (3) an assignment duly executed and delivered by
the Noteholder, in a form reasonably required by the Credit Enhancer and
provided to the Noteholder by the Credit Enhancer, irrevocably assigning
to the Credit Enhancer all rights and claims of the Noteholder relating
to or arising under the affected Notes against the debtor that made a
payment of the Preference Amount, or otherwise with respect to the
payment. If the documents are
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received after 10:00 a.m., New York City time, on a Business Day, they
will be considered received on the following Business Day, and
(ii) if the Preference Amount is recovered from the Noteholder
pursuant to the Order, the Noteholder will be entitled to payment
pursuant to the Policy.
A copy of the Policy shall be made available to each affected Noteholder
through the Indenture Trustee, and the Indenture Trustee shall furnish to the
Credit Enhancer or its fiscal agent, if any, a copy of its records evidencing
the payments that have been made by the Indenture Trustee in respect of any
Preference Amounts paid by the Credit Enhancer and the dates on which the
payments were made.
(d) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid on any Class of Notes from moneys
received under the Policy. The Credit Enhancer may inspect the records at
reasonable times during normal business hours on two Business Days' notice to
the Indenture Trustee.
(e) The Noteholders are not entitled to institute proceedings directly
against the Credit Enhancer. Each Noteholder, by its purchase of Notes agrees
that the Credit Enhancer may at any time during the continuation of any
proceeding relating to a Preference Amount, direct all matters relating to the
Preference Amount on its behalf, 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.
(f) Any payments to the Credit Enhancer shall be made by wire transfer
of immediately available funds to the following Federal Reserve Account (until
the Credit Enhancer notifies the Indenture Trustee of a change in the account
information):
Bank of America, N.A.
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
ABA Number: 000000000
For the Account of: XL Capital Assurance Inc.
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Account #: 000-000-0000
Reference: Policy Number CA02871A - CWHEQ 2006-D HELOC
(g) The Indenture Trustee shall, upon retirement of each Class of Notes,
furnish to the Credit Enhancer a notice of the retirement, and, after
retirement of each Class of the Notes and the expiration of the term of the
Policy, surrender the Policy to the Credit Enhancer for cancellation.
(h) The Indenture Trustee shall hold the Policy in trust as agent for
the Noteholders for the purpose of making claims on the Policy and
distributing the proceeds of claims on the
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Policy. Neither the Policy nor the amounts paid on the Policy shall constitute
part of the trust estate created by this Agreement. Each Noteholder, by
accepting its Notes, irrevocably appoints the Indenture Trustee as
attorney-in-fact to make claims on the Policy and to sign on its behalf any
certification required with respect to any Payment Notice under the Policy.
(i) Anything in this Indenture to the contrary notwithstanding, any
payment with respect to principal of or interest on the Notes that is made
with money received pursuant to the Policy shall not be considered payment of
the Notes from the Trust. The Depositor, the Master Servicer, and the
Indenture Trustee acknowledge, and each Noteholder by its acceptance of a Note
agrees that, without the need for any further action on the part of the Credit
Enhancer, the Depositor, the Master Servicer, the Indenture Trustee, or the
Note Registrar
(i) to the extent the Credit Enhancer makes payments, directly or
indirectly, on account of principal of or interest on any Class of Notes
to the related Noteholders, the Credit Enhancer shall be fully
subrogated to, and each such Noteholder hereby delegates and assigns to
the Credit Enhancer, to the fullest extent permitted by law, the rights
of such Noteholders to receive such principal and interest from the
Trust, and
(ii) the Credit Enhancer shall be paid such amounts from the
sources and in the manner provided in this Indenture for the payment of
such amounts and as provided in this Indenture until full reimbursement
of all Insured Payments and Preference Amounts (together with interest
thereon at the Late Payment Rate from the date paid by the Credit
Enhancer until the date of their reimbursement).
The Indenture Trustee and the Master Servicer shall cooperate in all
respects (at the expense of the Issuer) with any reasonable request by the
Credit Enhancer for action to preserve or enforce the Credit Enhancer's rights
or interests under this Indenture (without limiting the rights or affecting
the interests of the Holders of any Class of Notes as otherwise provided in
this Indenture).
Section 8.06. Replacement Policy.
If a Credit Enhancer Default occurs or if the claims paying ability
rating of the Credit Enhancer is downgraded, 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
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Enhancer. Any other form of credit enhancement may also be substituted for the
Policy after a Credit Enhancer Default or downgrade 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.
Section 8.07. Cap Contract.
The Cap Contract Administrator and the Cap Counterparty have entered
into the Cap Contract Administration Agreement. The Indenture Trustee's rights
to receive certain proceeds of the Cap Contract as provided in the Cap
Contract Administration Agreement shall be rights of the Indenture Trustee as
Cap Trustee under this Indenture, shall be an asset of the Cap Trust, and
shall not be an asset of the Trust or of any REMIC. The Cap Contract
Administrator and the Master Servicer shall remit any amounts received from
time to time with respect to the Cap Contract to the Cap Trustee, and the Cap
Trustee shall deposit the Cap Payment (Cap Trust Share) portion of any amounts
received from time to time with respect to the Cap Contract into the Cap
Contract Account, and shall remit to Countrywide Home Loans, Inc. the excess
of any amounts received with respect to the Cap Contract for a related Payment
Date over the Cap Payment (Cap Trust Share) for the related Payment Date.
No later than two Business Days following each Payment Date, the Cap
Trustee shall notify the Cap Contract Administrator of the aggregate Note
Principal Balance of the Class 2-A Certificates after all distributions on the
Payment Date.
Upon a Responsible Officer of the Cap Trustee obtaining actual knowledge
of an Event of Default (as defined in the Cap Contract) or Termination Event
(as defined in the Cap Contract) for which the Cap Contract Administrator has
the right to designate an Early Termination Date (as defined in the Cap
Contract), the Cap Trustee shall act at the written direction of the Depositor
as to whether to direct the Cap Contract Administrator to designate an Early
Termination Date. The Cap Trustee shall provide written notice to each Rating
Agency following the Event of Default or Termination Event. Upon the
termination of the Cap Contract under the circumstances contemplated by this
Section, the Cap Trustee shall use commercially reasonable efforts to enforce
the rights of the Cap Contract Administrator under the Cap Contract,
consistent with this Indenture, and the Cap Contract Administrator shall use
commercially reasonable efforts to procure a replacement Cap contract with
terms approximating those of the original Cap Contract.
Section 8.08. Cap Trust.
On the Closing Date, there is hereby established a separate trust (the "Cap
Trust"), the assets of which shall consist of the Indenture Trustee's rights
and obligations under the Cap Administration Agreement as Cap Contract
Administrator. The Cap Trust shall be maintained by the Cap Trustee, who
initially, shall be the Indenture Trustee. On each Payment Date, funds on
deposit in the Cap Contract Account up to the Cap Shortfall shall be
distributed to the Holders of the Class 2-A Notes and any funds remaining in
the account after this payment on
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any Payment Date shall be paid to the Sponsor. For federal income tax
purposes, the Cap Trust, including the Cap Contract Account, shall be owned by
the Sponsor. In the event that an early termination payment is received with
respect to an Early Termination Date, the early termination payment will be
deposited by the Cap Trustee in the Cap Contract Account to cover future Cap
Shortfalls on the Class 2-A Notes until the Cap Contract Termination Date and
any remaining amount will be paid on that date to the Sponsor.
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, the Co-Trustee, and the Indenture Trustee may enter into indentures
supplemental to this Indenture, in form satisfactory to the Indenture Trustee
and the Co-Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property subject
to the lien of this Indenture, or to confirm unto the Indenture Trustee
any property subject or required to be subjected to the lien of this
Indenture, or to subject additional property to the lien of this
Indenture;
(ii) to evidence the succession of another person to the Issuer
pursuant to this Indenture, and the assumption by the successor of the
covenants of the Issuer in this Indenture and the Notes in compliance
with the applicable provisions of this Indenture;
(iii) to add to the covenants of the Issuer, for the benefit of
the Noteholders, or the Credit Enhancer or to surrender any right
conferred on the Issuer in this Indenture;
(iv) to convey, transfer, assign, mortgage, or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity or mistake;
(vi) to correct or supplement any provision in this Indenture or
in any supplemental indenture that may be inconsistent with any other
provision in this Indenture or in any supplemental indenture or the
other Transaction Documents;
(vii) to conform this Indenture to the final prospectus supplement
issued in respect of the Notes referred to in the Indenture 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;
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(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.
The Indenture Trustee and the Co-Trustee are 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, the Co-Trustee, 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,
the Co-Trustee, 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
65
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 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, the Co-Trustee, 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 and the Co-Trustee may require and, subject to
Sections 6.01 and 6.03, shall be fully protected in relying on an Opinion of
Counsel (addressed to the Indenture Trustee) stating that
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the execution of the supplemental indenture is authorized or permitted by this
Indenture. The Indenture Trustee and the Co-Trustee may, but need not, enter
into any supplemental indenture that affects the Indenture Trustee's or the
Co-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 Co-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 that the amendment will not result in a tax on any
REMIC created under the Trust Agreement pursuant to the REMIC Provisions or
cause any REMIC created under the Trust Agreement to fail to qualify as a
REMIC at any time that any Securities are outstanding.
Section 9.06. Tax Matters
(a) The assets of the Issuer with respect to which a REMIC election is
to be made as provided in the Trust Agreement are intended to be a real estate
mortgage investment conduit, and the affairs of the Trust shall be conducted
so that each REMIC created pursuant to the Trust Agreement qualifies as a real
estate mortgage investment conduit.
(b) The Indenture Trustee shall act as agent on behalf of the Trust and
as such agent the Indenture Trustee shall:
(i) prepare and file in a timely manner a U.S. Real Estate
Mortgage Investment Conduit Income Tax Return (Form 1066 or any
successor form adopted by the Internal Revenue Service) and prepare and
file with the Internal Revenue Service and applicable state or local tax
authorities income tax or information returns for each taxable year for
each REMIC as required by the Code or state or local tax laws,
regulations, or rules, and furnish to the Holders of the Notes and the
Certificates any schedules, statements, or information required by the
Code or state or local tax laws, regulations, or rules;
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(ii) within thirty days of the Closing Date, furnish to the
Internal Revenue Service, on Forms 8811 or as otherwise may be required
by the Code, the name, title, address, and telephone number of the
person that the Holders of the Notes and the Certificates may contact
for tax information relating to the Notes and the Certificates, together
with such additional information as may be required by Form 8811, and
update such information as required by the Code for the Issuer;
(iii) make elections on behalf of each REMIC to be treated as a
REMIC on the federal tax return of each REMIC for its first taxable year
(and, if necessary, under applicable state law);
(iv) prepare and forward to the Holders of the Notes and the
Certificates and to the Internal Revenue Service and, if necessary,
state tax authorities, all information returns and reports as and when
required to be provided to them in accordance with the REMIC Provisions,
including the calculation of any original issue discount;
(v) provide any information necessary for the computation of any
tax imposed on any transfer of a Residual Certificate (the reasonable
cost of computing and furnishing such information may be charged to the
person liable for the tax);
(vi) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the REMIC tax status
of any REMIC;
(vii) pay, from the sources specified in Section 3.12(c) of the
Trust Agreement or Section 9.06(c), as applicable, any federal or state
tax, including prohibited transaction taxes as described below, imposed
on any REMIC before its termination when and as they become payable (but
the Indenture Trustee or any other appropriate person may contest any
such tax in appropriate proceedings and the Indenture Trustee may
withhold payment of the tax, if permitted by law, pending the outcome of
such proceedings);
(viii) ensure that federal, state, or local income tax or
information returns are signed as required by the Code or state or local
laws;
(ix) maintain records relating to each REMIC necessary to prepare
the foregoing returns, schedules, statements, or information, including
the income, expenses, assets, and liabilities of each REMIC, and the
fair market value and adjusted basis of the assets determined as
required by the Code; and
(x) subject to the succeeding sentence, represent any REMIC in any
administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative
adjustment as to any taxable year of any REMIC, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of any REMIC, and otherwise act on
behalf of any REMIC regarding any tax matter involving it. The Indenture
Trustee, as and when necessary and appropriate, may agree to represent
the trust in any administrative or judicial proceedings relating to an
examination or audit by
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any governmental taxing authority, request an administrative adjustment
as to any taxable year of the trust provided for herein, enter into
settlement agreements with any governmental taxing agency, extend any
statute of limitation relating to any tax matter of the trust provided
for herein, and otherwise act on behalf of the trust provided for herein
in relation to any tax matter involving the trust. The fees for any
representation or other assistance rendered by the Indenture Trustee in
connection with the tax-related services described in the preceding
sentence will be set forth in a separate agreement, if necessary.
To enable the Indenture Trustee to perform its duties, the Issuer shall
provide to the Indenture Trustee within ten days after the Closing Date any
information that the Indenture Trustee requests in writing and determines to
be relevant for tax purposes to the valuations and offering prices of the
Notes and the Certificates, including the price, yield, prepayment assumption,
and projected cash flows of the Notes and the Certificates and the Mortgage
Loans. Thereafter, the Issuer shall provide to the Indenture Trustee promptly
upon written request therefor, any additional information that the Indenture
Trustee requests to enable it to perform these duties.
(c) If any tax is imposed on "prohibited transactions" of any REMIC as
defined in Section 860F(a)(2) of the Code, on the "net income from foreclosure
property" of a REMIC as defined in section 860G(c) of the Code, on any
contribution to a REMIC after the Startup Day pursuant to Section 860G(d) of
the Code, or any other tax is imposed on any REMIC (including any federal,
state, or local tax), the tax shall be paid by the Indenture Trustee, if the
tax arises out of a breach by the Indenture Trustee of any of its obligations
described in Section 9.06(b).
(d) The Indenture Trustee shall treat the rights of the holders of
Principal Amount Notes to receive payments from the Basis Risk Carryforward
Reserve Fund as rights in a notional principal contract written by the Holders
of the Class C Certificates in respect of any Basis Risk Carryforward
distributed in favor of the holders of the Principal Amount Notes. Thus, the
Principal Amount Notes and the Class C Certificates shall be treated as
representing ownership of not only Master REMIC regular interests, but also
ownership of an interest in an interest rate cap contract.
(e) The Indenture Trustee shall treat the Basis Risk Carryforward
Reserve Fund as an outside reserve fund within the meaning of Treasury
Regulation 1.860G-2(h) that is owned by the Holders of the Class C
Certificates, and that is not an asset of any REMIC.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) The Principal Amount Notes are subject to redemption by the Issuer
with the consent of the Credit Enhancer and the Master Servicer in whole on
any Payment Date on or
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after the Optional Termination Date. 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 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 the Co-Trustee and then
notify the Noteholders by letter mailed or sent by facsimile transmission not
earlier than the 15th day and not later than the 25th day of the month before
the month of the redemption.
Payment on the Principal Amount Notes will only be made on presentation
and surrender of the Notes at the office or agency of the Indenture Trustee
specified in the redemption notice. By the redemption date, the Issuer shall
deposit in the Payment Account in immediately available funds an amount that,
when added to the funds on deposit in the Payment Account and the Collection
Account that are payable to the Noteholders, equals the redemption price for
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 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.
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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.
Section 10.03. Notes Payable on Redemption Date.
Following notice of redemption as required by Section 10.02, on
the redemption date the Principal Amount Notes shall become payable at the
redemption price and (unless the Issuer defaults in the payment of the
redemption price) no interest shall accrue on the redemption price for any
period after the date to which accrued interest is calculated for purposes of
calculating the redemption price.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.
(a) Whenever the Issuer requests the Indenture Trustee to
take any action under this Indenture, the Issuer shall furnish to the
Indenture Trustee and the Credit Enhancer an Officer's Certificate stating
that any conditions precedent provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in its opinion any conditions precedent have been complied with.
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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
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
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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 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
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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 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
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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 Indenture 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 Indenture 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";
(iv) the Co-Trustee 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 Co-Trustee addressed as provided
in the Indenture Adoption Annex or at any other address previously
furnished in writing to the Indenture Trustee by the Co-Trustee; or
(v) 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 Indenture Adoption Annex or at any other
address previously furnished in writing to the Indenture Trustee and the
Issuer.
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
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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 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.
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Section 11.08. Effect of Headings and Table of Contents.
The Article and Section headings and the Table of Contents are
for convenience only and shall not affect the construction of this
Indenture.
Section 11.09. Successors and Assigns.
All agreements in this Indenture and the Notes by the Issuer
shall bind its successors and assigns, whether so expressed or not. All
agreements of the Indenture Trustee in this Indenture shall bind its
successors, assigns, co-trustees, and agents.
Section 11.10. Separability.
If any provision in this Indenture or in the Notes is invalid, illegal,
or unenforceable, the validity, legality, and enforceability of the remaining
provisions of this Indenture and the Notes shall not be affected in any way.
Section 11.11. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any person, other than the parties to this Indenture and their
successors under this Indenture, the Master Servicer (under Article VIII), the
Credit Enhancer, any person with an ownership interest in the Trust, and the
Noteholders, any benefit or any legal or equitable right under this Indenture.
The Credit Enhancer is a third party beneficiary of this Indenture.
Section 11.12. Legal Holidays.
If the date on which any payment is due is not a Business Day, then
(notwithstanding any other provision of the Notes or this Indenture) payment
need not be made on that date, but may be made on the next Business Day with
the same force as if made on the date on which nominally due, and no interest
shall accrue for the period after the nominal due date.
Section 11.13. Governing Law.
THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 11.14. Counterparts; Electronic Delivery.
This Indenture may be executed in any number of counterparts,
each of which so executed shall be considered an original, but all the
counterparts shall together constitute a single instrument. Any signature page
to this Indenture containing a manual signature may be delivered by facsimile
transmission or other electronic communication device capable of transmitting
or creating a printable written record, and when so delivered shall have the
effect of delivery of an original manually signed signature page.
Section 11.15. Recording of Indenture.
This Indenture is a Security Agreement under the UCC. If this
Indenture is subject to recording in any appropriate public recording offices,
the recording is to be effected by the Issuer but only at the request and
expense of Noteholders accompanied by an Opinion of
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Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that the
recording materially and beneficially affects the interests of the Noteholders
or any other person secured under this Indenture or the enforcement of any
right granted to the Indenture Trustee under this Indenture.
Section 11.16. No Petition.
The Indenture Trustee, by entering into this Indenture, any Paying
Agent, by accepting its appointment as such, the Issuer, and each Noteholder,
by accepting a Note, hereby covenant that they will not at any time institute
against the Issuer or the Depositor, or join in any institution against the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency, or
liquidation proceedings, or other proceedings under any United States federal
or State bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture, or any of the other Transaction Documents. This
Section shall survive the termination of this Indenture.
Section 11.17. Non-recourse.
The Issuer and each Noteholder, by its acceptance of its Note, agree
that the indebtedness represented by the Notes is non-recourse to the Issuer,
and is payable solely from the assets of the Trust.
Section 11.18. Act on Instructions from Credit Enhancer; Consents and
Waivers of 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 reasonable 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).
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 11.19. Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, the Co-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, the Co-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, the Co-Trustee, or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner
78
Trustee, the Co-Trustee, or the Indenture Trustee or of any successor or
assign of the Indenture Trustee, the Co-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.
79
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 2006-D
By: WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Assistant Vice President
JPMORGAN CHASE BANK, N.A.
Indenture Trustee,
By: /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Attorney-in-Fact
CHASE BANK USA, NATIONAL ASSOCIATION
Co-Trustee
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Assistant Vice President
80
ANNEX 1
MASTER GLOSSARY OF DEFINED TERMS
XXX-1-1
EXHIBIT A-1
FORM OF NOTES
[FOR PRINCIPAL BALANCE 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. A "plan" is an employee benefit plan (as
defined in section 3(3) of ERISA) that is subject to Title I of ERISA, a plan
(as defined in and subject to section 4975 of the Code) and any entity whose
underlying assets include plan assets by reason of a plan's investment in the
entity or otherwise.
Unless this Note is presented by an authorized representative of the
Depository to the Issuer or its agent for registration of transfer, exchange,
or payment, and any Note issued in exchange for this Note is registered in the
name of the Depository or in another name requested by an authorized
representative of the Depository (and any payment on this Note is made to the
Depository or to another entity requested by an authorized representative of
the Depository), any transfer, pledge, or other use of this Note for value or
otherwise by or to any person is wrongful inasmuch as the registered owner of
this Note, the Depository, has an interest in this Note.
Solely for U.S. Federal Income Tax purposes, this note is a "regular
interest" in a "real estate mortgage investment conduit," as those terms are
defined, respectively, in Sections 860G and 860D of the internal revenue code
of 1986, as amended.
Any transfer in violation of either of the foregoing will be void ab
initio, and will not operate to transfer any rights to the transferee,
notwithstanding any instructions to the contrary.
A-1-1
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200[o]-[o]
REVOLVING HOME EQUITY LOAN ASSET BACKED NOTE
SERIES 200[o]-[o]
--------------------------------------------------------------------------------
Registered Principal Amount: $[___________]
--------------------------------------------------------------------------------
No. [____] Percentage Interest: [__]%
--------------------------------------------------------------------------------
CUSIP No. [_______] Initial Payment Date: [___________]
--------------------------------------------------------------------------------
Class [_____] Note Rate: Variable
--------------------------------------------------------------------------------
The Issuer, CWHEQ Revolving Home Equity Loan Trust, Series 20[o]-[o],
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 [o][o],
200[o](the "Indenture"), between the Issuer, JPMorgan Chase Bank, N.A., as
Indenture Trustee, [and Chase Bank USA, National Association, as Co-Trustee].
The entire remaining outstanding principal balance of this Note is payable on
the Payment Date in [INSERT MATURITY DATE]. Capitalized terms used in this
Note that are not otherwise defined have the meanings given to them in the
Indenture, 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
SPREAD]%, (ii) the Maximum Rate for the Class [INSERT CLASS DESIGNATION] Notes
for that Interest Period, and (iii) [INSERT FIXED CAP]%.
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
A-1-2
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 [in the related Loan Group] 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 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.
"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 2006-D, designated as
Revolving Home Equity Loan Asset Backed Notes, Series 2006-D.
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
A-1-3
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, the Indenture Trustee, and the Co-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,
the Indenture Trustee, and the Co-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 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
A-1-4
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, the Credit Enhancer, 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.
The Issuer with the consent of the Credit Enhancer and the Master
Servicer may effect an early retirement of all Classes of Notes by paying the
retransfer price and accepting retransfer of the Trust Assets on any Payment
Date after the Note Principal Balance of all Classes of Notes is less than or
equal to 10% of the Original Note Principal Balance of all Classes of Notes.
Each Holder or beneficial owner of this Note, by acceptance of a Note
or, in the case of a beneficial owner of this Note, a beneficial interest in
this Note, agrees by accepting the
A-1-5
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, Chase Bank USA, National Association, in its
individual capacity, any owner of a beneficial interest in the Issuer, or any
of their respective partners, beneficiaries, agents, officers, directors,
employees, or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on
this Note or performance of, or omission to perform, any of the obligations
under the Indenture. The holder of this Note by its acceptance of this Note
agrees that the holder shall have no claim against any of the foregoing for
any deficiency, loss, or claim. Nothing in this Note shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any
obligations under the Indenture or in this Note.
The Issuer and each Noteholder, by its acceptance of its Note, agree
that the indebtedness represented by the Notes is non-recourse to the Issuer,
and is payable solely from the assets of the Issuer and their proceeds.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Unless the certificate of authentication on this Note has been executed
by or on behalf of the Indenture Trustee, by manual or facsimile signature,
this Note shall not be entitled to any benefit under the Indenture, or be
valid for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.
Dated:
Wilmington Trust Company
not in its individual capacity
but solely as Owner Trustee on
behalf of the Trust
By: ____________________________
A-1-6
Certificate of Authentication:
This is one of the Notes referenced
in the within-mentioned Indenture.
JPMORGAN CHASE BANK, N.A. , not in its
individual capacity but solely as Indenture Trustee
By: ________________________
Authorized Officer
X-0-0
XXXXXXX X-0
FORM OF NOTES
[FOR INTEREST ONLY NOTES]
Unless this Note is presented by an authorized representative of the
Depository to the Issuer or its agent for registration of transfer, exchange,
or payment, and any Note issued in exchange for this Note is registered in the
name of the Depository or in another name requested by an authorized
representative of the Depository (and any payment on this Note is made to the
Depository or to another entity requested by an authorized representative of
the Depository), any transfer, pledge, or other use of this Note for value or
otherwise by or to any person is wrongful inasmuch as the registered owner of
this Note, the Depository, has an interest in this Note.
Solely for U.S. Federal Income Tax purposes, this note is a "regular
interest" in a "real estate mortgage investment conduit," as those terms are
defined, respectively, in Sections 860G and 860D of the internal revenue code
of 1986, as amended.
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 the Employee Retirement Income Security Act of 1974, as amended ("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-2-1
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200[o]-[o]
REVOLVING HOME EQUITY LOAN ASSET BACKED NOTE
SERIES 200[o]-[o]
--------------------------------------------------------------------------------
Registered Notional Amount: $[___________]
--------------------------------------------------------------------------------
No. [____] Percentage Interest: [__]%
--------------------------------------------------------------------------------
CUSIP No. [_______] Initial Payment Date: [INSERT SECOND PAYMENT
DATE]
--------------------------------------------------------------------------------
Class A-IO Note Rate: Variable
--------------------------------------------------------------------------------
The Issuer, CWHEQ Revolving Home Equity Loan Trust, Series 200[o]-[o],
promises to pay to CEDE & CO. or registered assigns the interest payable on
each of the [second, third, forth, fifth, and sixth] Payment Dates at the Note
Rate accrued during the [CONFIRM AND REMOVE BRACKETS][second, third, forth,
fifth, and sixth] Interest Periods, respectively, at the Note Rate on the
Class [A-IO] Notional Balance in an amount equal to the Percentage Interest of
the aggregate amount payable from the Payment Account as interest on the Notes
pursuant to Section 8.03 of the Indenture, dated as of [o] [o], 200[o] (the
"Indenture"), between the Issuer, JPMorgan Chase Bank, N.A., as Indenture
Trustee, and Chase Bank USA, National Association, as Co-Trustee. 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.
A "Payment Date" is the 15th day of each month or if that is not a
Business Day, then on the next Business Day, commencing in [INSERT MONTH OF
FIRST PAYMENT DATE] 200[_], to the person in whose name this Note is
registered at the close of business on the last day of the month preceding a
Payment Date (the "Record Date") at the Class A-IO 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 "Class A-IO Notional Balance" is the lesser of the Class A-IO
Scheduled Balance below and the Loan Pool Balance for the previous Payment
Date less Net Draws.
-------------------------------------------------------
Payment Date Class A-IO Scheduled Balance ($)
-------------------------------------------------------
Second []
-------------------------------------------------------
Third []
-------------------------------------------------------
Fourth []
-------------------------------------------------------
Fifth []
-------------------------------------------------------
Sixth []
-------------------------------------------------------
A-2-2
On the first Payment Date and on each Payment Date after the September
2006 Payment Date, the Class A-IO Notional Balance will be zero and, as a
result, this Class A-IO Note will receive interest only on the second through
the sixth Payment Dates and shall thereafter automatically expire.
The "Class A-IO Note Rate" means the lesser of
o [INSERT RATE]% per annum and
o the Weighted Average Net Loan Rate of the Mortgage Loans minus the
weighted average note rate of the Principal Amount Notes for that
Interest Period, adjusted to an effective rate reflecting the
accrual of interest based on a 360-day year consisting of twelve
30-day months multiplied by a fraction whose numerator is the Loan
Pool Balance for the previous Payment Date (minus Net Draws) and
whose denominator is the Class [A-IO] Notional Balance.
This Note is one of the Notes from a duly authorized issue of Notes
issued by CWHEQ Revolving Home Equity Loan Trust, Series 2006-D, designated as
Revolving Home Equity Loan Asset Backed Notes, Series 2006-D.
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 a notional amount 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, the Issuer, the
Indenture Trustee, and the Co-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, the Indenture
Trustee, and the Co-Trustee may amend the Indenture to change the Indenture in
any manner or to modify the rights of the Noteholders under the Indenture
except amendments that require the consent of each affected Noteholder. No
supplemental indenture may, without the consent of each affected Noteholder:
A-2-3
(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 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
A-2-4
in authorized denominations and evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No service charge will be made for any registration of transfer or
exchange, but the Indenture Trustee or the Note Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Before due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, and any agent of the Issuer, or the Indenture
Trustee may treat the person in whose name this Note is registered as its
owner for all purposes, whether or not this Note is overdue, and none of the
Issuer, the Indenture Trustee, or any such agent shall be affected by notice
to the contrary.
Each Holder or beneficial owner of this Note, by acceptance of a Note
or, in the case of a beneficial owner of this Note, a beneficial interest in
this Note, agrees by accepting the benefits of the Indenture that will not at
any time institute against the Depositor, the Sponsor, the Master Servicer, or
the Issuer, or join in any institution against any of them of, any bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceedings under any
United States 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, Chase Bank USA, National Association, 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.
A-2-5
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.
Dated:
Wilmington Trust Company
not in its individual capacity
but solely as Owner Trustee on
behalf of the Trust
By: ____________________________
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-2-6
EXHIBIT B
FORM OF CUSTODIAL AGREEMENT
________________________________________________________________________________
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 2006-D
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[__]-[_]
_________________________________
________________________________________________________________________________
B-1
CUSTODIAL AGREEMENT
This Custodial Agreement, dated as of [______________], 20[__] (this
"Agreement"), among CWHEQ, Inc. (the "Depositor"), Countrywide Home Loans,
Inc., as master servicer (the "Master Servicer"), CWHEQ Revolving Home Equity
Loan Trust, Series 2006-D (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 2006-D 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.
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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. The termination shall take
effect no sooner than sixty days after the date of delivery or mailing.
Concurrently with, or as soon as practicable after, the termination of this
Agreement, the Indenture Custodian shall
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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 2006-D
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
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if to the Credit Enhancer at
XL Capital
1221 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance
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 2006-D
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 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 2006-D, as the
Trust, and JPMorgan Chase Bank, N.A., as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes, Series 2006-D
-------------------------------------------------------------
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 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 2006-D, as the
Trust, and JPMorgan Chase Bank, N.A., as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes, Series 2006-D
-------------------------------------------------------------
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 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 2006-D, as the
Trust, and JPMorgan Chase Bank, N.A., as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes, Series 2006-D
-------------------------------------------------------------
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 Indenture 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 Indenture 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 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 2006-D, as the Trust, and
JPMorgan Chase Bank, N.A., as Indenture Trustee,
Revolving Home Equity Loan Asset Backed Notes,
Series 2006-D
------------------------------------------------
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:
X-X-0
XXXXX 0
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
XXXXX REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2006-D
____________________________________
MASTER GLOSSARY OF DEFINED TERMS
Dated as of March 30, 2006
____________________________________
================================================================================
MASTER GLOSSARY OF DEFINED TERMS......................................1
INDENTURE ADOPTION ANNEX............................................I-1
SALE AND SERVICING AGREEMENT ADOPTION ANNEX.......................SSA-1
i
MASTER GLOSSARY OF DEFINED TERMS
"Accelerated Principal Payment Amount" for each Payment Date after the
sixth Payment Date and each Class of Principal Amount Notes means the amount
of Investor Interest Collections for the related Loan Group applied on that
Payment Date as a payment of principal to decrease the Note Principal Balance
of the that Class of Principal Amount Notes until the difference between the
Loan Group Balance of the related Loan Group and the Note Principal Balance of
that Class of Principal Amount Notes is an amount equal to the related
Required Transferor Subordinated Amount for the Payment Date.
"Accountant's Attestation" as to any person means a report of a
registered public accounting firm reasonably acceptable to the Depositor that
attests to, and reports on, the Servicing Criteria Compliance Assessment
Report made by the person. The attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act, including that if an overall opinion cannot be expressed, the
registered public accounting firm shall state in the report why it was unable
to express an overall opinion. The report must be available for general use
and not contain restricted use language.
"Act" has the meaning specified in Section 11.03(a) of the Indenture.
"Additional Balance" as to any Mortgage Loan means the aggregate amount
of all additional borrowings by the mortgagor under the relevant Credit Line
Agreement after the Cut-off Date or the related Subsequent Cut-off Date, as
applicable, for the Mortgage Loan.
"Additional Home Equity Loans" means the Mortgage Loans funded after the
Cut-off Date acquired by the Trust on a Subsequent Closing Date pursuant to
Section 2.01(b) of the Sale and Servicing Agreement.
"Additional Loan Account" for a Loan Group means the trust account
maintained by the Indenture Trustee into which is deposited on the Closing
Date the amount specified in the Indenture Adoption Annex for a Loan Group.
The account will be an Eligible Account, and will be available only for
purchases of Additional Home Equity Loans for the relevant Loan Group.
"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.
"Adjusted Loan Group Balance" for any Payment Date and Loan Group means
the Loan Group Balance of that Loan Group, increased by the Loss Utilization
Amount for that Loan Group as of that Payment Date, and decreased by the Loss
Utilization Amount for the other Loan Group as of that Payment Date.
"Administration Agreement" means the Administration Agreement, dated as
of the Closing Date, among the Administrator, the Trust, and the Indenture
Trustee.
"Administrator" means the person acting as such under the Administration
Agreement.
1-1
"Affiliate" of any person means any other person controlling, controlled
by or under common control with the person. For purposes of this definition,
"control" means the power to direct the management and policies of a person,
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"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 related Unpaid Investor Interest
Shortfall (other than any related Basis Risk Carryforward) for the Payment
Date.
"Allocated Transferor Interest" for each Payment Date and each Loan
Group is the excess of
o the sum of the related Loan Group Balance as of the close of
business on the day before the Payment Date (minus related outstanding
Net Draws) plus any funds in the Additional Loan Account related to that
Loan Group over
o the Note Principal Balance of the related Class 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).
"Applicable Margin" has the meaning given to it in the Indenture Adoption
Annex.
"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 any Class of Principal Amount Notes means zero, and
otherwise for a Loan Group on any Payment Date means the excess of
o the aggregate Note Principal Balance of Principal Amount Notes
related to the Loan Group (after any amount paid by the Note Insurer
pursuant to the Policy for the Payment Date) over
o the sum of the Adjusted Loan Group Balance of the related Loan
Group, and the amount on deposit in the related Additional Loan Account.
"Appraised Value" for any Mortgaged Property means the value established
by any of the following: (i) with respect to Credit Line Agreements with
Credit Limits greater than $100,000, by a full appraisal, (ii) with respect to
Credit Line Agreements with Credit Limits equal to or less than $100,000, by
either a drive by inspection or electronic appraisal of the Mortgaged Property
made to establish compliance with the underwriting criteria then in effect in
connection with the application for the Mortgage Loan secured by the Mortgaged
Property, and (iii) with respect to any Mortgage Loan as to which the Servicer
consents to a new senior lien pursuant to Section 3.01(b) of the Sale and
Servicing Agreement, in compliance with the underwriting criteria then in
effect in connection with the application for the related senior mortgage
loan.
1-2
"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.
"Assets" means all assets and property of the Trust pursuant to the Sale
and Servicing Agreement.
"Assignment of Mortgage" for any mortgage means an assignment, notice of
transfer, or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction in which the related Mortgaged Property is located to
reflect the sale of the mortgage to the Trust, which assignment, notice of
transfer, or equivalent instrument may be in the form of one or more blanket
assignments covering the Mortgage Loans secured by Mortgaged Properties located
in the same jurisdiction.
"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 Principal Collections" for any Payment Date and each Loan
Group are the excess of Principal Collections from that Loan Group for the
related Collection Period over the Additional Balances related to that Loan
Group for that Collection Period.
"Available Investor Interest" for any Payment Date and each Loan Group
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 related Class of
Principal Amount Notes pursuant to Section 8.03(a)(iii) of the Indenture on
the Payment Date:
o Investor Interest Collections for the Loan Group 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 Investor Interest Collections for the unrelated Loan Group 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 to the
extent such Investor Interest Collections are available pursuant to
Sections 8.03(a)(vi) of the Indenture to be paid to the related Loan
Group as Crossover Amounts;
o any Interest Shortfall Deposit for the Loan Group made on the
Business Day preceding the Payment Date, as reported by the Master
Servicer to the Credit Enhancer in the servicing certificate delivered
on the related Determination Date,
1-3
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 for the related Loan
Group by the Master Servicer made pursuant to Section 4.03 of the Sale
and Servicing Agreement,
o the Subordinated Transferor Collections for the related Loan
Group on deposit in the Collection Account or the Payment Account on the
third Business Day preceding the Payment Date, and
o the Subordinated Transferor Collections for the unrelated Loan
Group on deposit in the Collection Account or the Payment Account on the
third Business Day preceding the Payment Date to the extent such
Subordinated Transfer Collections are not applied to the payments of the
premium on the Policy, Aggregate Investor Interest, Investor Loss
Amount, or Investor Loss Reduction Amount, or on the other Class of
Notes pursuant to Section 8.03(c) of the Indenture.
"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
related 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 related 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 the previous Payment Date to the current Payment Date.
"Basis Risk Carryforward Reserve Fund" means the Eligible Account
established and maintained by the Indenture Trustee on behalf of and for the
benefit of the Principal Amount Notes pursuant to Section 8.01(c) of the Sale
and Servicing Agreement.
"Billing Cycle" for any Mortgage Loan and Collection Period means the
billing period specified in the related Credit Line Agreement and with respect
to which amounts billed are received during the Collection Period.
"Book-Entry Notes" has the meaning given to it in the Indenture Adoption
Annex.
1-4
"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.
"Cap Contract" means the transaction evidenced by the Confirmation (as
assigned to the Cap Contract Administrator pursuant to the Cap Contract
Assignment Agreement).
"Cap Contract Account" means the separate subaccount of the Basis Risk
Carryforward Reserve Fund so designated pursuant to Section 8.01(c) of the
Indenture.
"Cap Contract Administration Agreement" means the cap contract
administration agreement dated as of the Closing Date among CHL, the Indenture
Trustee, and the Cap Contract Administrator.
"Cap Contract Administrator" means XX Xxxxxx Xxxxx Bank, N.A., in its
capacity as cap contract administrator under the Cap Contract Administration
Agreement.
"Cap Contract Assignment Agreement" means the Assignment Agreement dated
as of the Closing Date among CHL, the Cap Contract Administrator, and the Cap
Counterparty.
"Cap Contract Notional Balance" for the Cap Contract for each Payment
Date is as described in the Cap Payment Schedule under "Notional Schedule
($)".
"Cap Contract Termination Date" is as identified in the Indenture
Adoption Annex.
"Cap Counterparty" is as identified in the Indenture Adoption Annex.
"Cap Payment (Cap Trust Share)" for any Payment Date through the Cap
Contract Termination Date means the product of:
(i) the excess of One-Month LIBOR (as determined by the Cap Contract
Counterparty) for the Payment Date over the percentage specified in the
Cap Payment Schedule for the Payment Date,
(ii) the lesser of the Note Principal Balance of the Class 2-A Notes as
of the related Determination Date and the Cap Contract Notional Balance
for the Payment Date, and
(iii) the actual number of days in the related Accrual Period divided by
360.
"Cap Payment Schedule" is as identified in the Indenture Adoption Annex.
"Cap Payment (Total)" for any Payment Date through the Cap Payment
Termination Date means the amount payable by the Cap Contract
Counterparty under the Cap Contract equal to the product of:
(i) the excess of One-Month LIBOR (as determined by the Cap Contract
Counterparty) for the Payment Date over 16%,
1-5
(ii) the Cap Contract Notional Balance, and
(iii) the actual number of days in the related Accrual Period divided by
360.
"Cap Shortfall" for any Payment Date means the excess of
o the Basis Risk Carryforward for the Class 2-A Notes for the
Payment Date over
o the amounts of Excess Interest and the amounts in the Basis Risk
Carryforward Reserve Fund (excluding amount in the Cap Contract Account)
available to be paid as Basis Risk Carryforward to the Holders of the
Class 2-A Notes for the Payment Date pursuant to Sections 8.03(a)( xv)
of the Indenture.
"Cap Trust" means the trust fund established by Section 8.08 of the
Indenture.
"Cap Trustee" means XX Xxxxxx Chase Bank, N.A., not in its individual
capacity, but solely in its capacity as trustee for the benefit of the Holders
of the Class 2-A-2A Certificates under this Indenture.
"Certificate" means any of the Class C Certificates, the Class R-1
Certificates, and the Class R-2 Certificates.
"Certificate of Trust" means the Certificate of Trust in the form of
Exhibit A of the Trust Agreement to be filed for the Trust pursuant to Section
3810(a) of the Statutory Trust Statute.
"Certificate Register" means the register maintained by the Indenture
Trustee pursuant to Section 3.04 of the Trust Agreement.
"Certificateholder" means the registered holder of a Certificate issued
in connection with the creation of the Trust.
"Certification Party" means the entity for which a Certifying Person
acts as an officer, the Certifying Person, and each of the entity's officers,
directors, and Affiliates.
"Certifying Person" means the person who signs a Xxxxxxxx-Xxxxx
Certification.
"Class" means a Class of Notes listed in the Indenture Adoption Annex.
"Class 1-A Notes" has the meaning given to it in the Indenture Adoption
Annex.
"Class 2-A Notes" has the meaning given to it in the Indenture Adoption
Annex.
"Class A-IO Component" has the meaning given to it in the Indenture
Adoption Annex.
"Class A-IO Component Note Rate" has the meaning given to it in the
Indenture Adoption Annex.
"Class A-IO Notes" has the meaning given to it in the Indenture Adoption
Annex.
1-6
"Class A-IO Rate" has the meaning set forth in the Indenture.
"Class C Balance" on any day means the excess of the aggregate Asset
Balance of the Mortgage Loans on that day over the sum of the Note Principal
Balance of the Principal Amount Notes and the Class R-1 Balance.
"Class C Certificate" means any Class C Certificate executed by the
Owner Trustee and authenticated by the Indenture Trustee substantially in the
form of Exhibit B-1 of the Trust Agreement.
"Class C Share" on any day means a fraction whose numerator is the Class
C Balance and whose denominator is the sum of the Class C Balance and the
Class R-1 Balance, in each case on that day.
"Class X-0 Xxxxxxx" on any day means an amount equal to Net Draws at the
close of business on the previous day.
"Class R-1 Certificate" means any Class R-1 Certificate executed by the
Owner Trustee and authenticated by the Indenture Trustee substantially in the
form of Exhibit B-2 of the Trust Agreement.
"Class R-1 Share" on any day means a fraction whose numerator is the
Class R-1 Balance and whose denominator is the sum of the Class C Balance and
the Class R-1 Balance, in each case on that day.
"Class R-2 Certificate" means any Class R-2 Certificate executed by the
Owner Trustee and authenticated by the Indenture Trustee substantially in the
form of Exhibit B-2 of the Trust Agreement.
"Closing Date" means the Closing Date stated in the Indenture Adoption
Annex.
"Co-Trustee" means the Co-Trustee identified in the Indenture Adoption
Annex.
"Code" means the Internal Revenue Code of 1986 and Treasury regulations
promulgated under the Code.
"Collateral" means either the Group 1 Collateral or the Group 2
Collateral, as applicable, or both the Group 1 Collateral and Group 2
Collateral as the context may require.
"Collection Account" means the Eligible Account or Eligible Accounts
created and maintained for the benefit of the Transferor and the Secured
Parties pursuant to Section 3.02(b) of the Sale and Servicing Agreement.
"Collection Period" for any Payment Date and any Mortgage Loan means the
calendar month preceding the month of the Payment Date (or, in the case of the
first Collection Period, the period from the Cut-off Date through the date
specified in the Indenture Adoption Annex).
"Combined Loan-to-Value Ratio" for any Mortgage Loan as of any date
means a fraction:
1-7
o whose numerator is the sum of (i) the Credit Limit and (ii) the
outstanding principal balance as of the date of execution of the
related original Credit Line Agreement (or any subsequent date as
of which the outstanding principal balance may be determined in
connection with an increase in the Credit Limit for the Mortgage
Loan) of any mortgage loans that are senior or equal in priority
to the Mortgage Loan and that are secured by the same Mortgaged
Property and
o whose denominator is the Valuation of the related Mortgaged
Property.
"Confirmation" means the confirmation with a trade date of March 24,
2006 evidencing a transaction between the Cap Counterparty and the Sponsor
relating to the Cap Contract.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business is
administered specified in the Indenture 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 Enhancer" means the credit enhancer identified in the Indenture
Adoption Annex.
"Credit Enhancement Draw Amount" for the Class 1-A Notes and the Class
2-A Notes, respectively, and each Payment Date means (a) an amount equal to
the sum of (i) the excess of the related Aggregate Investor Interest allocated
to the Class 1-A Notes or the Class 2-A Notes, as the case may be, over the
related Available Investor Interest for the Payment Date and (ii) the related
Guaranteed Principal Payment Amount and (b) for each applicable date in
accordance with the Policy, any related Preference Amount.
"Credit Enhancer" means the Credit Enhancer identified in the Indenture
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 Limit Utilization Rate" for any Mortgage Loan means a fraction
whose numerator is the Cut-off Date Asset Balance for the Mortgage Loan and
whose denominator is the related Credit Limit.
"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.
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"Crossover Amount" for a Class of Notes and any Payment Date means the
portion of the Investor Interest Collections for the unrelated Loan Group that
are available pursuant to Sections 8.03(a)(vi), (ix), (x), (xiii) and (xiv) of
the Indenture.
"Custodial Agreement" means the Custodial Agreement dated as of the
Closing Date, among 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.
"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.
"Defective Mortgage Loan" means a Mortgage Loan subject to retransfer
pursuant to Section 2.02(b) or 2.04(d) of the Sale and Servicing Agreement.
"Delay Delivery Certification" has the meaning given to it in the
Custodial Agreement.
"Depositor" means CWHEQ, Inc., a Delaware corporation, or its successor
in interest.
"Depository" means a financial institution or other person maintaining
ownership records and effecting book-entry transfers and pledges of the Notes
deposited with it pursuant to an agreement with the Issuer. The Depository
shall at all times be a "clearing corporation" as defined in Section
8-102(a)(5) of the UCC of the State of New York.
"Determination Date" for any Payment Date means the third Business Day
before the Payment Date.
"Distribution Date" means the Business Day after the 14th day of each
month beginning in May 2006.
"Due Date" for any Mortgage Loan means the fifteenth day of the month.
"XXXXX" means the Securities and Exchange Commission's Electronic Data
Gathering, Analysis and Retrieval system.
"Electronic Ledger" means the electronic master record of home equity
credit line mortgage loans maintained by the Master Servicer or by the
Sponsor, as appropriate.
"Eligible Account" means
(a) an account that is maintained with a depository institution whose
debt obligations throughout the time of any deposit in it have one of the two
highest short-term debt ratings by Standard & Poor's and the highest
short-term debt rating by Moody's,
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(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) the Credit Enhancer to the Indenture Trustee, within 30 days
of receipt of notice of the deposit, to the effect that the account is
acceptable to it.
"Eligible Investments" means
(a) obligations of, or guaranteed as to principal and interest by, the
United States or any U.S. agency or instrumentality that is backed by the full
faith and credit of the United States;
(b) general obligations of or obligations guaranteed by any State
receiving the highest long-term debt rating of each Rating Agency, or any
lower rating that will not result in a downgrade or withdrawal of the rating
then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(c) commercial paper issued by Countrywide Home Loans, Inc. or any of
its affiliates if it is rated no lower than A-1 by Standard & Poor's and P-2
by Moody's, and the long-term debt of Countrywide Home Loans, Inc. is rated at
least A3 by Moody's, or any lower ratings that will not result in a downgrade
or withdrawal of the rating then assigned to the Notes by any Rating Agency
(without regard to the Policy);
(d) commercial or finance company paper that is then receiving the
highest commercial or finance company paper rating of each Rating Agency, or
any lower ratings that will not result in a downgrade or withdrawal of the
rating then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(e) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company incorporated
under the laws of the United States or any State and subject to supervision
and examination by federal or State banking authorities, if the commercial
paper or long term unsecured debt obligations of the depository institution or
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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 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
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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.
"Eligible Substitute Mortgage Loan" means a Mortgage Loan transferred to
the Trust by the Sponsor in connection with the retransfer of a Defective
Mortgage Loan that must, on the date of its transfer to the Trust,
o have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective
Mortgage Loan, an aggregate Asset Balance) not greater than the
Transfer Deficiency relating to the Defective Mortgage Loan;
o have a Loan Rate not less than the Loan Rate of the Defective
Mortgage Loan and not more than 1.000% in excess of the Loan Rate
of the Defective Mortgage Loan;
o have a Loan Rate based on the same Index with adjustments to the
Loan Rate made on the same Interest Rate Adjustment Date as that
of the Defective Mortgage Loan;
o have a FICO score not less than the FICO score of the Defective
Mortgage Loan and not more than 50 points higher than the
Defective Mortgage Loan;
o have a Gross Margin that is not less than the Gross Margin of
the Defective Mortgage Loan and not more than 100 basis points
higher than the Gross Margin for the Defective Mortgage Loan;
o if the Mortgage Loan is being transferred to the Trust in
connection with the retransfer a Defective Mortgage Loan in Loan
Group 1, the Mortgage
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Loan's original principal balance (by credit limit) conforms to
Xxxxxx Xxx or Xxxxxxx Mac guidelines;
o have a mortgage of the same or higher level of priority as the
mortgage relating to the Defective Mortgage Loan at the time the
mortgage was transferred to the Trust;
o have a remaining term to maturity not more than six months
earlier than the remaining term to maturity of the Defective
Mortgage Loan, not later than the maturity date of the Principal
Amount Notes, and not more than 60 months later than the remaining
term to maturity of the Defective Mortgage Loan;
o comply with each representation and warranty in Section 2.04 of
the Sale and Servicing Agreement (to be made as of the date of
transfer to the Trust); and
o have an original Combined Loan-to-Value Ratio not greater than
that of the Defective Mortgage Loan.
More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if the Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate. The procedures applied by the Sponsor
in selecting each Eligible Substitute Mortgage Loan shall not be materially
adverse to the interests of the Indenture Trustee, the Transferor, or the
Noteholders.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Event of Default" has the meaning specified in Section 5.01 of the
Indenture.
"Event of Servicing Termination" has the meaning given to it in Section
6.01 of the Sale and Servicing Agreement.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Act Reports" means any reports on form 10-D, Form 8-K, and
Form 10-K required to be filed by the Depositor with respect to the Trust
under the Exchange Act.
"Excess Interest" for any Payment Date is the sum of the amounts
remaining in the payment account after applying Investor Interest Collections
in Sections 8.03(a)(i), (ii) and (iii) of the Indenture.
The "Excess Spread Percentage" means, with respect to any Payment Date
and Loan Group, the percentage equivalent of a fraction, (A) the numerator of
which is (i) the Spread Rate for the Payment Date and Loan Group multiplied by
the Mortgage Loan Balance of the Loan Group as of the beginning of the
preceding Collection Period minus (ii) the aggregate amount of all realized
losses with respect to such Loan Group for the Payment Date, and (B) the
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denominator of which equals the Mortgage Loan Balance of the Loan Group as of
the beginning of the preceding Collection Period.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
to it.
"Foreclosure Profits" on a Liquidated Mortgage Loan are the excess of
o its Net Liquidation Proceeds over
o its Asset Balance (plus accrued and unpaid interest thereon at
the applicable Loan Rate from the date interest was last paid to
the end of the Collection Period during which the Mortgage Loan
became a Liquidated Mortgage Loan).
"Form 10-D Disclosure Item" for any person means any litigation or
governmental proceedings material to the holders of the Notes pending against
it, or against any of the Trust, the Depositor, the Indenture Trustee, the
Owner Trustee, or the Master Servicer or any subservicer, if it (or in the
case of the Indenture Trustee, a Responsible Officer of the Indenture Trustee)
has actual knowledge thereof.
"Form 10-K Disclosure Item" for any person means each Form 10-D
Disclosure Item, (a) any affiliations or (b) any relationships between it and
any Item 1119 Party that are either not in the ordinary course of business or
on other than an arms-length basis.
"Grant" means mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, and xxxxx x xxxx on and a Security
Interest in and a right of set-off against, deposit, set over, and confirm
pursuant to the Indenture. A Grant of the Collateral or of any other agreement
or instrument includes all rights (but none of the obligations) of the
granting party under the agreement or instrument, including the immediate and
continuing right after an Event of Default to claim for, collect, receive, and
give receipt for principal and interest payments on the Collateral and all
other moneys payable on the Collateral, to require the repurchase of Mortgage
Loans, to give and receive notices and other communications, to make waivers
or other agreements, to exercise all rights, to bring Proceedings in the name
of the granting party or otherwise, and generally to do and receive anything
that the granting party is or may be entitled to do or receive regarding the
Collateral.
"Gross Margin" for any Mortgage Loan means the percentage shown as the
"Gross Margin" for the Mortgage Loan on Exhibit A of the Sale and Servicing
Agreement.
"Group 1 Collateral" has the meaning given to it in the Granting Clause
of the Indenture.
"Group 2 Collateral" has the meaning given to it in the Granting Clause
of the Indenture.
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"Guaranteed Payment" for each Class of Notes and any Payment Date means
the sum of the related Guaranteed Principal Payment Amount plus the related
Aggregate Investor Interest for the Principal Amount Notes for that Payment
Date.
"Guaranteed Principal Payment Amount" for the Class 1-A Notes and the
Class 2-A Notes, respectively, means:
(a) on the Scheduled Maturity Date, the amount needed to pay the related
outstanding Note Principal Balance (after giving effect to all allocations and
payments for such Class or Classes of Notes from all sources other than the
Policy on that Payment Date),
(b) for any Payment Date (other than the Scheduled Maturity Date), if
the related Allocated Transferor Interest is, or is reduced to, zero or below,
the amount of the excess of
o the Note Principal Balance of the Class 1-A Notes or the
aggregate Note Principal Balance of the Class 2-A Notes, as
applicable (in either case, after giving effect to all allocations
and payments of principal to be made on the Class 1-A Notes or the
Class 2-A Notes, as applicable, from sources other than the Policy
on such Payment Date) over
o the related Adjusted Loan Group Balance, and
(c) for any other Payment Date, zero.
All calculations under the Policy with respect to the Class 1-A Notes or
the Class 2-A Notes are made after giving effect to all other amounts payable
and allocable to principal on the Class 1-A Notes or the Class 2-A Notes, as
the case may be, for such Payment Date.
"Holder" or "Noteholder" means the person in whose name a Note is
registered in the Note Register.
"Incipient Default" means any occurrence that is, or with notice or
lapse of time or both would become, an Event of Default.
"Indenture" means the Indenture, dated as of the Closing Date among the
Trust, the Indenture Trustee and the Co-Trustee.
"Indenture Adoption Annex" means the Indenture Adoption Annex contained
in this Master Glossary of Defined Terms.
"Indenture Trustee" means the Indenture Trustee identified in the
Indenture Adoption Annex, as Indenture Trustee under the Indenture, or any
successor Indenture Trustee under the Indenture.
"Indenture Trustee Fee" means a fee that is separately agreed to between
the Master Servicer and the Indenture Trustee.
"Indenture Trustee Fee Rate" means the per annum rate at which the
Indenture Trustee Fee is calculated.
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"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
the Indenture and that the signer is Independent.
"Index" for each Interest Rate Adjustment Date for a Mortgage Loan means
the highest "prime rate" as published in the "Money Rates" table of The Wall
Street Journal as of the first business day of the month.
"Initial Cut-off Date" means the Initial Cut-off Date specified in the
Indenture Adoption Annex.
"Initial Mortgage Loan" means any Mortgage Loan transferred to the Trust
on the Closing Date and identified on Exhibit A.
"Insolvency Event" regarding a specified person means
(a) the person generally fails to pay its debts as they become due or
admits in writing its inability to pay its debts generally as they become due;
(b) the person has a decree or order for relief by a court or agency or
supervisory authority having jurisdiction in the premises entered against it
or any substantial part of its property in an involuntary case under any
applicable bankruptcy, insolvency, or other similar law and the decree or
order remains unstayed and in effect for a period of 60 days;
(c) the person has a conservator, receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official appointed for it or for
all or any substantial part of its property in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities, or other similar
proceedings, and the decree or order remains unstayed and in effect for a
period of 60 days;
(d) the person's business is ordered to be wound-up or liquidated or the
person's business is subject to readjustment of debt, marshalling of assets
and liabilities, or other similar
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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.
The "Insurance Agreement" has the meaning given to it in the Indenture
Adoption Annex.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan net of any amount (i) covering any
expenses of the Master Servicer in connection with obtaining the proceeds,
(ii) applied to the restoration or repair of the related Mortgaged Property,
(iii) released to the mortgagor in accordance with the Master Servicer's
normal servicing procedures, or (iv) required to be paid to any holder of a
mortgage senior to the Mortgage Loan.
"Insured Notes" has the meaning give to it in the Indenture Adoption
Annex.
"Interest Bearing Notes" has the meaning given to it in the Indenture
Adoption Annex.
"Interest Collections" for each Payment Date and each Class of Notes
(or, Class A-IO Component) means
o the sum of all payments made by mortgagors of Mortgage Loans in
the related Loan Group and any other amounts constituting interest
collected by the Master Servicer under the Mortgage Loans in the related
Loan Group during the related Collection Period plus
o any optional advance for the related Loan Group 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 plus
o any payment from the Loan Insurance Policy and the Sponsor Loss
Coverage Obligation attributable to interest minus
o the premium for the Loan Insurance Policy minus
o the Servicing Fee for the related Loan Group for the related
Collection Period.
These amounts include any Net Liquidation Proceeds and net proceeds from
any other insurer pursuant to any insurance policy covering a Mortgage Loan in
the related Loan Group 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.
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The related Credit Line Agreement shall determine the portion of each payment
on the Mortgage Loan that constitutes principal or interest.
"Interest Formula Rate" has the meaning given to it in the Indenture
Adoption Annex.
"Interest Period" for the first Payment Date means the period beginning
on the Closing Date and ending on the day preceding the first Payment Date and
for any other Payment Date means the period beginning on the preceding Payment
Date and ending on the day before the Payment Date.
"Interest Rate Adjustment Date" for each Mortgage Loan means any date on
which the Loan Rate is adjusted in accordance with the related Credit Line
Agreement.
"Interest Shortfall Deposit" for each Loan Group means any deposit made
by the Sponsor on the first and second Payment Dates into the Collection
Account pursuant to Section 3.03 of the Sale and Servicing Agreement to offset
shortfalls in interest payable to the Noteholders of the related Class of
Notes or the related Class A-IO Component.
"Investor Floating Allocation Percentage" for any Payment Date and a
Loan Group means the lesser of 100% and a fraction whose numerator is the
aggregate Note Principal Balance of the related Class of Principal Amount
Notes and whose denominator is the sum of the related Loan Group Balance,
calculated as of the beginning of the related Collection Period and the amount
of funds in the related Additional Loan Account.
"Investor Interest Collections" for any Payment Date and a Loan Group
means the Interest Shortfall Deposit plus the product of the Interest
Collections received on the Loan Group during the related Collection Period
and the related Investor Floating Allocation Percentage for the Payment Date.
"Investor Loss Amount" for any Payment Date and a Loan Group means the
product of
o the related Investor Floating Allocation Percentage and
o the aggregate of the Liquidation Loss Amounts on the Mortgage Loans in
the Loan Group for the Payment Date.
"Investor Loss Reduction Amount" for each Payment Date and class of
LIBOR Notes means the portion of the Investor Loss Amount for that class for
all prior Payment Dates that has not been previously accounted for by
o payment of the principal balance of the related Class of LIBOR Notes
on a Payment Date (A) pursuant to Section 8.03(a) (iv), (v), or (x) of the
Indenture (B) from related or unrelated Subordinated Transferor
Collections, or (C) pursuant to a draw on the Policy, or
o reduction in the related Allocated Transferor Interest.
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"Investor Principal Collections" are for a Payment Date and a Class of
Principal Amount Notes
o during the Managed Amortization Period, the lesser of
(A) the excess of the amount of Principal Collections for
the related Loan Group for the Payment Date (which, for the first
Payment Date, include any amount remaining on deposit in the
related Additional Loan Account), over the aggregate of Additional
Balances created on the Mortgage Loans in the related Loan Group
during the Collection Period, minus Net Draws Principal Payment
related to that Loan Group, and
(B) the amount required to pay the related Class of
Principal Amount Notes to maintain the related Allocated
Transferor Interest at the related Required Transferor
Subordinated Amount.
o during the Rapid Amortization Period and if no Rapid Amortization
Event exists, the lesser of
(A) the excess of the amount of Principal Collections for
the Payment Date for the related Loan Group over the Net Draws
Principal Payment related to that Loan Group, and
(B) the amount required to pay the related Class of
Principal Amount Notes to maintain the related Allocated
Transferor Interest at the related Required Transferor
Subordinated Amount.
o on which a Rapid Amortization Event exists, all Principal Collections
for the related Loan Group for the Payment Date.
"Issuer" means CWHEQ Revolving Home Equity Loan Trust, Series 2006-D
until a successor replaces it and, after that, means its successor.
"Issuer Order" or "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Item 1119 Party" means the Depositor, any Seller, the Master Servicer,
the Indenture Trustee, the Owner Trustee, any subservicer, any originator
identified in the Prospectus Supplement, and any other material transaction
party identified in writing as such by the Master Servicer to each of the
Indenture Trustee and the Owner Trustee.
"Latest Possible Maturity Date" as provided in Section 3.11 of the Trust
Agreement.
"Latest Subsequent Closing Date" means the date specified in the
Indenture Adoption Annex.
"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
1-19
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 the Credit Enhancer), the
rate will be the Reference Bank Rate.
"LIBOR Business Day" means any day other than of a Saturday, a Sunday,
or a day on which banking institutions in the State of New York or in the City
of London, England are required or authorized by law to be closed.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority right, or interest or other
Security Agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of
the foregoing, and the filing of any Financing Statement under the UCC (other
than any Financing Statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing except
that any assignment pursuant to Section 5.02 is not a Lien.
"Lifetime Rate Cap" for each Mortgage Loan whose related Mortgage Note
provides for a lifetime rate cap means the maximum Loan Rate permitted over
the life of the Mortgage Loan under the terms of the related Credit Line
Agreement, as shown on the Mortgage Loan Schedule.
"Limited Exchange Act Reporting Obligations" means the obligations of
the Master Servicer under Section 3.09(b), Section 5.02, and Section 5.04 with
respect to notice and information to be provided to the Depositor and Article
VII (except Section 7.07(a)(1) and (2)).
"Liquidation Loss Amount" for any Payment Date and any Mortgage Loan
that becomes a Liquidated Mortgage Loan during the related Collection Period
is the unrecovered Asset Balance of the Mortgage Loan at the end of the
Collection Period after reducing the Asset Balance for the Net Liquidation
Proceeds and any amounts attributable to principal received under the Loan
Insurance Policy and the Sponsor Loss Coverage Obligation.
"Liquidated Mortgage Loan" for any Payment Date means any Mortgage Loan
that as of the end of the related Collection Period the Master Servicer has
determined in accordance with the servicing standards in the Sale and
Servicing Agreement that all liquidation proceeds that it expects to recover
on the Mortgage Loan or the related REO have been recovered.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of
overhead) that are incurred by the Master Servicer in connection with the
liquidation of any Mortgage Loan and not recovered under any insurance policy,
including legal fees and expenses, any unreimbursed amount expended pursuant
to Section 3.06 of the Sale and Servicing Agreement (including amounts
advanced to correct defaults on any mortgage loan which is senior to the
Mortgage Loan and amounts advanced to keep current or pay off a mortgage loan
that is senior to the
1-20
Mortgage Loan) respecting the related Mortgage Loan and any related and
unreimbursed expenditures with respect to real estate property taxes, water or
sewer taxes, condominium association dues, property restoration or
preservation or insurance against casualty, loss or damage.
"Liquidation Proceeds" means proceeds received in connection with the
liquidation of any Mortgage Loan or related REO, whether through trustee's
sale, foreclosure sale, or otherwise.
"Loan Group" means Loan Group 1 or Loan Group 2, as applicable.
"Loan Group 1" means all Mortgage Loans identified as Loan Group 1
Mortgage Loans on the Mortgage Loan Schedule.
"Loan Group 1 Balance" for any Payment Date is the aggregate of the
Asset Balances of all Mortgage Loans in Loan Group 1 as of the last day of the
related Collection Period.
"Loan Group 2" means all Mortgage Loans identified as Loan Group 2
Mortgage Loans on the Mortgage Loan Schedule.
"Loan Group 2 Balance" for any Payment Date is the aggregate of the
Asset Balances of all Mortgage Loans in Loan Group 2 as of the last day of the
related Collection Period.
"Loan Group Balance" means the Loan Group 1 Balance or the Loan Group 2
Balance, as applicable.
"Loan Insurance Policy" means the Loan Insurance Policy referred to in
the Indenture Adoption Annex.
"Loan Insurance Premium Rate" has the meaning given to it in the
Indenture Adoption Annex.
"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 related Credit Line Agreement to the
calculation of interest for the day on the Asset Balance of the Mortgage Loan.
"Loan Rate Cap" for each Mortgage Loan means the lesser of (i) the
Lifetime Rate Cap or (ii) the applicable state usury ceiling.
"Loan-to-Value Ratio" for any date of determination for any first lien
mortgage loan means a fraction whose numerator is the outstanding principal
balance of the mortgage loan as of the date of determination and whose
denominator is the Valuation of the related Mortgaged Property.
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"Managed Amortization Period" means the period from the Closing Date to
the Rapid Amortization Commencement Date.
"Master Servicer" means Countrywide Home Loans, Inc., a New York
corporation and any successor to it and any successor under the Sale and
Servicing Agreement.
"MERS" means Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor to it.
"MERS(R) System" means the system of recording transfers of mortgages
electronically maintained by MERS.
"MIN" means the Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
"Minimum Monthly Payment" for any Mortgage Loan and any month means the
minimum amount required to be paid by the related mortgagor in that month.
"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:
(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
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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;
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.
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"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 in a Loan Group included in the Trust on the date identifying each
Mortgage Loan and specifying the items identified in the Indenture 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.
"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 any Liquidation Loss
Amount allocated to the Class R-1 Certificates.
"Net Draws Principal Payment" for a Payment Date and a Loan Group is the
amount of Principal Collections from that Loan Group applied on the Payment
Date to the payment of outstanding Net Draws related to that Loan Group to the
holder of the Class R-1 Certificates.
o During the Managed Amortization Period, the Net Draws Principal
Payment for a Payment Date and a Loan Group will be the least of
(i) Net Draws for that Loan Group,
(ii) the Available Principal Collections related to that Loan
Group, and
(iii) the sum of (a) Available Principal Collections related to
that Loan Group in an amount equal to 3% of the aggregate Note
Principal Balance of the related Class of Principal Amount Notes
for the Payment Date and (b) the remaining related Available
Principal Collections (after that 3%) times a fraction whose
numerator is related Remaining Net Draws and whose
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denominator is the sum of related Remaining Net Draws and the
aggregate Note Principal Balance of the related Class of Principal
Amount Notes.
o During the Rapid Amortization Period if a Rapid Amortization Event
is not continuing, the Net Draws Principal Payment for a Payment
Date and a Loan Group will be Principal Collections from that Loan
Group for the Payment Date times a fraction whose numerator is Net
Draws related to that Loan Group and whose denominator is the sum
of Net Draws related to that Loan Group and the Note Principal
Balance of the related Class of Principal Amount Notes.
o So long as a Rapid Amortization Event is continuing, the Net Draws
Principal Payment for a Payment Date and a Loan Group will be
zero.
"Net Liquidation Proceeds" for any Liquidated Mortgage Loan means
Liquidation Proceeds net of Liquidation Expenses.
"Non-Permitted Transferee" means any person other than a Permitted
Transferee.
"Note" has the meaning given to it in the Indenture 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 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 Liquidation Loss Amount
allocated to that Class of Principal Amount Notes.
"Note Rate" for a Class of Interest Bearing Notes means the related rate
specified in the Indenture Adoption Annex.
"Note Register" and "Note Registrar" have the meanings specified in
Section 2.03.
"Noteholder" means a holder of one or more Notes.
"Officer's Certificate" means a certificate
(a) with respect to the Indenture, signed by any Authorized Officer of
the Issuer or other specified party under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01 of the
Indenture and delivered to the Indenture Trustee
(b) with respect to the Sale and Servicing Agreement,
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o signed by the Chairman of the Board, the Vice Chairman of
the Board, the President, a Managing Director, a Vice
President (however denominated), an Assistant Vice
President, the Treasurer, the Secretary, or one of the
Assistant Treasurers or Assistant Secretaries of the
Depositor, the Sponsor, the Transferor, or the Master
Servicer, or
o if provided for in the Sale and Servicing Agreement, signed
by a Servicing Officer, or
o for any other person, signed by an authorized officer of the
person.
"Opinion of Counsel" means written opinions of counsel who may, except
as otherwise expressly provided in the Indenture, be an employee of or counsel
to the Issuer, the Depositor, the Sponsor, the Master Servicer, or the
Transferor (except that any opinion pursuant to Section 8.06 of the Indenture,
Section 5.04 of the Sale and Servicing Agreement, or relating to taxation must
be an opinion of independent outside counsel) and who is reasonably acceptable
to the parties to whom it is to be delivered.
Opinions provided pursuant to the Indenture shall be addressed to the
Indenture Trustee as Indenture Trustee, any other designated party, shall
comply with any applicable requirements of Section 11.01 of the Indenture, and
shall be in form and substance reasonably satisfactory to the parties to whom
it is to be delivered.
In connection with any opinion of counsel concerning the interpretation
or application of the REMIC Provisions, the counsel must in fact be
independent of the Depositor and the Master Servicer, not have any direct
financial interest in the Depositor or the Master Servicer or in any affiliate
of either, and not be connected with the Depositor or the Master Servicer as
an officer, employee, promoter, underwriter, trustee, partner, director, or
person performing similar functions.
Copies of all Opinions of Counsel shall be delivered to the Credit
Enhancer.
"Optional Termination Date" means any Payment Date on or after which the
Note Principal Balance of the Principal Amount Notes is less than or equal to
10% of the Original Note Principal Balance.
"Original Note Principal Balance" means the aggregate Note Principal
Balance of all Classes of Principal Amount Notes on the Closing Date as
reflected in the Indenture Adoption Annex.
"Outstanding" as of the date of determination means all Notes that have
been authenticated and delivered under the Indenture except:
(i) Notes that have been cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation or that by their terms
have expired;
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(ii) Notes or portions thereof the payment for which money in the
necessary amount has been deposited with the Indenture Trustee or any
Paying Agent in trust for the Noteholders, and if the Notes are to be
redeemed, notice of the redemption has been duly given pursuant to the
Indenture or notice has been provided for in a manner satisfactory to
the Indenture Trustee; and
(iii) Notes in exchange for or instead of which other Notes have
been authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that those Notes are
held by a Protected Purchaser.
In determining whether the Holders of the requisite Outstanding Amount
have Acted under the Indenture or under any Transaction Document, Notes owned
by the Issuer, the Depositor, a Seller, or the Transferor, or any of their
affiliates shall be disregarded and treated as not being Outstanding, except
that, in determining whether the Indenture Trustee shall, if the Notes have
first been transferred to a non-affiliate, be protected in relying on any Act,
only Notes that a Responsible Officer knows to be so owned shall be
disregarded. Notes so owned that have been pledged in good faith, or for whose
owner the Issuer, the Depositor, a Seller, or the Transferor, or any of their
affiliates is acting as trustee or nominee, may be regarded as Outstanding if
the pledgee or other person establishes to the satisfaction of the Indenture
Trustee the pledgee's or other person's right to Act for the Notes and that
the pledgee or other person is not the Issuer, the Depositor, or the
Transferor, or any of their affiliates.
To effectuate the Credit Enhancer's right of subrogation under Section
4.03 of the Indenture, all Notes that have been paid with funds provided under
the Policy shall be Outstanding until the Credit Enhancer has been paid all
amounts due to it pursuant to the Insurance Agreement with respect to those
Notes.
"Outstanding Amount" means the 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 Indenture
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 of the Indenture and is authorized by the Issuer to make payments to and
distributions from the Payment Account, including payments of principal or
interest on the Notes on behalf of the Issuer.
"Payment Account" means the Eligible Account established and maintained
by the Indenture Trustee on behalf of and for the benefit of the Secured
Parties pursuant to Section 8.01 of the Indenture.
"Payment Date" means the day of each month specified in the Indenture
Adoption Annex, or if that is not a Business Day, then the next Business Day.
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"Performance Certification" means a certification in the form of Exhibit
F-1 of the Sale and Servicing Agreement (in the case of any Reporting
Subcontractor of the Master Servicer or a subservicer) and the Owner Trustee)
and Exhibit F-2 of the Sale and Servicing Agreement (in the case of the
Indenture Trustee or any Reporting Subcontractor of the Indenture Trustee).
"Permitted Transferee" means any person other than
o the United States, any State or political subdivision thereof, or
any agency or instrumentality of any of them,
o a foreign government, International Organization, or any agency or
instrumentality of either of them,
o an organization (except certain farmers' cooperatives described in
Section 521 of the Code) that is exempt from tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income) on any excess
inclusions (as defined in Section 860E(c)(1) of the Code) with
respect to any Residual Certificate,
o rural electric and telephone cooperatives described in Section
1381(a)(2)(C) of the Code,
o an "electing large partnership" as defined in Section 775 of the
Code,
o a person that is not a citizen or resident of the United States, a
corporation, partnership, or other entity created or organized in
or under the laws of the United States, any state of the United
States, or the District of Columbia, or an estate or trust whose
income from sources without the United States is includible in
gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or
business within the United States or a trust if a court within the
United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons
have the authority to control all substantial decisions of the
trust unless such person has furnished the holder of the R-1
Certificates and the Owner Trustee with a duly completed Internal
Revenue Service Form W-8ECI or any applicable successor form, and
o any other person so designated by the Depositor based on an
Opinion of Counsel that the Transfer of an Ownership Interest in a
Residual Certificate to such person may cause any REMIC to fail to
qualify as a REMIC at any time that the Certificates are
outstanding.
The terms "United States," "State," and "International Organization" have the
meanings in Section 7701 of the Code or successor provisions. A corporation
will not be treated as an instrumentality of the United States or of any State
or political subdivision thereof for these purposes if all of its activities
are subject to tax and, with the exception of the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by such
government unit.
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"Policy" means the certificate guaranty insurance policy identified in
the Indenture Adoption Annex and all its endorsements, dated as of the Closing
Date, issued by the Credit Enhancer to the Indenture Trustee for the benefit
of the Holders of the Insured Notes.
"Policy Payments Account" means a separate special purpose trust account
that is an Eligible Account, for the benefit of Holders of the Insured Notes
and the Credit Enhancer over which the Indenture Trustee has exclusive control
and sole right of withdrawal.
"Preference Amount" has the meaning given to it in the 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).
"Premium Letter" has the meaning given to it in the Indenture Adoption
Annex.
"Principal Amount Notes" has the meaning given to it in the Indenture
Adoption Annex.
"Principal Collections" for the Mortgage Loans in a Loan Group and any
Payment Date means the sum of all payments made by the mortgagors and any
other amounts constituting principal collected by the Master Servicer under
the Mortgage Loans in that Loan Group during the related Collection Period.
These amounts include any Net Liquidation Proceeds, any payment from the Loan
Insurance Policy or the Sponsor Loss Coverage Obligation attributable to
principal (including any amounts payable from the designated trust account to
cover Liquidation Loss Amounts with respect to the Mortgage Loans after the
termination of the Loan Insurance Policy) and net proceeds from any other
insurer pursuant to any insurance policy covering a Mortgage Loan allocable to
principal of the applicable Mortgage Loan and Transfer Deposit Amounts, but
exclude Foreclosure Profits. The terms of the related Credit Line Agreement
shall determine the portion of each payment on a Mortgage Loan that
constitutes principal or interest.
"Principal Reserve Fund" means the Eligible Account established and
maintained by the Indenture Trustee pursuant to Section 8.01(d).
"Proceeding" means any suit in equity, action at law, or other judicial
or administrative proceeding.
"Purchase Agreement" means the Purchase Agreement dated as of the
Closing Date among Countrywide Home Loans, Inc., as a seller, the other
sellers named therein, as sellers, and the Depositor, as purchaser, with
respect to the Mortgage Loans.
"Purchase Price" with respect to any Mortgage Loan required to be
purchased by the Sponsor pursuant to Section 2.03 or 2.04 Sale and Servicing
Agreement or purchased at the
1-29
option of the Master Servicer pursuant to Section 3.01 or 3.06 Sale and
Servicing Agreement means an amount equal to the sum of
(i) 100% of the unpaid principal balance of the Mortgage Loan on the
date of such purchase,
(ii) accrued interest on the Mortgage Loan at the applicable Loan Rate
(or at the applicable [Adjusted] Loan Rate if (x) the purchaser is the
Master Servicer or (y) if the purchaser is Countrywide and Countrywide
is an affiliate of the Master Servicer) from the date through which
interest was last paid by the Mortgagor to the Due Date in the month in
which the Purchase Price is to be distributed to Noteholders, and
(iii) in the case of any Mortgage Loan required to be purchased by the
Sponsor because of, or that arises out of, a violation of any predatory
or abusive lending law with respect to the related Mortgage Loan, any
costs and damages incurred by the Trust relating to such violation of
any predatory or abusive lending law with respect to the related
Mortgage Loan.
"Rapid Amortization Commencement Date" means the earlier of the Payment
Date in the month specified in the Indenture Adoption Annex and the Payment
Date after the Collection Period in which a Rapid Amortization Event occurs.
"Rapid Amortization Event" has the meaning given to it in Section 5.16
of the Indenture.
"Rapid Amortization Period" means the period beginning on the Rapid
Amortization Commencement Date until the termination of the Indenture.
"Rating Agency" means any statistical credit rating agency, or its
successor, that rated the Notes at the request of the Depositor at the time of
the initial issuance of the Notes. If a particular Rating Agency is no longer
in existence, "Rating Agency" will mean a statistical credit rating agency, or
other comparable person, designated by the Depositor and the Credit Enhancer.
The Indenture Trustee will be notified of any such designation. References to
the highest short-term unsecured rating category of a Rating Agency mean A-1+
or better in the case of Standard & Poor's and P-1 or better in the case of
Moody's and in the case of any other Rating Agency mean the ratings it deems
equivalent to these. References to the highest long-term rating category of a
Rating Agency mean "AAA" in the case of Standard & Poor's and "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.
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"Record Date" for a Payment Date or redemption date has the meaning
given to it in the Indenture 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 obtaining the consent of, as of 11:00 A.M., New York City
time, on the Adjustment Date immediately preceding the Interest Period, for
loans in U.S. dollars to leading European banks for a period of one month in
amounts approximately equal to the outstanding Note Principal Balance. If no
such quotations can be obtained, the Reference Bank Rate shall be LIBOR for
the preceding Interest Period.
"Regulation AB" means Subpart 229.1100-Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, and subject to any
clarification and interpretation provided by the Securities and Exchange
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Securities and Exchange Commission, or as may be provided by the
Securities and Exchange Commission or its staff from time to time.
"Registered Holder" means the person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Remaining Net Draws" for a Loan Group is related Net Draws minus 3% of
the Note Principal Balance of the related Class of Principal Amount Notes for
the Payment Date.
"REMIC" means a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code, and when referring to entities means the
real estate mortgage investment conduits created under this Agreement as
defined in Section 3.11 of the Trust Agreement.
"REMIC Provisions" means Section 860A through 860G of the Code and
related provisions, and regulations and rulings promulgated under those
sections.
"REO" means a Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
1-31
"Reportable Event" means any event required to be reported on Form 8-K,
and in any case, the following:
o entry into a definitive agreement related to the Trust, the
Notes, or the Mortgage Loans, or an amendment to a
Transaction Document, only if the Depositor is not a party
to the agreement or amendment (e.g., a servicing agreement
with a servicer contemplated by Item 1108(a)(3) of
Regulation AB);
o termination of a Transaction Document (other than by
expiration of the agreement on its stated termination date
or as a result of all parties completing their obligations
under the agreement), if the Depositor is not a party to the
agreement (e.g., a servicing agreement with a servicer
contemplated by Item 1108(a)(3) of Regulation AB);
o with respect to the Master Servicer only, if the Master
Servicer becomes aware of any bankruptcy or receivership
with respect to the Sponsor, the Depositor, the Master
Servicer, any subservicer, the Indenture Trustee, the Owner
Trustee, the Loan Insurance Policy Provider, any enhancement
or support provider contemplated by Items 1114(b) or 1115 of
Regulation AB, or any other material party contemplated by
Item 1101(d)(1) of Regulation AB;
o with respect to the Indenture Trustee, the Master Servicer,
and the Depositor only, the occurrence of an early
amortization, performance trigger, or other trigger,
including an Event of Default under the Indenture, of which
it (in the case of the Indenture Trustee, a Responsible
Officer of the Indenture Trustee) has actual knowledge;
o the resignation, removal, replacement, or substitution of
the Master Servicer, any subservicer (with respect to the
Master Servicer only), the Indenture Trustee, or the Owner
Trustee;
o with respect to the Master Servicer only, if the Master
Servicer becomes aware that (i) any material enhancement or
support specified in Item 1114(a)(1) through (3) of
Regulation AB or Item 1115 of Regulation AB that was
previously applicable regarding one or more Classes of the
Notes has terminated other than by expiration of the
contract on its stated termination date or as a result of
all parties completing their obligations under the
agreement; (ii) any material enhancement specified in Item
1114(a)(1) through (3) of Regulation AB or Item 1115 of
Regulation AB has been added with respect to one or more
Classes of the Notes; or (iii) any existing material
enhancement or support specified in Item 1114(a)(1) through
(3) of Regulation AB or Item 1115 of Regulation AB with
respect to one or more Classes of the Notes has been
materially amended or modified; and
1-32
o with respect to the Indenture Trustee, the Master Servicer,
and the Depositor only, a required distribution to
Noteholders is not made as of the required Payment Date
under the Indenture.
"Required Amount" for a Payment Date and a Loan Group means the amount
by which the sum of the amounts distributable pursuant to Sections 8.03(a)(i),
(ii), (iii), (iv) and (v) of the Indenture on the Payment Date exceed related
Investor Interest Collections available for payment thereon for the Payment
Date.
"Required Transferor Subordinated Amount" has the meaning given to it in
the Indenture Adoption Annex.
"Residual Certificates" means each of the Class R-1 and Class R-2
Certificates.
"Responsible Officer" any officer of the Indenture Trustee, Co-Trustee
or any officer in the corporate trust department of the Owner Trustee, as
applicable, with direct responsibility for the administration of the Trust
Agreement or the Indenture and also, with respect to a particular matter, any
other officer to whom a matter is referred because of the officer's knowledge
of and familiarity with the particular subject. With respect to the Cap
Trustee and the Cap Contract Administrator, any officer of the Indenture
Trustee with direct responsibility for the administration of the Cap Contract
and the Cap Contract Administration Agreement, respectively.
"Rolling Three Month Excess Spread Percentage" means, with respect to
any Payment Date and Loan Group, the arithmetic average of the three Excess
Spread Percentages for such Loan Group determined for the current Payment Date
and for each of the two preceding Payment Dates.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of the Closing Date among the Sponsor, the Depositor, the Trust, and
the Indenture Trustee.
"Sale and Servicing Agreement Adoption Annex" means the Sale and
Servicing Agreement Adoption Annex contained in this Master Glossary of
Defined Terms.
"Xxxxxxxx-Xxxxx Certification" means the certification required by Rules
13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to Section 302 of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder (including any interpretations
thereof by the staff of the Securities and Exchange Commission)).
"Scheduled Maturity Date" means the date specified in the Indenture
Adoption Annex.
"Secured Parties" with respect to the Group 1 Collateral means the
Holders of the Class 1-A Notes, the Holders of the Class A-IO Notes, and the
Credit Enhancer, and with respect to the Group 2 Collateral means the Holders
of the Class 2-A Notes, the Holders of the Class A-IO Notes, and the Credit
Enhancer.
1-33
"Securities Act" means the Securities Act of 1933.
"Seller" means any Seller of Mortgage Loans pursuant to the Purchase
Agreement.
"Servicing Certificate" means the certificate delivered each month
pursuant to Section 4.01 of the Sale and Servicing Agreement to the Indenture
Trustee completed and executed by any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee (with a copy to the Credit Enhancer) by the
Master Servicer on the Closing Date, as it may be amended from time to time.
"Servicing Criteria" means the "servicing criteria" in Item 1122(d) of
Regulation AB.
"Servicing Criteria Compliance Assessment Report" for any person means a
report (in form and substance reasonably satisfactory to the Depositor)
regarding the person's assessment of compliance with the Servicing Criteria
during the preceding year, as required under Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122 of Regulation AB.
"Servicing Fee" for a Loan Group and any Payment Date means the product
of
o the Servicing Fee Rate specified in the Indenture Adoption Annex
divided by 12 and
o the Loan Group Balance of that Loan Group 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).
"Servicing Officer" means any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee by the Master Servicer on the Closing Date,
as the list may be amended from time to time.
"Sponsor" means Countrywide Home Loans, Inc., a New York corporation
and any successor.
"Sponsor Loss Coverage Amount" means initially the amount specified in
the Sale and Servicing Agreement Adoption Annex, and thereafter as reduced by
the amount of all previous payments of the Sponsor Loss Coverage Obligation.
"Sponsor Loss Coverage Obligation" for any Payment Date means the lesser
of (i) the remaining Sponsor Loss Coverage Amount before payment of the
Sponsor Loss Coverage Obligation for that Payment Date and (ii) an amount
equal to the portion of the losses realized on the Mortgage Loans identified
in the Mortgage Loan Schedule as being covered by the Insurance Policy with
respect to which a claim for payment was denied by the Loan Insurer due to an
exclusion in the Loan Insurance Policy minus any such amount previously paid
to the Indenture Trustee as Sponsor Loss Coverage Obligation. A claim for
Liquidation Loss Amount on a Mortgage Loan covered by the Loan Insurance
Policy that is denied payment by the Loan
1-34
Insurer for any other reason or that is not of the insured perils covered by
the Loan Insurance Policy will not be a Sponsor Loss Coverage Obligation and
will not be payable by the Sponsor.
"Spread Rate" for a Loan Group means, with respect to any Payment Date,
(i) the Net WAC for that Loan Group for the preceding Collection Period minus
(ii) the Note Rate for the related Class of Notes for such Payment Date.
"Standard & Poor's" means Standard & Poor's, a division of The
XxXxxx-Xxxx Companies, Inc., or its successor in interest.
"State" means any one of the 00 xxxxxx xx xxx Xxxxxx Xxxxxx or the
District of Columbia.
"Statutory Trust Statute" means the Delaware Statutory Trust Act (12
Del. Code, ss. 3801 et seq.).
"Subcontractor" means any vendor, subcontractor, or other person that is
not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgaged-backed securities market) of
Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to the Mortgage Loans under the
direction or authority of the Master Servicer or the Indenture Trustee or any
subservicer, as the case may be.
"Subordinated Transferor Collections" means for any Payment Date and a
Loan Group the Interest Collections and Principal Collections from that Loan
Group allocated to pay the related Allocated Transferor Interest which are
subordinated to the payment of the Required Amount on the related and
unrelated Classes of Notes.
"Subsequent Closing Date" means any date designated by the Depositor on
which the Trust acquires Additional Home Equity Loans pursuant to Section
2.01(b) of the Sale and Servicing Agreement.
"Subsequent Cut-off Date" means the cut-off date designated by the
Depositor in a Transfer Document in connection with the acquisition of
Additional Home Equity Loans by the Trust pursuant to Section 2.01(b) of the
Sale and Servicing Agreement.
"Tax Matters Person Certificate" means the Class R-2 Certificate with a
Denomination of $0.01.
"Transaction Documents" means the Indenture, the Notes, the Sale and
Servicing Agreement, the Purchase Agreement, the Custodial Agreement, the
Administration Agreement, the Trust Agreement, the Insurance Agreement, the
Policy, the Loan Insurance Policy, and any other document or agreement entered
into in connection with the Trust, the Notes, the Certificates, or the
Mortgage Loans; and "Transaction Documents" for the purpose of the Trust
Agreement means collectively the Indenture and any other document designated
in the Indenture as a "Transaction Document" for the purposes of Trust
Agreement.
1-35
"Transfer Date" has the meaning given to it in Section 2.06 of the Sale
and Servicing Agreement.
"Transfer Deficiency" with respect to a Loan Group means that the excess
of the Loan Group Balance of that Loan Group (minus related Net Draws) over
the Note Principal Balance of the related Class of Principal Amount Notes
after a retransfer of a Mortgage Loan in the related Loan Group pursuant to
Section 2.02(b) or 2.04(d) of the Sale and Servicing Agreement would be less
than the related Required Transferor Subordinated Amount.
The amount of any Transfer Deficiency with respect to a Loan Group is the
lesser of
o the Asset Balance of the Defective Mortgage Loan and
o the excess of
o the related Required Transferor Subordinated Amount over
o the related Allocated Transferor Interest.
In any computation involving a Mortgage Loan required to be purchased by the
Sponsor because of, or arising out of, a violation of any predatory or abusive
lending law with respect to the Mortgage Loan, the Transferor Interest shall
be reduced for any costs and damages incurred by the Trust relating to the
violation of any predatory or abusive lending law with respect to the Mortgage
Loan.
"Transfer Deposit Amount" has the meaning given to it in Section 2.07 of
the Sale and Servicing Agreement.
"Transfer Document" means a document substantially in the form of
Exhibit D of the Sale and Servicing Agreement.
"Transfer Notice Date" has the meaning given to it in Section 2.06 of
the Sale and Servicing Agreement.
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.
"Transferor" means the Holder of the Class C Certificates executed and
authenticated by the Owner Trustee under the Trust Agreement.
"Transferor Certificates" has the meaning given to it in the Indenture
Adoption Annex.
"Transferor Principal Collections" for any Payment Date means Principal
Collections received with respect to the Mortgage Loans during the related
Collection Period minus Additional Balances created on the Mortgage Loans
during the Collection Period minus the Net Draws Principal Payment minus
Investor Principal Collections.
1-36
"Trust" means the trust formed pursuant to the Trust Agreement and
specified in the Indenture Adoption Annex.
"Trust Agreement" means the Trust Agreement among Countrywide Home
Loans, Inc., the Depositor and the Owner Trustee forming the Trust.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force on the date of the Indenture, unless otherwise specifically provided.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the relevant jurisdiction, unless the context otherwise requires.
"Unpaid Investor Interest Shortfall" for any Payment Date and Class of
Principal Amount Notes means the aggregate amount of Note Interest on that
Class of Principal Amount Notes that was accrued for a prior Payment Date and
has not been paid to Holders of that Class of Notes.
"Valuation" of any Mortgaged Property means the lesser of (i) the
Appraised Value of the Mortgaged Property and (ii) in the case of a Mortgaged
Property purchased within one year of the origination of the related Mortgage
Loan, the purchase price of the Mortgaged Property.
"Weighted Average Net Loan Rate" for a Loan Group and any Collection
Period means the average of the daily Net Loan Rate (specified in the
Indenture Adoption Annex) for each Mortgage Loan in that Loan Group (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.
1-37
INDENTURE ADOPTION ANNEX
INDENTURE ADOPTION ANNEX
The Issuer shall issue under Section 2.02(b) of the Indenture:
o Class 1-A Notes in an aggregate principal amount of $525,000,000,
o Class 2-A Notes in an aggregate principal amount of
$1,325,000,000,
o Class A-IO Notes in an aggregate notional amount equal to the sum
of the Class A-IO-1 Component Notional Balance and the Class
A-IO-2 Component Notional Balance.
The amount deposited in the "Additional Loan Account" for Loan Group 1
and for Loan Group 2 on the Closing Date is $131,066,717.58 and
$127,280,388.08, respectively.
The "Applicable Margin" means, for the Class 1-A Notes and for the Class
2-A Notes is 0.20% and 0.20%, respectively.
The "Book-Entry Notes" are the Class 1-A Notes, The Class 2-A Notes, and
the Class A-IO Notes.
"Cap Contract Termination Date" means November 2011.
"Cap Counterparty" means Barclays Bank PLC and its successors.
"Cap Payment Schedule" is as follows:
Payment Notional Cap Payment Notional Cap
Date Schedule ($) Strike (%) Date Schedule ($) Strike (%)
------- ------------- ---------- ------- ------------ ----------
1 1,325,000,000 7.45782% 34 432,178,144 15.53633%
2 1,281,362,634 16.01892% 35 417,726,663 17.22245%
3 1,239,162,416 16.55955% 36 403,751,124 15.53648%
4 1,198,352,014 16.01892% 37 390,235,854 16.06111%
5 1,158,885,656 16.01892% 38 377,165,694 15.53663%
6 1,120,719,078 16.55955% 39 364,525,985 16.06127%
7 1,083,809,472 16.01892% 40 352,302,550 15.53680%
8 1,045,282,928 16.55955% 41 340,481,680 15.53688%
9 1,007,888,132 16.01892% 42 329,050,117 16.06153%
10 973,590,294 16.01892% 43 317,995,040 15.53705%
11 941,308,020 17.75666% 44 307,304,049 16.06171%
12 910,088,926 16.01892% 45 296,965,153 15.53723%
13 879,897,998 16.05955% 46 286,966,758 15.53732%
14 850,701,373 15.53510% 47 277,297,648 17.22356%
15 822,466,306 16.05966% 48 267,946,979 15.53751%
16 795,161,129 15.53520% 49 258,904,264 16.06219%
2-1
Payment Notional Cap Payment Notional Cap
Date Schedule ($) Strike (%) Date Schedule ($) Strike (%)
------- ------------- ---------- ------- ------------ ----------
17 768,755,216 15.53526% 50 250,159,360 15.53770%
18 743,218,952 16.05982% 51 241,702,460 16.06240%
19 718,523,696 15.53537% 52 233,524,078 15.53790%
20 694,641,750 16.05994% 53 225,615,041 15.53801%
21 671,546,329 15.53548% 54 217,966,480 16.06272%
22 649,211,529 15.53554% 55 210,569,816 15.53822%
23 627,612,300 16.62081% 56 203,416,752 16.06294%
24 606,724,418 15.53566% 57 196,499,266 15.53845%
25 586,524,454 16.06024% 58 189,809,600 15.53856%
26 566,989,752 15.53578% 59 183,340,250 17.22496%
27 548,098,404 16.06037% 60 177,083,961 15.53880%
28 529,829,221 15.53591% 61 171,033,716 16.06355%
29 512,161,712 15.53598% 62 163,629,705 15.53908%
30 495,076,063 16.06058% 63 156,534,260 16.06388%
31 478,553,110 15.53611% 64 149,734,521 15.53941%
32 462,574,322 16.06072% 65 143,218,164 15.53959%
33 447,121,777 15.53626% 66 136,973,380 16.06443%
The "Certificates" mean the Class C Certificates, Class R-1
Certificates, and Class R-2 Certificates issued pursuant to the Trust
Agreement.
A "Class" of Notes is any of the Class 1-A Notes, The Class 2-A Notes,
and the Class A-IO Notes.
A "Class 1-A Note" is any note executed by the Owner Trustee and
authenticated by the Indenture Trustee substantially in the form of Exhibit A
of the Indenture and related to Loan Group 1.
A "Class 2-A Note" is any note executed by the Owner Trustee and
authenticated by the Indenture Trustee substantially in the form of Exhibit
A-1 and related to Loan Group 2.
The "Class Note Rate" for any Class of Principal Amount Notes is for the
first Interest Period a per annum rate equal to the sum of the interpolated
one-month and two-month LIBOR and the Applicable Margin, and for any
subsequent Interest Period, a per annum rate equal to the least of
(i) the sum of LIBOR as of the Adjustment Date for that Interest
Period and the Applicable Margin,
(ii) the Maximum Rate for that Class Notes for that Interest
Period, and
(iii) 16.00%.
The interpolated one-month and two-month LIBOR shall be equal to one-month
LIBOR for the first Interest Period plus the product of
2-2
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 "Class A-IO-1 Component Note 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 for Loan Group 1 minus the
Class 1-A Note Rate of the Principal Amount Notes for that Interest
Period, adjusted to an effective rate reflecting the accrual of interest
based on a 360-day year consisting of twelve 30-day months multiplied by
a fraction whose numerator is the outstanding principal balance of the
Mortgage Loans in Loan Group 1 for the previous Payment Date (minus Net
Draws) and whose denominator is the Class A-IO-1 Component Notional
Balance.
The "Class A-IO-2 Component Note 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 for Loan Group 2 minus the
Class 2-A Note Rate of the Principal Amount Notes for that Interest
Period, adjusted to an effective rate reflecting the accrual of interest
based on a 360-day year consisting of twelve 30-day months multiplied by
a fraction whose numerator is the outstanding principal balance of the
Mortgage Loans in Loan Group 2 for the previous Payment Date (minus Net
Draws) and whose denominator is the Class A-IO-2 Component Notional
Balance.
The "Class A-IO-1 Component Notional Balance" for the second through the
sixth Payment Date is the lesser of the Class A-IO-1 Component Scheduled
Balance below and the outstanding principal balance of the Mortgage Loans in
Loan Group 1 at the beginning of the related Collection Period (less related
Net Draws). On the first Payment Date and each Payment Date after the sixth
Payment Date, the Class A-IO-1 Component Notional Balance will be zero.
The "Class A-IO-2 Component Notional Balance" for the second through the
sixth Payment Date is the lesser of the Class A-IO-2 Component Scheduled
Balance below and the outstanding principal balance of the Mortgage Loans in
Loan Group 2 at the beginning of the related Collection Period (less related
Net Draws). On the first Payment Date and each Payment Date after the sixth
Payment Date, the Class A-IO-2 Component Notional Balance will be zero.
2-3
Payment Date Class A-IO-1 Class A-IO-2 Component
Component Scheduled Scheduled Balance ($)
Balance ($)
Second 275,004,398.00 828,025,686.00
Third 272,816,502.00 813,826,340.00
Fourth 230,847,100.00 699,788,124.00
Fifth 211,505,507.00 643,383,853.00
Sixth 213,527,869.00 641,389,754.00
The "Closing Date" is March 30, 2006.
The "Co-Trustee" is Chase Bank USA, National Association, or any
successor Co-Trustee under the Indenture.
The last day of the first "Collection Period" is the last day of April
2006.
The "Corporate Trust Office" of the Indenture Trustee at the date of
execution of the 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 2006-D.
The "Credit Enhancer" is XL Capital Assurance Inc. and any successor or
replacement for the Credit Enhancer.
The "Indenture Trustee" is JPMorgan Chase Bank, N.A., a national
banking association.
The "Initial Cut-off Date" is the later of March 23, 2006 and the date
of origination of the relevant Initial Mortgage Loan.
The "Insurance Agreement" is the insurance agreement dated as of the
Closing Date among the Sponsor, the Master Servicer, the Depositor, the
Issuer, the Indenture Trustee, and the Credit Enhancer.
The "Insured Notes" are the Class 1-A Notes and the Class 2-A Notes.
The "Interest Bearing Notes" are the Class 1-A Notes, the Class 2-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 Note
Rate.
The "Latest Subsequent Closing Date" is the earlier of April 30, 2006
and the date the amount in each Additional Loan Account is less than $40,000.
The "Loan Insurance Policy" is the policy dated March 30, 2006, policy
number GKA1180, issued by Loan Insurance Policy Provider to the Co-Trustee.
The "Loan Insurance Policy Provider" is United Guaranty Residential
Insurance Company of North Carolina.
The "Loan Insurance Premium Rate" means 0.996% per annum.
2-4
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
in the related Loan Group 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, and (xii) indication
of the Loan Group.
The "Net Loan Rate" for any Mortgage Loan on any day is the Loan Rate
less
o the Servicing Fee Rate,
o Premium Percentage defined in the Insurance Agreement,
o the Loan Insurance Premium Rate, if applicable, and
o commencing with the Payment Date in May 2007, 0.50% per annum.
A "Note" is any Class 1-A Note, Class 2-A Note, or 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.
The "Note Rate" refers to either the Class 1-A Note Rate, the Class 2-A
Note Rate, the Class A-IO-1 Component Note Rate, or the Class A-IO-2 Component
Note Rate, as applicable.
The "Original Note Principal Balance" of the Notes is
o for the Class 1-A Notes, $525,000,000, and
o for the Class 2-A Notes, $1,325,000,000.
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 of a Class of Principal Amount
Notes that are Outstanding at the date of determination is their aggregate
principal amount. Certain voting rights will be held solely by the Credit
Enhancer as described in Section 11.17 of the Indenture.
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 May 2006.
2-5
The "Policy" is the note guaranty insurance policy number CA02871A
issued by the Credit Enhancer.
The "Premium Letter" means the letter agreement among the Credit
Enhancer, the Indenture Trustee, the Sponsor and the Depositor dated the date
hereof in respect of the premium payable in consideration of the issuance of
the Policy.
The "Principal Amount Notes" are the Class 1-A Notes and Class 2-A
Notes.
The Payment Date referred to in the definition of "Rapid Amortization
Commencement Date" is the Payment Date in April 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.
"Reporting Subcontractor" with respect to the Master Servicer or the
Indenture Trustee means any Subcontractor determined by the Master Servicer or
the Indenture Trustee pursuant to section 7.08(b) of the Sale and Servicing
Agreement to be "participating in the servicing function" within the meaning
of Item 1122 of Regulation AB. References to a Reporting Subcontractor shall
refer only to the Subcontractor of the Master Servicer or the Indenture
Trustee and shall not refer to Subcontractors generally.
The "Required Transferor Subordinated Amount" means as to any Payment
Date and each Loan Group 0.500% of the initial principal balance of the
related class of Class A Notes. Provided, however, that if, on any Payment
Date after the 12th Payment Date, the Rolling Three Month Excess Spread
Percentage with respect to a Loan Group is less than 1.750% or if, on any
Payment Date after the 24th Payment Date, the Rolling Three Month Excess
Spread Percentage with respect to a Loan Group is less than 2.000%, or if, on
any Payment Date after the 12th Payment Date, the Excess Spread Percentage
with respect to a Loan Group is less than 0.000%, then, in any such case, the
Required Transferor Subordinated Amount for the related class of Class A Notes
shall be 0.750% of the initial principal balance of that class of Class A
Notes, until the related Rolling Three Month Excess Spread Percentage again
equals or exceeds 1.750% or 2.000%, as applicable, and until the related
Excess Spread Percentage exceeds 0.000% on a subsequent Payment Date.
The "Scheduled Maturity Date" is the Payment Date in May 2036.
The "Servicing Fee Rate" is 0.50% per annum.
The "Trust" is the CWHEQ Revolving Home Equity Loan Trust, Series
2006-D, a Delaware statutory trust established pursuant to the Trust
Agreement, dated as of March 27, 2006, between Countrywide Home Loans, Inc.,
the Depositor, and Wilmington Trust Company.
The title of the Additional Loan Accounts for Loan Group 1 and Loan
Group 2 are "JPMorgan Chase Bank, N.A., as Indenture Trustee, Additional Loan
Account for Loan Group 1 for the registered holders of Revolving Home Equity
Loan Asset Backed Notes, Series 2006-D and XL Capital Assurance
2-6
Inc." and "JPMorgan Chase Bank, N.A., as Indenture Trustee, Additional Loan
Account for Loan Group 2 for the registered holders of Revolving Home Equity
Loan Asset Backed Notes, Series 2006-D and XL Capital Assurance Inc.,"
respectively.
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 2007.
The first year after which an annual compliance statement pursuant to
Section 3.09 is due is 200[7].
The wiring instructions for Section 6.15(c) are:
for the Co-Trustee:
JPMorgan Chase Bank
ABA#: 000-000-000
Acct Number: 507953991
Acct Name: Delaware Incoming Wire Account
Ref: Account #: [_____] CWHEQ 06-D Loan Ins Policy
Premium A/C
for the Indenture Trustee:
JPMorgan Chase Bank, N.A. - Houston, TX.
ABA# 000000000
Acct Number: 00103409232
Acct Name: Houston Structured Finance
Ref: CWHEQ 2006-D
The date in each year by which the Indenture Trustee will furnish
reports pursuant to Section 7.04 is March 15 beginning in 2007.
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 2006-D."
The title of the account established by the Co-Trustee is "CWHEQ
Revolving Home Equity Loan Trust Series 2006-D Loan Insurance Policy Premium
Account."
The Payment Date referred to in Section 8.03(b) of the Indenture is the
Maturity Date.
The date of the Prospectus Supplement is March 29, 2006.
Addresses for notices under Section 11.04 are:
For the Issuer at:
CWHEQ Revolving Home Equity Loan Trust, Series 2006-D
Wilmington Trust Company, as Owner Trustee
0-0
Xxxxxx Xxxxxx Xxxxx
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration;
For the Credit Enhancer at:
XL Capital
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance
For the Co-Trustee at:
Chase Bank USA, National Association
000 Xxxxxxx Xxxxxxxxxx Xxxx,
Ops 4, Xxxxx 0
Xxxxxx, XX 00000
Attention: Worldwide Securities Services;
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
2-8