EXHIBIT 4.4
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CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 200_-_
Issuer
and
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Indenture Trustee
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INDENTURE
Dated as of __________, 200_
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions and Other Provisions of General Application
Section 1.01. Definitions..........................................................................3
Section 1.02. Incorporation by Reference of Trust Indenture Act....................................3
Section 1.03. Other Terms..........................................................................3
Section 1.04. Rules of Construction................................................................3
ARTICLE II
The Notes
Section 2.01. Form.................................................................................5
Section 2.02. Execution, Authentication, and Delivery..............................................6
Section 2.03. Registration; Registration of Transfer and Exchange..................................6
Section 2.04. Mutilated, Destroyed, Lost, or Stolen Notes..........................................7
Section 2.05. Persons Considered Owner.............................................................8
Section 2.06. Payment of Principal and Interest; Defaulted Interest................................8
Section 2.07. Cancellation.........................................................................9
Section 2.08. Book-Entry Notes....................................................................10
Section 2.09. Notices To Depository...............................................................11
Section 2.10. Definitive Notes....................................................................11
Section 2.11. Tax Treatment.......................................................................11
Section 2.12. Transfer Restrictions; Restrictive Legends..........................................11
ARTICLE III
Covenants
Section 3.01. Payment of Principal and Interest...................................................12
Section 3.02. Maintenance of Office or Agency.....................................................13
Section 3.03. Money For Payments To Be Held in Trust..............................................13
Section 3.04. Existence...........................................................................14
Section 3.05. Protection of the Collateral........................................................14
Section 3.06. Opinions About Collateral...........................................................15
Section 3.07. Performance of Obligations..........................................................16
Section 3.08. Negative Covenants..................................................................17
Section 3.09. Annual Compliance Statement.........................................................18
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.................................19
Section 3.11. Successor or Transferee.............................................................19
Section 3.12. Further Instruments and Acts........................................................20
Section 3.13. Compliance with Laws................................................................20
Section 3.14. Master Servicer as Agent and Bailee of the Indenture Trustee........................20
Section 3.15. Investment Company Act..............................................................20
Section 3.16. Representations.....................................................................20
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ARTICLE IV
Satisfaction and Discharge
Section 4.01. Satisfaction and Discharge of Indenture.............................................21
Section 4.02. Application of Trust Money..........................................................23
Section 4.03. Subrogation and Cooperation.........................................................23
Section 4.04. Release of Collateral...............................................................24
ARTICLE V
Remedies
Section 5.01. Events of Default...................................................................24
Section 5.02. Acceleration of Maturity; Rescission and Annulment..................................25
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee...........26
Section 5.04. Indenture Trustee May File Proofs of Claim..........................................27
Section 5.05. Remedies; Priorities................................................................28
Section 5.06. Optional Preservation of the Collateral.............................................30
Section 5.07. Limitation of Suits.................................................................30
Section 5.08. Unconditional Right to Receive Principal and Interest...............................31
Section 5.09. Restoration of Rights and Remedies..................................................31
Section 5.10. Rights and Remedies Cumulative......................................................31
Section 5.11. Delay or Omission Not a Waiver......................................................31
Section 5.12. Control by Credit Enhancer or Noteholders...........................................32
Section 5.13. Waiver of Past Defaults.............................................................32
Section 5.14. Undertaking For Costs...............................................................32
Section 5.15. Waiver of Stay or Extension Laws....................................................33
Section 5.16. Rapid Amortization Events...........................................................33
Section 5.17. Sale of Collateral..................................................................34
Section 5.18. Performance and Enforcement of Certain Obligations..................................35
ARTICLE VI
The Indenture Trustee
Section 6.01. Duties of Indenture Trustee.........................................................35
Section 6.02. Notice of Defaults..................................................................37
Section 6.03. Rights of Indenture Trustee.........................................................37
Section 6.04. Indenture Trustee Not Responsible for Certain Things................................38
Section 6.05. Individual Rights of Indenture Trustee..............................................39
Section 6.06. Money Held in Trust.................................................................39
Section 6.07. Compensation........................................................................39
Section 6.08. Eligibility.........................................................................40
Section 6.09. Preferential Collection of Claims Against Issuer....................................40
Section 6.10. Replacement of Indenture Trustee....................................................40
Section 6.11. Acceptance of Appointment by Successor..............................................41
Section 6.12. Successor Indenture Trustee by Merger...............................................41
Section 6.13. Appointment of Co-Indenture Trustee or Separate Indenture Trustee...................41
Section 6.14. Representations and Warranties of Indenture Trustee.................................43
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ARTICLE VII
Noteholders' Lists and Reports
Section 7.01. Issuer to Furnish Names and Addresses of Noteholders................................43
Section 7.02. Preservation of Information; Communications.........................................44
Section 7.03. Reports of Issuer...................................................................44
Section 7.04. Reports by Indenture Trustee........................................................44
ARTICLE VIII
Accounts, Disbursements, and Releases
Section 8.01. Accounts............................................................................45
Section 8.02. Withdrawals from the Collection Account.............................................46
Section 8.03. Payments............................................................................47
Section 8.04. Calculation of the Note Rate........................................................50
Section 8.05. Claims on the Policy; Policy Payments Account.......................................50
Section 8.06. Replacement Policy..................................................................51
ARTICLE IX
Supplemental Indentures
Section 9.01. Supplemental Indentures.............................................................52
Section 9.02. Execution of Supplemental Indentures................................................54
Section 9.03. Effect of Supplemental Indenture....................................................55
Section 9.04. Reference in Notes to Supplemental Indentures.......................................55
Section 9.05. Tax Opinion.........................................................................55
ARTICLE X
Redemption of Notes
Section 10.01. Redemption..........................................................................55
Section 10.02. Form of Redemption Notice...........................................................56
Section 10.03. Notes Payable on Redemption Date....................................................57
ARTICLE XI
Miscellaneous
Section 11.01. Compliance Certificates and Opinions, etc...........................................57
Section 11.02. Form of Documents Delivered to Indenture Trustee....................................59
Section 11.03. Acts of Noteholders.................................................................59
Section 11.04. Notices.............................................................................60
Section 11.05. Notices to Noteholders; Waiver......................................................61
Section 11.06. Alternate Payment and Notice Provisions.............................................62
Section 11.07. Conflict with Trust Indenture Act...................................................62
Section 11.08. Effect of Headings and Table of Contents............................................62
Section 11.09. Successors and Assigns..............................................................62
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Section 11.10. Separability........................................................................62
Section 11.11. Benefits of Indenture...............................................................62
Section 11.12. Legal Holidays......................................................................63
Section 11.13. Governing Law.......................................................................63
Section 11.14. Counterparts; Electronic Delivery...................................................63
Section 11.15. Recording of Indenture..............................................................63
Section 11.16. No Petition.........................................................................63
Section 11.17. Act on Instructions from Credit Enhancer............................................63
Section 11.18. Non-recourse........................................................................64
Section 11.19. Trust Obligation....................................................................64
EXHIBITS
Exhibit A - FORM OF NOTES A-1
ANNEX 1 - DEFINITIONS βββ�-1-1
ANNEX 2 - ADOPTION ANNEX βββ�-2-1
THIS INDENTURE, dated as of _________, 200_, between CWHEQ Revolving Home
Equity Loan Trust, Series 200_-_, a Delaware statutory trust, and the
INDENTURE TRUSTEE, as indenture trustee,
WITNESSETH THAT
Each party agrees for the benefit of the other party and for the benefit
of the Noteholders and the Credit Enhancer as follows.
GRANTING CLAUSE
The Issuer Grants to the Indenture Trustee for the series referred to in
the Adoption Annex at the Closing Date, as Indenture Trustee for the benefit
of the Holders of the Class [1-A] Notes and the Credit Enhancer, 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 Issuer's rights under hazard insurance policies 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 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 [1-A] Notes are entitled to from Loan Group [2]; and
o all present and future claims, demands, causes of action, and
choses in action regarding any of the foregoing and all payments on and
all proceeds from any of the foregoing, including all proceeds of their
conversion, voluntary or involuntary, into cash or other liquid property,
all cash proceeds, accounts, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights
to payment of every kind, and other forms of obligations, instruments,
and other property that at any time constitute any part of or are
included in the proceeds of any of the foregoing (collectively, the
"Group [1] Collateral").
The Issuer Grants to the Indenture Trustee for the notes referred to
in the Adoption Annex at the Closing Date, as Indenture Trustee for the
benefit of the Holders of the Class [2-A] Notes and the Credit Enhancer,
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 Issuer's rights under hazard insurance policies 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 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 [2-A] Notes are entitled to from Loan Group [1]; and
o all present and future claims, demands, causes of action, and
choses in action regarding any of the foregoing and all payments on and
all proceeds from any of the foregoing, including all proceeds of their
conversion, voluntary or involuntary, into cash or other liquid property,
all cash proceeds, accounts, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights
to payment of every kind, and other forms of obligations, instruments,
and other property that at any time constitute any part of or are
included in the proceeds of any of the foregoing (collectively, the
"Group [2] Collateral").
The Notes will have the benefit of the Policy issued by the Credit
Enhancer.
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, and to secure compliance with the provisions of this
Indenture, all as provided in this Indenture.
The foregoing Grants shall inure to the benefit of the Credit Enhancer to
the extent of draws made on the Policy and amounts owing under the Insurance
Agreement, and shall
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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 Noteholders
and the Credit Enhancer, acknowledges the Grants, accepts the trusts under
this Indenture in accordance with this Indenture, and agrees to perform its
duties required in this Indenture in accordance with its terms and the terms
of the Transaction Documents.
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Indenture as defined in Annex 1 or the Adoption Annex.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference into this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute, or defined by Commission rule
have the meanings so assigned to them.
Section 1.03. Other Terms.
Defined terms that are used only in one section or only in another
definition may be omitted from the list of defined terms in Annex 1. Defined
terms used in this Indenture are sometimes defined after their first use
without a reference such as "(as hereinafter defined)."
Section 1.04. Rules of Construction.
Except as otherwise expressly provided in this Indenture or unless the
context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural as
well as the singular.
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(b) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Indenture, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Indenture as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Indenture are a part of this Indenture. The words
"herein," "hereof," "hereto," "hereunder," and other words of similar import
refer to this Indenture as a whole and not to any particular article, section,
exhibit, or other subdivision of this Indenture.
(c) The headings of the various Articles and Sections in this Indenture
are for convenience of reference only and shall not define or limit any of the
provisions of this Indenture.
(d) Any term that relates to a document or a statute, rule, or regulation
includes any amendments, modifications, supplements, or any other changes that
may have occurred since the document, statute, rule, or regulation came into
being, including changes that occur after the date of this Indenture, except
in the case of the TIA. References to law are not limited to statutes.
References to statutes include any rules or regulations promulgated under them
by a governmental authority charged with the administration of the statute.
Any reference to any person includes references to its successors and assigns.
(e) Any party may execute any of the requirements under this Indenture
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under
this Indenture. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Indenture are implicitly available from
time to time.
(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
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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.
(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.
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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 Class [1-A] and Class [2-A] Notes in the
amounts reflected in the Adoption Annex. The aggregate principal amount of
Class [1-A] and Class [2-A] Notes outstanding at any time may not exceed those
amounts except as provided in Section 2.04. Each Note shall be dated the date
of its authentication. The Notes shall be issuable as registered Notes in the
minimum denomination of $[25,000] and in integral multiples of $[1,000] above
that.
(c) No Note shall be entitled to any benefit under this Indenture or be a
valid obligation of the Issuer for any purpose, unless a certificate of
authentication appears on it executed by the Indenture Trustee by the manual
signature of one of its authorized signatories. 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
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Section 8-401(a) of the UCC are met, the Issuer shall execute, and the
Indenture Trustee shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, in the name of the designated transferees, new Notes of the
same Class in any authorized denominations, of a like aggregate principal
amount.
(c) At the option of the Holder, Notes may be exchanged for other Notes
of the same Class in any authorized denominations, of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at the office or
agency of the Issuer maintained pursuant to Section 3.02. Whenever any Notes
are so surrendered for exchange, if the requirements of Section 8-401(a) of
the UCC are met the Issuer shall execute, and the Indenture Trustee shall
authenticate and the Noteholder shall obtain from the Indenture Trustee, the
Notes that the Noteholder making the exchange is entitled to receive.
(d) All Notes issued on any registration of transfer or exchange of Notes
shall be valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
for registration of transfer or exchange.
(e) Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
its Holder or any attorney for its Holder duly authorized in writing. The
endorsement signature shall be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("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 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
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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 the preceding sentence, 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 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 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 or principal payable on a 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
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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 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 the Note on a Payment Date, a redemption
date, or the Scheduled Maturity Date (and except for the redemption price for
any Class of Notes called for redemption pursuant to Section 10.01) which
shall be payable as provided below.
(b) The principal of each 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 Notes shall be made pro rata to
the Noteholders of that Class. The Indenture Trustee shall send a notice to
each person in whose name a 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 Notes as of the close of business on the Record Date preceding the
Scheduled Maturity Date, at the Holder's address or facsimile number appearing
in the Note Register, and shall specify that the principal of the Note will be
payable only on presentation and surrender of the Note and shall specify the
place where the Note may be presented and surrendered for payment. Notices in
connection with redemptions of Notes shall be mailed to Noteholders as
provided in Section 10.02.
(c) If the Issuer defaults in a payment of interest on the 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 Noteholder 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
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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 Notes, on original issuance, will be issued by the Issuer in the
form of typewritten Notes representing the book-entry Notes, to the Depository
Trust Company, the initial Depository. The book-entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Depository, and no Note Owner will receive a definitive
Note representing its interest in a Note, except as provided in Section 2.10.
Until definitive, fully registered Notes have been issued to the Note Owners
pursuant to Section 2.10:
(i) the provisions of this Section shall be in full force;
(ii) the Note Registrar and the Indenture Trustee may deal with the
Depository for all purposes of this Indenture (including the payment of
principal and interest on the Notes and accepting instructions under this
Indenture) as the sole holder of the Notes, and shall have no obligation
to the Note Owners;
(iii) to the extent that this Section conflicts with any other
provisions of this Indenture, this Section shall control;
(iv) the rights of Note Owners shall be exercised only through the
Depository and shall be limited to those established by law and
agreements between the Note Owners and the Depository;
(v) until definitive Notes are issued 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 Notes to the Depository's participants;
(vi) whenever this Indenture requires or permits actions to be taken
based on instructions from Holders of Notes evidencing a specified
percentage of the Outstanding Amount, the Depository shall be treated as
representing that percentage only to the extent that it has received
instructions to that effect from Note Owners owning the required
percentage of the beneficial interest in the Notes and has delivered the
instructions to the Indenture Trustee; and
(vii) the Indenture Trustee may conclusively rely on information
furnished by the Depository about its participants and furnished by the
participants about indirect participating firms and persons shown on the
books of the indirect participating firms as direct or indirect Note
Owners.
(b) The book-entry Notes may not be transferred except as a whole and
then only by the Depository to its nominee or by its nominee to the Depository
or another nominee of the Depository, or by the Depository or its nominee to a
successor to the Depository or the successor's nominee.
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Section 2.09. Notices To Depository.
Whenever a communication to the Noteholders is required under this
Indenture, until definitive Notes have been issued to the Note Owners pursuant
to Section 2.10, the Indenture Trustee shall communicate with the Depository
as Holder of the Notes, and shall have no obligation to the Note Owners.
Section 2.10. Definitive Notes.
If
(i) the Issuer advises the Indenture Trustee in writing that the
Depository is no longer willing or able to discharge its responsibilities
properly with respect to the book-entry Notes and the Issuer is unable to
locate a qualified successor, or
(ii) after the occurrence of an Event of Default, Note Owners of not
less than 51% of the aggregate Outstanding Amount of both Classes 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 entered into this Indenture, and the Notes will be issued,
with the intention that, for all purposes including federal, State, and local
income, single business, and franchise tax purposes, the Notes will qualify as
indebtedness secured by the Collateral. The Issuer, by entering into this
Indenture, and each Noteholder, by its acquisition of a Note (and each Note
Owner by its acquisition of an interest in a book-entry Note), agree to treat
the Notes for all purposes including federal, State, and local income, single
business, and franchise tax purposes as indebtedness.
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 ββββ ββ-ββ, ββββ ββ-β�, ββββ ββ-ββ, ββββ
ββ-ββ, ββββ 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,
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a plan (as defined in and subject to section 4975 of the Code) and any entity
whose underlying assets include plan assets by reason of a plan's investment
in the entity or otherwise.
(b) Unless the Indenture Trustee and the Credit Enhancer receive an
Opinion of Counsel to the effect that it is no longer appropriate, each
definitive Note shall bear the following legend on its face:
"Each transferee or purchaser of this Note that is a plan or is investing
plan assets, by acceptance of this Note or an interest in this Note,
represents that the investment and holding of this Note satisfy the conditions
for exemptive relief under ββββ ββ-ββ, ββββ ββ-β�, ββββ ββ-ββ, ββββ ββ-ββ, ββββ
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.
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 and interest 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.
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Section 3.02. Maintenance of Office or Agency.
The Issuer will maintain in the Borough of Manhattan, The City of New
York, an office or agency where Notes may be surrendered for registration of
transfer or exchange, and where notices to and demands on the Issuer regarding
the Notes and this Indenture may be served. The Issuer initially appoints the
Indenture Trustee to serve as its agent for these purposes. The Indenture
Trustee will give prompt notice to the Issuer of the location, and of any
change in the location, where the Indenture Trustee maintains this office or
agency. If the Issuer ever fails to maintain the required office or agency,
then surrenders, notices, and demands may be made or served at the Corporate
Trust Office.
Section 3.03. Money For Payments To Be Held in Trust.
All payments of amounts payable on any Notes pursuant to Section 8.03,
shall be made from amounts deposited in the Payment Account by the Indenture
Trustee or by another Paying Agent, and no amounts so deposited in the Payment
Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section or Section 8.03.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which the
Paying Agent agrees with the Indenture Trustee that it will, and the Indenture
Trustee hereby agrees in its capacity as Paying Agent that it will:
(i) hold all sums held by it for the payment of amounts due on the
Notes in trust for the benefit of the persons entitled to them until they
are paid to the persons entitled to them or otherwise disposed of as
provided in this Indenture, and pay them to the persons entitled to them
as provided in this Indenture;
(ii) give the Indenture Trustee and the Credit Enhancer notice of
any payment default by the Issuer on the Notes of which it has actual
knowledge;
(iii) at any time during the continuance of any payment default on
the Notes, at the request of the Indenture Trustee, immediately pay to
the Indenture Trustee all sums held in trust by it for the payment of the
Notes;
(iv) immediately resign as a Paying Agent and immediately pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes
if at any time it 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
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all sums held by it in trust. Those sums shall be held by the Indenture
Trustee on the same trusts as those on which the sums were held by the Paying
Agent. On payment by a Paying Agent to the Indenture Trustee, it shall be
released from all further liability with respect to that money.
Subject to applicable laws on abandoned property, any money held in trust
by the Indenture Trustee or any Paying Agent for the payment of any amount due
on any Note remaining unclaimed for two years after it has become payable
shall be discharged from the trust and be paid to the Issuer on Issuer
Request. After that the Holder of the unpaid Note shall look only to the
Issuer for its payment as an unsecured general creditor (but only to the
extent of the amounts paid to the Issuer). On its payment to the Issuer all
liability of the Indenture Trustee or the Paying Agent with respect to that
trust money shall cease. The Indenture Trustee or the Paying Agent, before
being required to make the payment to the Issuer, shall at the expense and
direction of the Issuer cause to be published once a notice that the money
remains unclaimed and that, after a date specified in the notice not less than
30 days from the date of the publication, any unclaimed balance of the money
then remaining will be repaid to the Issuer. The notice shall be published in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York. The Indenture
Trustee may also adopt and employ, at the expense and direction of the Issuer,
any other reasonable means of notification of the repayment (including mailing
notice of the repayment to their last address of record to Holders whose 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 Noteholders and
the Credit Enhancer 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 Noteholders and the Credit Enhancer, 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:
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(i) Grant more effectively any portion of the Collateral;
(ii) preserve the Security Interest (and its priority) created by
this Indenture or carry out more effectively the purposes of this
Indenture;
(iii) perfect, publish notice of, or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to any of the Collateral;
(v) preserve and defend title to the Collateral and the rights of
the Indenture Trustee, the Credit Enhancer, and the Noteholders in the
Collateral against all adverse claims; or
(vi) pay all taxes or assessments levied or assessed on the
Collateral when due.
(b) Except as otherwise provided in this Indenture or the other
Transaction Documents, the Indenture Trustee shall not remove any portion of
the Collateral that consists of money or is evidenced by an instrument,
certificate, or other writing from the jurisdiction in which it was held at
the date of the most recent Opinion of Counsel delivered pursuant to Section
3.06 unless the Indenture Trustee and the Credit Enhancer receive an Opinion
of Counsel to the effect that the lien and Security Interest created by this
Indenture will continue to be maintained on any removed property after giving
effect to its removal.
(c) The Issuer designates the Indenture Trustee its agent and
attorney-in-fact to execute any Financing Statement, Continuation Statement,
or other instrument required to be executed pursuant to this Section. The
Issuer authorizes the Indenture Trustee to file Financing Statements or
Continuation Statements, and amendments to them, relating to any part of the
Collateral without the signature of the Issuer where permitted by law. A
carbon, photographic, or other reproduction of this Indenture or any filed
Financing Statement covering the Collateral or any part of it shall be
sufficient as a Financing Statement where permitted by law. The Indenture
Trustee will promptly send to the Issuer any Financing Statements or
Continuation Statements that it files without the signature of the Issuer. Any
Financing Statement filed 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 stating that, in
its opinion, all action has been taken
(i) with respect to the recording and filing of this Indenture, any
indentures supplemental to this Indenture, and any other requisite
documents and
15
(ii) with respect to the execution and filing of any Financing
Statements and Continuation Statements
necessary to perfect the Security Interest of this Indenture in the Mortgage
Loans, and reciting the details of the action, or stating that, in its
opinion, no action is necessary to perfect the Security Interest of this
Indenture in the Mortgage Loans.
(b) By the date specified in the Adoption Annex in each calendar year
beginning in the year specified in the Adoption Annex, the Issuer shall
furnish to the Indenture Trustee and the Credit Enhancer an Opinion of Counsel
either stating that, in its opinion, no action is necessary to maintain the
perfected Security Interest of this Indenture in the Mortgage Loans or stating
that, in its opinion, all action has been taken
(i) with respect to the recording, filing, re-recording, and
refiling of this Indenture, any indentures supplemental to this
Indenture, and any other requisite documents and
(ii) with respect to the execution and filing of any Financing
Statements and Continuation Statements
necessary to maintain the perfected Security Interest created by this
Indenture in the Mortgage Loans and reciting the details of the action. The
Opinion of Counsel shall also describe the recording, filing, re-recording,
and refiling of this Indenture, any indentures supplemental to this Indenture,
and any other requisite documents and the execution and filing of any
Financing Statements and Continuation Statements that will, in counsel's
opinion, be required to maintain the perfected Security Interest of this
Indenture in the Mortgage Loans until the date specified in the Adoption Annex
in the following calendar year.
Section 3.07. Performance of Obligations.
(a) The Issuer will not take any action (and will not permit others to
take any action) that would release any person from any of their material
obligations under any of the Transaction Documents, that would create any
Security Interests that are not provided for in the Transaction Documents, or
that would change or impair the validity or effectiveness of the Transaction
Documents or any Security Interest granted under them, except as expressly
provided in the Transaction Documents. The Indenture Trustee, as pledgee of
the Mortgage Loans and an assignee of the Issuer's rights under the Sale and
Servicing Agreement may exercise all of the rights of the Issuer to direct the
actions of the Master Servicer pursuant to the Sale and Servicing Agreement.
Unless granted or permitted by the Credit Enhancer, the Issuer may not waive
any default by the Master Servicer under the Sale and Servicing Agreement or
terminate the Master Servicer under the Sale and Servicing Agreement.
(b) The Issuer may contract with other persons to assist it in performing
its duties under this Indenture, and the performance of those duties by a
person identified to the Indenture Trustee in an Officer's Certificate shall
be considered to be action taken by the Issuer.
16
(c) The Issuer will punctually perform all of its obligations under the
Transaction Documents, including properly filing all Financing Statements and
Continuation Statements required to be filed by the Transaction Documents. The
Rating Agency Condition must be satisfied in connection with any amendment,
termination, or material change in a Transaction Document. The Issuer shall
not amend, terminate, or otherwise change any Transaction Document without the
consent of the Indenture Trustee and the Credit Enhancer. The Issuer will
provide notice of any termination, amendment, or material change in any
Transaction Document to the Rating Agencies. The consent of the Indenture
Trustee will not be required if the Rating Agency Condition is satisfied with
respect to the proposed action.
(d) Without derogating from the Grants to the Indenture Trustee under
this Indenture or the rights of the Indenture Trustee under this Indenture,
the Issuer agrees
(i) that it will not, without the prior consent of the Credit
Enhancer and either the Indenture Trustee or the Holders of not less than
51% of the aggregate Outstanding Amount of both Classes, change or waive,
or agree to or otherwise permit any change to or waiver of, the terms of
any Collateral (except to the extent otherwise provided in the Sale and
Servicing Agreement); and
(ii) that any change in the terms of any Collateral shall not (A)
increase or reduce the amount of, or accelerate or delay the timing of,
distributions that are required to be made for the benefit of the
Noteholders (except as may be incidental to changes or waivers allowed
under (d)(i)) or (B) reduce the percentage of the Notes that is required
to consent to any change in the terms of any Collateral without the
consent of the Holders of all the Outstanding Notes.
If the Credit Enhancer and either the Indenture Trustee or the requisite
percentage of Holders consent to any change in the terms of any Collateral,
the Issuer agrees, promptly following a request by the Indenture Trustee to do
so, to execute and deliver, in its own name and at its own expense, any
documents the Indenture Trustee deems appropriate under the circumstances.
Section 3.08. Negative Covenants.
So long as any Notes are Outstanding, the Issuer shall not:
(a) dispose of any of the Collateral or other properties or assets of the
Issuer, except as expressly permitted by this Indenture or the Sale and
Servicing Agreement, unless directed to do so by the Indenture Trustee with
the consent of the Credit Enhancer;
(b) claim any credit on, or make any deduction from the principal or
interest or other amounts payable on, the Notes (other than amounts properly
withheld from payments under the Code or applicable State law) or assert any
claim against any present or former Noteholder for the payment of the taxes
levied or assessed on any part of the Collateral;
(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
17
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; or
(j) subject to the Master Servicer's servicing the Mortgage Loans in
accordance with the Sale and Servicing Agreement, waive or impair, or fail to
assert rights under, the Mortgage Loans, or effect impairment of the Issuer's
interest in the Mortgage Loans, the Sale and Servicing Agreement, or any other
Transaction Document, if the action would materially and adversely affect the
interests of the Noteholders or the Credit Enhancer.
Section 3.09. Annual Compliance Statement.
Within 80 days after the end of each year (commencing with the year
specified in the Adoption Annex) the Issuer will deliver to the Indenture
Trustee and the Credit Enhancer an Officer's Certificate stating, as to the
Authorized Officer signing the Officer's Certificate, that:
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(i) a review of the activities of the Issuer during the calendar
year and of its performance under this Indenture and the Trust Agreement
has been made under the Authorized Officer's supervision; and
(ii) to the best of the Authorized Officer's knowledge, based on
that review, the Issuer has complied with all its obligations under this
Indenture and the Trust Agreement throughout that year or, if there has
been a default in its compliance with any obligation, specifying each
default known to the Authorized Officer and its nature and status.
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
The Issuer shall not consolidate or merge with or into or transfer all or
substantially all of its properties or assets to any other person, unless:
(i) the person (if other than the Issuer) formed by or surviving the
consolidation or merger or to which the transfer is made is organized and
existing under the laws of the United States or any State and expressly
assumes the due and punctual payment of the principal and interest on the
Notes and the performance of every obligation under each Transaction
Document on the part of the Issuer to be performed by an indenture
supplemental to this Indenture, executed and delivered to the Indenture
Trustee, in form satisfactory to the Indenture Trustee and the Credit
Enhancer;
(ii) immediately after giving effect to the transaction, no
Incipient Default has occurred and is continuing;
(iii) the Rating Agency Condition has been satisfied with respect to
the transaction;
(iv) the Issuer has delivered to the Indenture Trustee and the
Credit Enhancer an Opinion of Counsel to the effect that the transaction
will not have any material adverse tax consequence to the Issuer or any
Noteholder;
(v) any action that is necessary to maintain the Security Interest
created by this Indenture has been taken; and
(vi) the Issuer has delivered to the Indenture Trustee and the
Credit Enhancer an Officer's Certificate and an Opinion of Counsel each
stating that the consolidation or merger and the supplemental indenture
comply with this Article and that all conditions precedent in this
Indenture relating to the transaction have been complied with (including
any filing required by the Exchange Act).
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
19
to, and be substituted for, and may exercise every right of, the Issuer under
this Indenture with the same effect as if it had been named as the Issuer in
this Indenture.
Section 3.12. Further Instruments and Acts.
On request of the Indenture Trustee or the Credit Enhancer, the Issuer
will execute and deliver any further instruments and do any further acts that
may be appropriate to carry out more effectively the purpose of this
Indenture.
Section 3.13. Compliance with Laws.
The Issuer shall comply with the requirements of all laws the
non-compliance with which would, individually or in the aggregate, materially
and adversely affect the ability of the Issuer to perform its obligations
under the Notes or any Transaction Document.
Section 3.14. Master Servicer as Agent and Bailee of the Indenture
Trustee.
Solely for the purposes of perfection under Section 9-313(c) of the UCC
or other similar applicable law, rule, or regulation of the state in which
property is held by the Master Servicer, the Master Servicer is acting as
agent and bailee of the Indenture Trustee in holding amounts subject to
deposit to the Collection Account, as well as its agent and bailee in holding
any Mortgage File released to the Master Servicer, and any other items of
Collateral that come into the possession of the Master Servicer. By the Master
Servicer's execution of the Sale and Servicing Agreement, the Indenture
Trustee, as a secured party of the Mortgage Loans, has possession of these
items for the purposes of Section 9-313(c) of the UCC of the state in which
the Issuer is organized.
Section 3.15. Investment Company Act.
The Issuer shall not become an "investment company" or under the
"control" of an "investment company" as those terms are defined in the
Investment Company Act of 1940 and the rules and regulations under it (taking
into account not only the general definition of the term "investment company"
but also any available exceptions to the general definition). The Issuer shall
be in compliance with this Section 3.15 if it obtains an order exempting it
from regulation as an "investment company" so long as it is in compliance with
the conditions imposed in the order.
Section 3.16. Representations.
(a) The Issuer represents and warrants to the Indenture Trustee and the
Credit Enhancer that as of the Closing Date, unless specifically stated
otherwise:
(i) This Indenture creates a valid and continuing Security Interest
in the Collateral in favor of the Indenture Trustee. The Security
Interest created by this 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.
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(iii) Before the Grants of the Security Interest pursuant to the
Granting Clause of this Indenture, the Issuer owns, and has good and
marketable title to, the Mortgage Loans free of any lien, claim, or
encumbrance of any person.
(iv) By the Closing Date with respect to the Mortgage Loans and
within 10 days of the applicable date of substitution with respect to any
Eligible Substitute Mortgage Loan, the Issuer will file Financing
Statements in the proper filing office in the appropriate jurisdiction to
perfect the Security Interest in the Collateral Granted under this
Indenture.
(v) The Issuer has received a written acknowledgement from the
Custodian that the Custodian is acting solely as agent of the Indenture
Trustee.
(vi) The Issuer has not authorized the filing of and is not aware of
any Financing Statements against the Issuer that include a description of
collateral covering the Collateral other than any financing statement (A)
relating to the Security Interests granted to the Indenture Trustee
pursuant to this Indenture, (B) that has been terminated, or (C) that
names the Indenture Trustee as secured party.
(vii) The Mortgage Notes that constitute or evidence the Collateral
do not have any marks or notations indicating that they have been
pledged, assigned, or otherwise conveyed to any person other than the
Indenture Trustee. All Financing Statements filed or to be filed against
the Issuer in favor of the Indenture Trustee in connection with this
Indenture describing the Collateral contain a statement to the following
effect: "A purchase of the Mortgage Loans included in the collateral
covered by this financing statement will violate the rights of the
Indenture Trustee."
(viii) On the Closing Date, the Issuer is a "Qualifying SPE" as such
term is defined in the statement of Accounting Standards No. 140 of the
Financial Accounting Standards Board, as in effect on the Closing Date.
(b) The representations and warranties in this Section 3.16 shall survive
delivery of the respective Mortgage Files to the Custodian pursuant to the
Custodial Agreement and the termination of the Sale and Servicing Agreement.
(c) The Indenture Trustee and the Credit Enhancer shall not, without the
prior written consent of the Rating Agencies, waive any of the representations
and warranties in Section 3.16(a).
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
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of this Indenture, and the rights of the Credit Enhancer as subrogee of the
Noteholders, this Indenture shall cease to be of further effect, and the
Indenture Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when the option of the Issuer to redeem the 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 and (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); or
(B) all Notes not previously delivered to the Indenture Trustee
for cancellation:
(1) have become payable,
(2) will become payable at their Scheduled Maturity Date
within one year, or
(3) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the
giving of notice of redemption by the Indenture Trustee in the
name, and at the expense, of the Issuer,
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 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.
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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 principal and interest from Mortgage Loans only from the sources and
in the manner provided in this Indenture and in the Insurance Agreement.
The Indenture Trustee shall cooperate in all respects with any reasonable
request or direction by the Credit Enhancer to take any of the following
actions to preserve or enforce the Credit Enhancer's interest under each of
this Indenture and the Sale and Servicing Agreement, consistent with this
Indenture and without limiting the rights of the Noteholders under this
Indenture, including upon the occurrence and continuance of a Credit Enhancer
Default:
(i) institute Proceedings for the collection of all amounts then
payable on the Notes or under this Indenture with respect to the Notes
and all amounts payable 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
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(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 all amounts provided for in the
Indenture have been paid, the Indenture Trustee shall release any remaining
Collateral from the lien of this Indenture and release to the Issuer any funds
then on deposit in any account other than funds held in trust for the
satisfaction of Notes that have not been surrendered for payment. The
Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section only on receipt of an Issuer Request accompanied by
an Officer's Certificate.
(c) Whenever a Mortgage Loan has been substituted for in accordance with
Section 2.01(f) or 2.02(b) 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:
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(i) default by the Issuer in the payment of any interest on any 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
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 both Classes of Notes) by registered or
certified mail specifying the default or incorrect representation or
warranty and requiring it to be remedied and stating that the notice is a
notice of default under this Indenture; or
(iv) an Insolvency Event occurs with respect to the Issuer.
The Issuer shall deliver to the Indenture Trustee and the Credit Enhancer,
within five days after its occurrence, notice in the form of an Officer's
Certificate of any Incipient Default under clause (iii), its status, and what
action the Issuer is taking or proposes to take with respect to the event.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then the Indenture
Trustee or the Holders of not less than 51% of the aggregate Outstanding
Amount of both Classes, 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 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 both 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:
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(A) all payments of principal and interest on the 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 in its discretion with the consent of the Credit
Enhancer, and at the direction of the Credit Enhancer shall, institute a
Proceeding for the collection of the sums due, and may prosecute the
Proceeding to final decree, and may enforce the judgment against the Issuer
(or other obligor on the Notes) and collect in the manner provided by law out
of the property of the Issuer (or other obligor on the Notes) wherever
situated, the moneys determined to be payable.
(c) If an Event of Default 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 Noteholders and the Credit Enhancer, 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 Noteholders and the Credit Enhancer, and it
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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 Noteholders and the Credit Enhancer.
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 Notes is then payable as
expressed in them or by declaration or otherwise and irrespective of whether
the Indenture Trustee has made any demand pursuant to this Section, with the
consent of the Credit Enhancer the Indenture Trustee is authorized by
intervention in the Proceedings or otherwise:
(i) to file and prove claims for the entire amount of principal and
interest and other amounts owing on the 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
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(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 contained in this Indenture authorizes the Indenture Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder or the Credit Enhancer any plan of reorganization, arrangement,
adjustment, or composition affecting the Notes or the rights of any Noteholder
or the Credit Enhancer or authorizes the Indenture Trustee to vote on the
claim of any Noteholder or the Credit Enhancer in any such proceeding except
to vote for the election of a trustee in bankruptcy or similar person.
Section 5.05. Remedies; Priorities.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee subject to Section 11.16 may with the consent of the Credit Enhancer,
and at the direction of the Credit Enhancer shall, do any of the following
(subject to Section 5.11):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture, whether by declaration or otherwise, and all
amounts payable under the Sale and Servicing Agreement, and enforce any
judgment obtained, and collect from the Issuer and any other obligor on
the Notes moneys adjudged due;
(ii) institute Proceedings for the complete or partial foreclosure
of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights of
the Indenture Trustee, the Credit Enhancer, and the Noteholders;
(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.
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The Indenture Trustee, however, may not sell or otherwise liquidate Collateral
following an Event of Default unless (A) the Indenture Trustee obtains the
consent of the Credit Enhancer and the Holders of 100% of the aggregate
Outstanding Amount of the Notes of both Classes, (B) the proceeds of the sale
or liquidation distributable to the Noteholders and the Credit Enhancer are
sufficient to discharge in full all amounts then due on the 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 and
interest on the Notes as they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee obtains the consent of the
Credit Enhancer and the Holders of a majority of the aggregate Outstanding
Amount of the Notes of both 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 both Classes instead of by the Credit Enhancer.
(b) If the Indenture Trustee collects any money or property with respect
to a Loan Group upon an acceleration and liquidation of the Collateral, 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, 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 related Noteholders for interest due on the related
Notes (except for Basis Risk Carryforward), pro rata according to the
amounts due on those Notes for interest;
FOURTH: to the related Noteholders for amounts due on the related
Notes for principal, pro rata according to the principal due on those
Notes until the Note Principal Balance of the applicable Class of Notes
is reduced to zero;
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FIFTH: to the unrelated Noteholders, any amounts that if they were
being distributed 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 Basis Risk Carryforward to the related
Noteholders; 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 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 both 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 both Classes; and
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(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 both 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
and interest and other amounts payable on its Note after their due dates (or,
in the case of redemption, after the redemption date) and to institute suit
for the enforcement of any payment, and this right shall not be impaired
without the consent of the Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Indenture Trustee or any Noteholder has instituted any Proceeding
to enforce any right under this Indenture and the Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to
the Indenture Trustee or to the Noteholder, then the Issuer, the Indenture
Trustee, the Credit Enhancer, and the Noteholders shall, subject to any
determination in the Proceeding, be restored severally and respectively to
their former positions under this Indenture, and all rights of the Indenture
Trustee and the Noteholders shall continue as though no Proceeding had been
instituted.
Section 5.10. Rights and Remedies Cumulative.
No right given to the Indenture Trustee, the Credit Enhancer, or to the
Noteholders in this Indenture is intended to be exclusive of any other right,
and every right shall, to the extent permitted by law, be cumulative to every
other right given under this Indenture or existing at law or in equity or
otherwise. The assertion of any right under this Indenture, or otherwise,
shall not prevent the concurrent assertion of any other appropriate right.
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.
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Section 5.12. Control by Credit Enhancer or Noteholders.
If no Credit Enhancer Default exists, then the Credit Enhancer, otherwise
the Holders of not less than 51% of the aggregate Outstanding Amount of both
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 both 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.
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 both Classes may waive any past default and its consequences except
a default
(i) in payment of principal or interest on any of the Notes or
(ii) regarding a provision of this Indenture that cannot be changed
without the consent of the Holder of each affected Note.
After any such waiver, the Incipient Default shall cease to exist and be
considered to have been cured and not to have occurred, and any Event of
Default arising from it shall be considered to have been cured and not to have
occurred, for every purpose of this Indenture. No waiver shall extend to any
subsequent or other default or impair any right consequent to it.
Section 5.14. Undertaking For Costs.
All parties to this Indenture agree, and each Holder of a Note by its
acceptance of its Note agrees, that in any suit for the enforcement of any
right under this Indenture, or in any suit against the Indenture Trustee for
any action taken, suffered, or omitted by it as Indenture Trustee, any court
may in its discretion require the filing by any party litigant in the suit of
an undertaking to pay the costs of the suit, and that the court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant. The
provisions of this Section shall not apply to
(i) any suit instituted by the Indenture Trustee or the Credit
Enhancer,
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(ii) any suit instituted by any Noteholder, or group of Noteholders,
holding in the aggregate more than 25% of the aggregate Outstanding
Amount of both Classes, or
(iii) any suit instituted by any Noteholder for the enforcement of
the payment of principal or interest on any Note after the due dates
expressed in the Note and in this Indenture (or, in the case of
redemption, after the redemption date).
Section 5.15. Waiver of Stay or Extension Laws.
To the extent that it may lawfully do so, the Issuer covenants that it
will not at any time insist on, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time after this in force, that may affect the covenants or the
performance of this Indenture. To the extent that it may lawfully do so, the
Issuer expressly waives all benefit of any such law, and covenants that it
will not hinder, delay, or impede the execution of any power granted in this
Indenture to the Indenture Trustee, but will permit the execution of every
power as though the law had not been enacted.
Section 5.16. Rapid Amortization Events.
If any one of the following events occurs during the Managed Amortization
Period:
(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 take the action
specified in the second sentence of Section 2.01(f) of the Sale and Servicing
Agreement or the failure to substitute an Eligible Substitute Mortgage Loan or
deposit into the Collection Account the Transfer Deposit Amount in accordance
with Section 2.02(b) of the Sale and Servicing Agreement as provided in
Section 2.04(d)(2) 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 both 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
33
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 both Classes. A Rapid Amortization Event
pursuant to this subparagraph (d) shall not occur if the Sponsor has accepted
retransfer of the related Mortgage Loans or substituted for them during the
60-day period (or such longer period (not to exceed an additional 60 days) as
the Indenture Trustee may specify) in accordance with the Sale and Servicing
Agreement;
(e) An Insolvency Event occurs with respect to the Transferor or the
Depositor, but for this purpose the 60-day periods in the definition of
Insolvency Event shall be 30 days;
(f) The Trust becomes subject to registration as an "investment company"
under the Investment Company Act of 1940; or
(g) The aggregate of all draws under the Policy exceeds the percentage of
the Original Note Principal Balance of both Classes specified in the Adoption
Annex,
then, when any event described in subparagraph (a), (b), (c), or (d) occurs,
either the Indenture Trustee (with the consent of the Credit Enhancer), the
Credit Enhancer, or the Holders of not less than 51% of the aggregate
Outstanding Amount of both Classes (with the consent of the Credit Enhancer),
by notice given in writing to the Transferor, the Depositor, and the Master
Servicer (and to the Indenture Trustee if given by either the Credit Enhancer
or the Noteholders) may declare that an early amortization event (a "Rapid
Amortization Event") has occurred as of the date of the notice, and in the
case of any event described in subparagraph (e), (f), or (g), a Rapid
Amortization Event shall occur without any notice or other action on the part
of the Indenture Trustee, the Credit Enhancer, or the Noteholders, immediately
upon its occurrence.
Section 5.17. Sale of Collateral.
(a) The power to effect any sale or other disposition (a "Sale") of any
portion of the Collateral pursuant to Section 5.05 is subject to this Section
5.17. The Indenture Trustee waives its right to any amount fixed by law as
compensation for any Sale.
(b) In connection with a Sale of any of the Collateral,
(i) any Holder of Notes may bid for the property offered for sale,
and on compliance with the terms of sale may own the property without
further accountability, and may, in paying its purchase price, deliver
any Notes or claims for interest on them 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
34
appropriately stamped to show partial payment if the amount payable for
the property is less than the amount due on the Notes;
(ii) the Indenture Trustee may bid for and acquire the property
offered for Sale, and may purchase any portion of the Collateral in a
private sale, and rather than paying cash, may settle the purchase price
by crediting the gross Sale price against the amount that would be
distributable as a result of the Sale in accordance with Section 5.05(b)
on the next Payment Date after the Sale without being required to produce
the Notes to complete the Sale or for the net Sale price to be credited
against the Notes, and any property so acquired by the Indenture Trustee
shall be held and dealt with by it in accordance with this Indenture;
(iii) the Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the
Collateral in connection with its Sale;
(iv) the Indenture Trustee is hereby irrevocably appointed the agent
and attorney-in-fact of the Issuer to transfer its interest in any
portion of the Collateral in connection with its Sale, and to take all
action necessary to effect the Sale; and
(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 both 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
35
conduct of its own affairs, except when this Indenture or the Sale and
Servicing Agreement requires it to follow the directions of the Credit
Enhancer.
(b) Except during the continuance of an Event of Default:
(i) obligations of the Indenture Trustee shall be determined solely
by the express provisions of this Indenture and the Sale and Servicing
Agreement, the Indenture Trustee undertakes to perform only the duties
specifically stated in this Indenture and the Sale and Servicing
Agreement, and no implied covenants or obligations shall be read into
this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed in them, on certificates, opinions,
or other documents furnished to the Indenture Trustee and conforming to
the requirements of this Indenture and the Sale and Servicing Agreement,
and the Indenture Trustee need not investigate into any of the matters
expressed in them; but in the case of certificates or opinions
specifically required to be furnished to the Indenture Trustee, the
Indenture Trustee must examine them to determine whether or not they
conform to the requirements of this Indenture 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 both 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;
36
(iv) the Indenture Trustee shall not be charged with knowledge of
the occurrence of an Incipient Default, a Rapid Amortization Event, or of
any failure by the Master Servicer to comply with its obligations under
Section 6.01(i) or (ii) of the Sale and Servicing Agreement unless a
Responsible Officer at the Corporate Trust Office obtains actual
knowledge of the failure or the Indenture Trustee receives notice of the
failure; and
(v) no provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties under this Indenture or
in the exercise of any of its rights, if it has reasonable grounds to
believe that repayment of the funds or adequate indemnity against the
risk is not reasonably assured to it.
(d) Every provision of this Indenture relating to the conduct or
affecting the liability of the Indenture Trustee shall be subject to the
provisions of this Section and the TIA.
(e) The limitations on the obligations of the Indenture Trustee under
this Indenture shall not affect any obligations of the Indenture Trustee
acting as Master Servicer under the Sale and Servicing whenever it may be so
acting.
Section 6.02. Notice of Defaults.
If an Incipient Default or Rapid Amortization Event occurs and is
continuing and if a Responsible Officer knows of it, the Indenture Trustee
shall notify the Credit Enhancer and mail to each Noteholder notice of the
Incipient Default or Rapid Amortization Event within 90 days after it occurs.
Except in the case of an Incipient Default in payment of principal or interest
on any Note, the Indenture Trustee may withhold the notice to Noteholders so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
Section 6.03. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel unless
other evidence is specifically required.
(c) The Indenture Trustee may execute any of the trusts or powers under
this Indenture or perform any duties under this Indenture either directly or
through agents or counsel or a custodian or nominee, and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of, or
for the supervision of, any agent, counsel, custodian, or nominee appointed
with due care by it under this Indenture.
37
(d) The Indenture Trustee may consult with counsel, and the written
advice of counsel with respect to legal matters relating to this Indenture,
the Transaction Documents, and the Notes and any Opinion of Counsel shall be
full authorization and protection from liability for any action taken,
omitted, or suffered by it under this Indenture in good faith and in
accordance with the advice of counsel or any Opinion of Counsel.
(e) The Indenture Trustee may enter into any amendment of the Sale and
Servicing Agreement as to which the Rating Agency Condition is satisfied, and
when so requested by an Issuer Request and the Rating Agency Condition is
satisfied, the Indenture Trustee shall enter into any amendment of the Sale
and Servicing Agreement
(i) that does not impose further obligations or liabilities on the
Indenture Trustee, and
(ii) as to which either the Rating Agency Condition is satisfied or
Holders of not less than 66(2)/3% of the aggregate Outstanding Amount of
both 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 Noteholders
and the Credit Enhancer. Each custodian shall be a depository institution (or
an affiliate of a depository institution) subject to supervision by federal or
state authority and shall be qualified to do business in the jurisdiction in
which it holds any Collateral. Each Custodial Agreement may be amended only
with the consent of the Credit Enhancer, which shall not be unreasonably
withheld.
Section 6.04. Indenture Trustee Not Responsible for Certain Things.
The Indenture Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of the Collateral or any
Transaction Document (other than the signature and authentication of the
Indenture Trustee on the Notes). It shall not be responsible for any statement
in this Indenture other than Section 6.14 or in any document issued in the
sale of the Notes or in the Notes other than the Indenture Trustee's
certificate of authentication.
The Indenture Trustee is not accountable for the use or application by
the Issuer of any of the Notes or of the proceeds of the Notes, or for the use
or application of any funds paid to the Depositor or the Master Servicer on
the Mortgage Loans or deposited in or withdrawn from the Collection Account by
the Master Servicer. The Indenture Trustee shall not be responsible for:
(i) the validity and enforceability of any Mortgage or any Mortgage
Loan, or the perfection and
38
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.
The Indenture Trustee shall have no responsibility for filing any Financing or
Continuation Statement in any public office at any time or otherwise to
perfect or maintain the perfection of any Security Interest or lien granted to
it under this Indenture or to prepare or file any Commission filing for the
Trust or to record this Indenture.
Section 6.05. Individual Rights of Indenture Trustee.
The Indenture Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Issuer, the
Sponsor, and their affiliates with the same rights it would have if it were
not Indenture Trustee. Any co-trustee, Paying Agent, Note Registrar,
co-registrar, or co-paying agent may do the same with like rights.
Section 6.06. Money Held in Trust.
Money held in trust by the Indenture Trustee need not be segregated from
other funds except to the extent required by law or the Transaction Documents.
The Indenture Trustee shall not be liable for interest on any money received
by it except as the Indenture Trustee may agree in writing.
Section 6.07. Compensation.
The compensation of the Indenture Trustee will be separately agreed to
between the Master Servicer and the Indenture Trustee and, to the extent not
paid otherwise, will be payable after an Event of Default as provided in
Section 5.05(b). To the extent funds available under
39
Section 5.05(b) are insufficient to pay the full amount of the fees, they will
be paid by the Master Servicer. Except for amounts available for the purpose
as provided in Section 5.05(b), the Indenture Trustee shall have no claim
against the Issuer or any of the Collateral for the payment of any of its fees
and expenses. The Indenture Trustee shall not fail to perform its duties under
the Transaction Documents if its fees and expenses are not paid.
Section 6.08. Eligibility.
The Indenture Trustee shall be a corporation organized and doing business
under the laws of the United States or any State, authorized under those laws
to exercise trust powers, and shall satisfy the requirements of Rule
3a-7(a)(4)(i) of the Investment Company Act of 1940. The Indenture Trustee
shall satisfy the requirements of TIA Section 310(a) at all times. The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as shown in its most recent published annual report of condition.
The Indenture Trustee shall comply with TIA Section 310(b), including the
optional provision permitted by the second sentence of TIA Section 310(b)(9).
However, any indentures under which other securities of the Issuer are
outstanding shall be excluded from the operation of TIA Section 310(b)(1) if
the requirements for the exclusion in TIA Section 310(b)(1) are met. The
principal office of any successor Indenture Trustee shall be in a state for
which an Opinion of Counsel has been delivered to the successor Indenture
Trustee at the time it is appointed to the effect that the Trust will not be a
taxable entity under the laws of the state of its principal office. Whenever
an Indenture Trustee ceases to be eligible in accordance with the provisions
of this Section, the Indenture Trustee shall resign immediately in accordance
with Section 6.10.
Section 6.09. Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.10. Replacement of Indenture Trustee.
No resignation or removal of the Indenture Trustee and no appointment of
a successor Indenture Trustee shall become effective until the acceptance of
appointment by the successor Indenture Trustee. The Indenture Trustee may
resign at any time by so notifying the Issuer, the Transferor, the Depositor,
the Master Servicer, and the Credit Enhancer. The Credit Enhancer or the
Holders of not less than 51% of the aggregate Outstanding Amount of both
Classes may remove the Indenture Trustee at any time and the Issuer shall then
appoint a successor Indenture Trustee reasonably acceptable to the Credit
Enhancer by so notifying the Indenture Trustee, the Transferor, the Depositor,
the Master Servicer, and the Credit Enhancer. The Issuer (and if the Issuer
fails to do so, the Transferor) shall remove the Indenture Trustee and appoint
a successor reasonably acceptable to the Credit Enhancer if:
(i) the Indenture Trustee fails to satisfy Section 6.08;
(ii) an Insolvency Event occurs with respect to the Indenture
Trustee; or
40
(iii) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee fails to satisfy Section 6.08, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee. If a
successor Indenture Trustee does not take office within 60 days after the
retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer, the Transferor, the Depositor, the Master Servicer, the
Credit Enhancer, or the Holders of not less than 51% of the aggregate
Outstanding Amount of both Classes may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee. If the
Indenture Trustee resigns or is removed or if a vacancy exists in the office
of Indenture Trustee for any reason, the Issuer, with the approval of the
Transferor and the Credit Enhancer, shall promptly appoint a successor
Indenture Trustee for the retiring Indenture Trustee.
Section 6.11. Acceptance of Appointment by Successor.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer, the
Transferor, the Depositor, the Master Servicer, and the Credit Enhancer. The
resignation or removal of the retiring Indenture Trustee shall become
effective on receipt of the written acceptance, and the successor Indenture
Trustee shall have all the rights and obligations, and automatically succeed
to the estate, of the Indenture Trustee under this Indenture without any
further act or transfer. The successor Indenture Trustee shall mail a notice
of its succession to the Noteholders. The retiring Indenture Trustee shall
promptly deliver any instruments of transfer with respect to the trust estate
requested by the Issuer or the successor Indenture Trustee and deliver all
property held by it as Indenture Trustee to the successor Indenture Trustee.
No proposed successor Indenture Trustee shall accept its appointment unless at
the time of its acceptance it is eligible under Section 6.08.
Section 6.12. Successor Indenture Trustee by Merger.
If the Indenture Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving, or
transferee corporation shall be the successor Indenture Trustee if it is
otherwise eligible under Section 6.08 without any further act on the part of
anyone. The Indenture Trustee shall provide the Credit Enhancer and each
Rating Agency notice of any such transaction.
If any of the Notes have been authenticated but not delivered when the
successor Indenture Trustee takes over, it may adopt the certificate of
authentication of any predecessor Indenture Trustee and deliver the
authenticated Notes with the same effect as if it had authenticated the Notes.
Section 6.13. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Indenture Trustee
and the Issuer, acting jointly, may execute and
41
deliver instruments to appoint one or more persons approved by the Master
Servicer and the Credit Enhancer to act as a co-trustee or co-trustees, or
separate trustee or separate trustees, of any part of the Collateral, and to
vest in them, in that capacity and for the benefit of the Noteholders and the
Credit Enhancer, title to any part of the Collateral and any rights and
obligations the Indenture Trustee considers appropriate, subject to the other
provisions of this Section. No co-trustee or separate trustee under this
Indenture need satisfy the requirements for a successor trustee under Section
6.08, and no notice to Noteholders of the appointment of any co-trustee or
separate trustee shall be required under Section 6.09.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following:
(i) all rights and obligations of the Indenture Trustee shall be
performed by the Indenture Trustee and any separate trustee or co-trustee
jointly (the separate trustee or co-trustee is not authorized to act
without the Indenture Trustee joining in the act), except to the extent
that under any law of any jurisdiction in which any particular acts are
to be performed the Indenture Trustee is unable to perform the acts, in
which case the rights and obligations (including holding title to any
part of the Collateral) shall be performed singly by the separate trustee
or co-trustee, but solely at the direction of the Indenture Trustee;
(ii) no trustee under this Indenture shall be personally liable for
any act or omission of any other trustee under this Indenture; and
(iii) the Indenture Trustee, the Master Servicer, and the Issuer may
at any time accept the resignation of or remove any separate trustee or
co-trustee.
(c) Any notice, request, or other writing given to the Indenture Trustee
shall be considered to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture
and the conditions of this Article. Each separate trustee and co-trustee, on
its acceptance of the trusts conferred, shall be subject to this Indenture and
vested with the estates specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided in the
instrument of appointment. Every instrument of appointment shall be filed with
the Indenture Trustee and a copy of it given to the Issuer.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee dies, becomes incapable of acting, resigns or is removed, all of
its estates, rights, and obligations shall vest in the Indenture Trustee, to
the extent permitted by law, without the appointment of a new trustee.
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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.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Names and Addresses of Noteholders.
The Issuer will furnish to the Indenture Trustee not more than five days
after each Record Date a list of the names and addresses of the Holders of
Notes as of the Record Date in the form the Indenture Trustee reasonably
requires, and at any other times the Indenture Trustee or Credit Enhancer
requests in writing, within 30 days after the Issuer receives the request, a
list of similar form and content as of a date not more than ten days before
the time the list is
43
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 contained 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. Reports of Issuer.
(a) The Issuer shall:
(i) file with the Commission, the Indenture Trustee, and the Credit
Enhancer copies of the annual reports and of the information, documents,
and other reports (or copies of the portions of any of these the
Commission prescribes in its rules and regulations) that the Issuer may
be required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act, within 15 days after the Issuer is required to file
the same with the Commission;
(ii) file with the Indenture Trustee, the Credit Enhancer, and the
Commission in accordance with the Commission's rules and regulations any
additional information, documents, and reports with respect to compliance
by the Issuer with the conditions and covenants of this Indenture the
rules and regulations require; and
(iii) supply to the Indenture Trustee and the Credit Enhancer
summaries of any information, documents, and reports required to be filed
by the Issuer pursuant to clauses (i) and (ii) of this Section and by the
rules and regulations of the Commission (and the Indenture Trustee shall
transmit them by mail to all Noteholders described in TIA Section
313(c)).
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee.
If required by TIA Section 313(a), within 60 days after the date in each
year specified in the Adoption Annex, beginning with the date specified in the
Adoption Annex, the Indenture Trustee shall mail to each Noteholder as
required by TIA Section 313(c) and to the Credit
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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. The Indenture Trustee shall also
mail a hard copy of the statement to the Credit Enhancer.
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 ______________________. Assistance in using
the Indenture Trustee's internet website may be obtained by calling the
Indenture Trustee's customer service desk at (___) ___-____. The Indenture
Trustee shall notify each Noteholder, the Master Servicer, the Credit
Enhancer, and each Rating Agency in writing of any change in the address or
means of access to the internet website where the statement for Noteholders is
accessible.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, Internal Revenue
Service Form 1099 (or any successor form) and any other tax forms required to
be filed or furnished to Noteholders covering payments by the Indenture
Trustee (or the Paying Agent) on the Notes and shall file and distribute them
as required by law. In addition, the Indenture Trustee shall promptly furnish
any information reasonably requested by the Issuer that is reasonably
available to the Indenture Trustee to enable the Issuer to perform its federal
and state income tax reporting obligations.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS, AND RELEASES
Section 8.01. Accounts.
The Indenture Trustee will establish and maintain on behalf of the
Noteholders an Eligible Account (the "Payment Account") with the title
specified in the Adoption Annex. The Indenture Trustee shall hold amounts
deposited in the Payment Account as Indenture Trustee for the benefit of the
Noteholders and the Credit Enhancer. The Indenture Trustee will,
45
promptly upon receipt, deposit in the Payment Account and retain in it the
aggregate amount remitted by the Master Servicer pursuant to the Sale and
Servicing Agreement. The Indenture Trustee shall invest amounts on deposit in
the Payment Account at the direction of the Master Servicer in Eligible
Investments payable on demand or maturing no later than the day before the
next Payment Date. All income realized from investment of funds in the Payment
Account shall be for the benefit of the Master Servicer. Any losses incurred
on funds in the Payment Account that reduce their principal amount shall be
immediately deposited in the Payment Account by the Master Servicer out of its
own funds.
Pursuant to the Sale and Servicing Agreement, the Master Servicer 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 certain other amounts specified in Section 3.03 of
the Sale and Servicing Agreement in the Payment Account on the dates specified
therein and, not later than the Business Day before each Payment Date, to
withdraw from the Collection Account and remit to the Indenture Trustee the
amount to be applied on the next Payment Date by the Indenture Trustee
pursuant to Section 8.03, to the extent on deposit in the Collection Account.
If on a Determination Date the Master Servicer notifies the Indenture
Trustee and the Credit Enhancer of the amount in the Collection Account
allocable to Interest Collections and Principal Collections for the Mortgage
Loans 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.
Section 8.02. Withdrawals from the Collection Account.
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; and
(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.
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
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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.
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:
(i) to pay the premium related to that Loan Group pursuant to the
Insurance Agreement to the Credit Enhancer;
(ii) to pay the Aggregate Investor Interest (with interest on
overdue interest (exclusive of Basis Risk Carryforward) to the extent
permitted by applicable law) for that Class of Notes for the Payment Date
to the related Noteholders;
(iii) to pay the Investor Loss Amount for that Class of Notes for
the Payment Date to the related Noteholders as principal in reduction of
the related Note Principal Balance;
(iv) (A) first to pay the Investor Loss Reduction Amount, and then
(B) to reduce the Loss Utilization Amount to zero, in each case, for that
Class of Notes to the related Noteholders in reduction of their Note
Principal Balance;
(v) to pay any amounts described in item (ii) 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 Notes;
(vi) 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;
(vii) to pay the related Accelerated Principal Payment Amount to the
related Class of Noteholders as principal in reduction of the related
Note Principal Balance;
(viii) to pay any amounts described in items (iii) and (iv)(A) 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 Notes;
47
(ix) to pay any amounts related to the Loan Group owed to the Credit
Enhancer pursuant to the Insurance Agreement to the Credit Enhancer;
(x) 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;
(xi) to pay previously unreimbursed Credit Enhancement Draw Amounts
related to the unrelated Loan Group 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;
(xii) to pay any Basis Risk Carryforward to the related Noteholders;
and
(xiii) any remaining amount to the Issuer for distribution in
accordance with the Trust Agreement.
(b) Payment of Principal Collections and Excess Overcollateralization
Amounts. Except on the Payment Date in the month specified in the Adoption
Annex, on each Payment Date, the Indenture Trustee shall distribute out of the
Payment Account to the Holders of each Class of Notes the Principal
Collections from the related Loan Group up to the related Scheduled Principal
Collections Payment Amount but not in excess of the related Note Principal
Balance. On the Payment Date in the month specified in the Adoption Annex, the
Indenture Trustee shall distribute to the Holders of each Class of Notes the
Principal Collections from the related Loan Group up to the related Note
Principal Balance.
The dollar amount of any Excess Overcollateralization Amount for a Loan
Group will be deducted from the Scheduled Principal Collections Payment Amount
for that Loan Group and paid to the Transferor.
(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 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
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be allocated to reduce the related Allocated Transferor Interest to the extent
of the related Available Transferor Subordinated Amount.
If, after allocating the remaining Investor Loss Amount and the Investor
Loss Reduction Amount for that Class to the related Allocated Transferor
Interest to the extent of the related Available Transferor Subordinated Amount
any Investor Loss Amount or Investor Loss Reduction Amount for that Class
remains uncovered, then the remaining Investor Loss Amount and the Investor
Loss Reduction Amount for that Class shall be allocated to the Allocated
Transferor Interest of the unrelated Loan Group to the extent of the Available
Transferor Subordinated Amount of the unrelated Loan Group (after any
reduction of the Allocated Transferor Interest of the unrelated Loan Group
attributable to the unrelated Loan Group's Investor Loss Amount and Investor
Loss Reduction Amount). However, no allocation of Investor Loss Amounts or
Investor Loss Reduction Amounts for a Loan Group shall reduce either Allocated
Transferor Interest below zero.
(d) Payment of the Credit Enhancement Draw Amount. The Indenture Trustee
will make payments to the related Class of Noteholders from the Credit
Enhancement Draw Amount (but not including any portion of it representing a
Preference Amount) drawn under the Policy for any Payment Date and Class
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)(ii); 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 Notes under this Indenture shall not exceed the related Original Note
Principal Balance.
(e) Distributions to Issuer. On each Payment Date, based on the
information in the Servicing Certificate for the Payment Date and subject to
Section 8.03(a),(b), and (c), the Indenture Trustee shall distribute to the
Issuer from amounts in the Payment Account (i) the Interest Collections for
each Loan Group that are not Investor Interest Collections on the Payment Date
for the related Collection Period and (ii) the portion of Transferor Principal
Collections for each Loan Group for the related Collection Period in excess of
Additional Balances created on the Mortgage Loans in that Loan Group during
the Collection Period. Collections allocable to the Transferor Certificates
pursuant to this Section 8.03(e) will be distributed to the Issuer only to the
extent that the distribution will not reduce the excess of the Adjusted Loan
Group Balance of a Loan Group over the Note Principal Balance of the related
Class of Notes as of the related Payment Date below the related Minimum
Transferor Interest. Amounts not distributed to the Issuer because of this
limitation will be retained in the Payment Account until the excess of the
Adjusted Loan Group Balance of that Loan Group over the Note Principal Balance
of the related Class of Notes exceeds the related Minimum Transferor
49
Interest, at which time the excess shall be released to the Issuer. If any
such amounts are still retained in the Payment Account at the commencement of
the Rapid Amortization Period or are collected thereafter, they will be paid
to the related Noteholders as a reduction of the applicable Note Principal
Balance.
Section 8.04. Calculation of the Note Rate.
On each Adjustment Date, the Indenture Trustee shall determine LIBOR for
the related Interest Period and inform the Master Servicer (at the facsimile
number given to the Indenture Trustee in writing) of the rate. On each
Determination Date, the Indenture Trustee shall determine the applicable Note
Rate for each Class of Notes for the related Payment Date.
Section 8.05. Claims on the Policy; Policy Payments Account.
(a) If the Credit Enhancement Draw Amount (not including any portion of
it representing a Preference Amount) for a Class specified in the Servicing
Certificate for a Payment Date is more than zero (determined as of the close
of business on the third Business Day before the Payment Date), then the
Indenture Trustee shall notify the Credit Enhancer by telephone or telecopy of
the Credit Enhancement Draw Amount (not including any portion of it
representing a Preference Amount) for the Class of Notes. The notice shall be
confirmed to the Credit Enhancer in writing in the form of the Notice of Claim
and Certificate in Exhibit A to the Policy, by 10:00 A.M., New York City time,
on the second Business Day before the Payment Date. Following receipt by the
Credit Enhancer of the notice in that form, the Credit Enhancer will pay any
amount payable under the Policy (other than a Preference Amount) for the Class
of Notes in the form on the later to occur of (i) 12:00 NOON, New York City
time, on the second Business Day following the receipt and (ii) 12:00 NOON,
New York City time, on the Payment Date to which the deficiency relates.
(b) The Indenture Trustee shall establish the Policy Payments Account.
The Indenture Trustee shall deposit any amount paid under the Policy in the
Policy Payments Account and distribute the amount only to pay Holders of the
Notes the Guaranteed Payment for their Class of Notes for which a claim was
made. No payments under the Policy may be used to pay any costs, expenses, or
liabilities of the Master Servicer, the Indenture Trustee, or the Trust (other
than payments of principal and interest on the Notes). Amounts paid under the
Policy shall be transferred to the Payment Account in accordance with the next
paragraph and disbursed by the Indenture Trustee to Holders of the related
Class of Notes in accordance with Section 8.03. Payments from draws on the
Policy need not be made by checks or wire transfers separate from the checks
or wire transfers used to pay other funds paid to Noteholders on the Payment
Date. The portion of any payment of principal of or interest on the related
Class of Notes paid from funds transferred from the Policy Payments Account,
however, shall be noted in the statement to be furnished to Holders of the
Notes pursuant to Section 7.04. Funds held in the Policy Payments Account
shall not be invested.
On any Payment Date (or the day on which a payment on the Policy is
received, if later) for which a claim has been made under the Policy, the
amount of any funds received by the
50
Indenture Trustee as a result of any claim under the Policy, to the extent
required to make the Guaranteed Payment on the related Class of Notes on the
Payment Date, shall be withdrawn from the Policy Payments Account and
deposited in the Payment Account and applied by the Indenture Trustee,
together with the other funds to be paid from the Payment Account pursuant to
Section 8.03, directly to the payment in full of the Guaranteed Payment due on
the Class of Notes. Any funds remaining in the Policy Payments Account on the
first Business Day following the later of the Payment Date and the Business
Day after the day on which a payment on the Policy has been paid to the
Holders of the Class [1-A] or Class [2-A] Notes shall be remitted to the
Credit Enhancer, pursuant to the instructions of the Credit Enhancer, by the
end of the Business Day.
(c) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid on any Note from moneys received
under the Policy. The Credit Enhancer may inspect the records at reasonable
times during normal business hours on one Business Day's notice to the
Indenture Trustee.
(d) The Indenture Trustee shall promptly notify the Credit Enhancer of
any Preference Claim of which a Responsible Officer has actual knowledge. The
Credit Enhancer shall pay Preference Amounts in the manner provided in the
Policy. Each Noteholder by its purchase of Notes, the Master Servicer, and the
Indenture Trustee agree that the Credit Enhancer may at any time during the
continuation of any proceeding relating to a Preference Claim direct all
matters relating to the Preference Claim, including (i) the direction of any
appeal of any order relating to the Preference Claim and (ii) the posting of
any surety, supersede as, or performance bond pending any appeal. In addition
and without limiting the foregoing, the Credit Enhancer shall be subrogated to
the rights of the Master Servicer, the Indenture Trustee, and each Noteholder
in the conduct of any Preference Claim, including all rights of any party to
an adversary proceeding action with respect to any court order issued in
connection with any Preference Claim.
Section 8.06. Replacement Policy.
If a Credit Enhancer Default occurs the Depositor may substitute a new
insurance policy 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
insurance policy will qualify as a "similar commercially available credit
enhancement contract" within the meaning of Treas. Reg. ss.
1.1001-3(e)(4)(iv)(B), (iii) the Credit Enhancer shall have failed to cure
such Credit Enhancer Default within 10 Business Days following its receipt of
written notice of such Credit Enhancer Default, and (iv) the Rating Agency
Condition is satisfied. No new credit enhancement may be substituted, however,
unless the Indenture Trustee receives a legal opinion, acceptable in form and
substance to the Indenture Trustee, from counsel to the provider of the new
credit enhancement with respect to its enforceability and any other matters
the Indenture Trustee reasonably requires. Within five Business Days after the
Indenture Trustee takes physical possession of the new credit enhancement and
the opinion of counsel, it will
51
deliver the replaced Policy to the Credit Enhancer. Any other form of credit
enhancement may also be substituted for the Policy after a Credit Enhancer
Default if the new rating of the Notes would be an improvement over their then
current rating and the Indenture Trustee receives an Opinion of Counsel to the
effect that the substitution will not be treated as a significant modification
within the meaning of Treas. Reg. ss. 1.1001-3 and provided that the
requirements of clauses (iii) and (iv) are met. Notwithstanding the foregoing,
the substitution of new credit enhancement shall not affect the rights of the
Credit Enhancer to receive payments of any amounts due to it or reimbursement
for any draws made on the Policy or any other amounts owed to the Credit
Enhancer, in each case pursuant to this Indenture and the Insurance Agreement.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures.
(a) Without the consent of the Holders of any Notes but with the consent
of the Credit Enhancer (which shall not be unreasonably withheld) and with
prior notice to each Rating Agency, subject to Section 9.05, the Issuer and
the Indenture Trustee may enter into indentures supplemental to this
Indenture, in form satisfactory to the Indenture Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property subject to
the lien of this Indenture, or to confirm unto the Indenture Trustee any
property subject or required to be subjected to the lien of this
Indenture, or to subject additional property to the lien of this
Indenture;
(ii) to evidence the succession of another person to the Issuer
pursuant to this Indenture, and the assumption by the successor of the
covenants of the Issuer in this Indenture and the Notes in compliance
with the applicable provisions of this Indenture;
(iii) to add to the covenants of the Issuer, for the benefit of the
Noteholders or the Credit Enhancer, or to surrender any right conferred
on the Issuer in this Indenture;
(iv) to convey, transfer, assign, mortgage, or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity or mistake;
(vi) to correct or supplement any provision in this Indenture or in
any supplemental indenture that may be inconsistent with any other
provision in this Indenture or in any supplemental indenture or the other
Transaction Documents;
(vii) to conform this Indenture to the final prospectus supplement
issued in respect of the Notes referred to in the Adoption Annex;
(viii) to modify, eliminate, or add to the provisions of this
Indenture as required by any Rating Agency or any other nationally
recognized statistical rating
52
organization to maintain or improve any rating of the Notes without
taking the Policy into account;
(ix) to modify, eliminate, or add to the provisions of this
Indenture to comply with any requirement imposed by the Code;
(x) to modify, eliminate, or add to the provisions of this Indenture
to the extent necessary to comply with any rules or regulations of the
Securities and Exchange Commission hereafter promulgated;
(xi) 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
(xii) to provide for the acceptance of the appointment of a
successor trustee under this Indenture and to add to or change any of the
provisions of this Indenture necessary to facilitate the administration
of the trusts under this Indenture by more than one trustee, pursuant to
the requirements of Article VI.
The Indenture Trustee is authorized to join in the execution of any
supplemental indenture and to make any further appropriate agreements and
stipulations that may be contained in it.
(b) Without the consent of any of the Noteholders but with satisfaction
of the Rating Agency Condition (in connection with which the consent of the
Credit Enhancer shall not be unreasonably withheld), subject to Section 9.05,
the Issuer and the Indenture Trustee may enter into indentures supplemental to
this Indenture to change this Indenture in any manner or to modify the rights
of the Noteholders or the Credit Enhancer under this Indenture that does not
adversely affect in any material respects the interests of any Noteholder,
except that, without the consent of each affected Noteholder by an Act of the
applicable Noteholders delivered to the Issuer and the Indenture Trustee and
without the consent of the Credit Enhancer and subject to Section 9.05, no
supplemental indenture under this Section 9.01(b) shall:
(i) change the date of payment of any installment of principal 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 this Indenture requiring the application of available funds
to the payment of any amount due on the Notes after their due dates (or,
in the case of redemption, after the redemption date), as provided in
Article V;
(iii) reduce the percentage of the Outstanding Amount the consent of
the Holders of which is required for any supplemental indenture, or the
consent of the Holders of which is required for any waiver of compliance
with certain provisions of
53
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 contained in
this Indenture; or
(v) permit the creation of any lien ranking before or on a parity
with the lien of this Indenture with respect to any part of the
Collateral (except any change in any mortgage's lien status in accordance
with the Sale and Servicing Agreement) or, except as otherwise permitted
or contemplated in this Indenture, terminate the lien of this Indenture
on any property at any time subject to this Indenture or deprive the
Holder of any Note of the security provided by the lien of this
Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and that determination
shall be conclusive on the Holders of all Notes, whether authenticated and
delivered under this Indenture before or after that. The Indenture Trustee
shall not be liable for any determination made in good faith.
An Act of Noteholders under this Section need not approve the particular
form of any proposed supplemental indenture, but is sufficient if it approves
the substance of the supplemental indenture.
Promptly after the execution by the Issuer and the Indenture Trustee
of any supplemental indenture pursuant to this Section, the Indenture Trustee
shall mail to the Noteholders to which the supplemental indenture relates a
notice stating in general terms the substance of the supplemental indenture.
Any failure of the Indenture Trustee to mail a notice, or any defect in it,
shall not, however, in any way impair or affect the validity of the
supplemental indenture.
Section 9.02. Execution of Supplemental Indentures.
In executing any supplemental indenture permitted by this Article, the
Indenture Trustee may require and, subject to Sections 6.01 and 6.03, shall be
fully protected in relying on an Opinion of Counsel stating that the execution
of the supplemental indenture is authorized or permitted by this Indenture.
The Indenture Trustee may, but need not, enter into any supplemental indenture
that affects the Indenture Trustee's own rights or obligations under this
Indenture or otherwise.
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Section 9.03. Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture pursuant to this
Indenture, this Indenture shall be changed in accordance with the supplemental
indenture, and the Indenture Trustee, the Issuer, and the Noteholders shall
bound by the supplemental indenture.
Section 9.04. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in the supplemental indenture. If the Issuer so
determines, new Notes so modified as to conform, in the opinion of the
Indenture Trustee and the Issuer, to the supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
Section 9.05. Tax Opinion.
This Indenture may not be amended under this Article or otherwise unless,
in connection with the amendment, an Opinion of Counsel is furnished to the
Indenture Trustee that the amendment will not (i) adversely affect the status
of the Notes as debt, or cause the beneficial owners of the Note to recognize
gain or loss, for federal income or applicable state tax purposes; (ii) result
in the Trust being taxable at the entity level; or (iii) result in the Trust
being classified as a taxable mortgage pool (as defined in Section 7701(i) of
the Code).
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) The Notes are subject to optional redemption by the Issuer with the
consent of the Credit Enhancer and the Master Servicer in whole on any Payment
Date from the Payment Date immediately before which the aggregate Note
Principal Balance of both Classes of Notes is less than or equal to 10% of the
aggregate Original Note Principal Balance of both Classes of Notes. The
redemption price for each Class of 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 Notes not later than the first day of the month preceding the month
of the redemption. The Indenture Trustee shall first notify the Credit
Enhancer and the Master Servicer and then notify the Noteholders by letter
mailed or sent by facsimile transmission not earlier than the ____ day and not
later than the ____ day of the month before the month of the redemption.
55
Payment on the 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
Notes, whereupon all the Notes called for redemption shall be payable on the
redemption date.
(c) On presentation and surrender of the 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 (x) the amount available for distribution on the redemption date,
net of the amount needed to pay the redemption price and (y) 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 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 Notes pursuant to Section 10.01(a) shall be
evidenced by an Issuer Order. The Issuer Order shall specify the items
required in the notice of redemption to be mailed to Noteholders. The Issuer
shall notify each Rating Agency of the redemption.
Section 10.02. Form of Redemption Notice.
Notice of redemption under Section 10.01 shall be given by the Indenture
Trustee by first-class mail, postage prepaid, or by facsimile or other
reliable electronic means (promptly confirmed by mail) to each Holder of 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 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
56
(v) that on the redemption date, the redemption price will become
payable on each Note and that interest on the Notes shall cease to accrue
beginning on the redemption date.
Notice of redemption of the 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 Note shall not affect
the validity of the redemption of any other Note.
Section 10.03. Notes Payable on Redemption Date.
Following notice of redemption as required by Section 10.02, on the
redemption date the Notes shall become payable at the redemption price and
(unless the Issuer defaults in the payment of the redemption price) no
interest shall accrue on the redemption price for any period after the date to
which accrued interest is calculated for purposes of calculating the
redemption price.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.
(a) Whenever the Issuer requests the Indenture Trustee to take any action
under this Indenture, the Issuer shall furnish to the Indenture Trustee and
the Credit Enhancer (i) an Officer's Certificate stating that any conditions
precedent provided for in this Indenture relating to the proposed action have
been complied with and (ii) an Opinion of Counsel stating that in its opinion
any conditions precedent have been complied with.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of the certificate or opinion
has read the covenant or condition and the definitions in this Indenture
relating to it;
(ii) a brief statement as to the nature and scope of the examination
or investigation on which the statements or opinions contained 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.
57
(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 both
Classes of 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 both Classes of Notes.
(iii) Whenever any property is to be released from the lien of this
Indenture, the Issuer shall also furnish to the Indenture Trustee and the
Credit Enhancer an Officer's Certificate stating the opinion of each
person signing the certificate as to the fair value (within 90 days of
the release) of the property proposed to be released and stating that in
the opinion of that person the proposed release will not impair the
security under this Indenture in contravention of the provisions of this
Indenture.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate stating the opinion of any signer as to
the matters described in clause (b)(iii), the Issuer shall also furnish
to the Indenture Trustee and the Credit Enhancer an Independent
Certificate as to the same matters if the fair value of the property and
of all other property released from the lien of this Indenture since the
commencement of the then-current calendar year, as described in the
certificates required by clause (b)(iii) and this clause (b)(iv), equals
10% or more of the aggregate Outstanding Amount of both Classes of 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
both Classes of Notes.
(v) Notwithstanding any provision of this Indenture, the Issuer may,
without compliance with the other requirements of this Section, (A)
collect, liquidate,
58
sell, or otherwise dispose of Collateral as and to the extent permitted
by the Transaction Documents, and (B) make cash payments out of the
Collection Account as and to the extent permitted by the Transaction
Documents, so long as the Issuer delivers to the Indenture Trustee and
the Credit Enhancer every six months, beginning six months after the date
of this Indenture, an Officer's Certificate of the Issuer stating that
all the dispositions of Collateral described in clauses (A) and (B) that
occurred during the preceding six months were in the ordinary course of
the Issuer's business and that their proceeds were applied in accordance
with the Transaction Documents.
Section 11.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified person, all the matters need not be
certified by, or covered by the opinion of, only one person, or be certified
or covered by only one document. One person may certify or give an opinion
with respect to some matters and one or more other persons as to other
matters, and any person may certify or give an opinion as to one matter in one
or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based on a certificate or opinion of counsel insofar as it relates to legal
matters, unless the officer knows, or in the exercise of reasonable care
should know, that with respect to the matters on which the officer's
certificate or opinion is based the certificate or opinion is erroneous. Any
certificate of an Authorized Officer or Opinion of Counsel may be based on a
certificate or opinion of officers of any appropriate party to any of the
Transaction Documents insofar as it relates to factual matters, stating that
the information with respect to the factual matters is in the possession of
the party, unless the person signing knows, or in the exercise of reasonable
care should know, that the certificate or opinion is erroneous.
Where any person is required to deliver two or more documents under this
Indenture, they may, but need not, be consolidated into one document.
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 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
59
them) are referred to as the "Act" of the Noteholders signing the instruments.
Proof of execution of any instrument or of a writing appointing an agent for a
Noteholder shall be sufficient for any purpose of this Indenture and (subject
to Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any instrument
may be proved by an affidavit of a witness to the execution or the certificate
of any notary public or other person authorized by law to acknowledge the
execution of deeds. Any certificate on behalf of a jural entity executed by a
person purporting to have authority to act on behalf of the jural entity shall
itself be sufficient proof of the authority of the person executing it to act.
The fact and date of the execution by any person of any instrument may also be
proved in any other manner that the Indenture Trustee deems sufficient.
(c) The Note Register shall prove the ownership of Notes.
(d) Any Act by the Holder of a Note shall bind every Holder of the same
Note and every Note issued on its transfer or in exchange for it or in lieu of
it, in respect of anything done, omitted, or suffered to be done by the
Indenture Trustee or the Issuer in reliance on the Act, whether or not
notation of the action is made on the Note.
Section 11.04. Notices.
Any request, demand, authorization, direction, notice, consent, waiver,
Act, or other action or other documents provided or permitted by this
Indenture to be given to:
(i) the Indenture Trustee by any Noteholder or by the Issuer shall
be sufficient for every purpose under this Indenture if given in writing
and delivered by first-class mail, postage prepaid, overnight courier,
personally delivered, or facsimile (followed by the original by any other
means authorized by this Section) to the Indenture Trustee at its
Corporate Trust Office, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose under this Indenture if given in writing
and delivered by first-class mail, postage prepaid, overnight courier,
personally delivered, or facsimile (followed by the original by any other
means authorized by this Section) to the Issuer addressed as provided in
the Adoption Annex or at any other address previously furnished in
writing to the Indenture Trustee by the Issuer; or
(iii) the Credit Enhancer by the Issuer, the Indenture Trustee, or
by any Noteholder shall be sufficient for every purpose under this
Indenture if given in writing and delivered by first-class mail, postage
prepaid, overnight courier, personally delivered, or facsimile (followed
by the original by any other means authorized by this Section) (unless
otherwise specifically provided) to the Credit Enhancer addressed as
provided in the Adoption Annex or at any other address previously
furnished in writing to the Indenture Trustee by the Credit Enhancer,
except that whenever a notice or other
60
communication to the Credit Enhancer refers to an Event of Default, Event
of Servicing Termination, a claim under the Policy, or with respect to
which failure on the part of the Credit Enhancer to respond would
constitute consent or acceptance, then a copy of the notice or other
communication shall also be sent to the attention of the General Counsel
of the Credit Enhancer and shall be marked to indicate "URGENT MATERIAL
ENCLOSED"; or
(iv) to each Rating Agency by the Issuer or the Indenture Trustee
shall be sufficient for every purpose under this Indenture if given in
writing and delivered by first-class mail, postage prepaid, overnight
courier, personally delivered, or facsimile (followed by the original by
any other means authorized by this Section) to the parties at the
addresses as provided in the Adoption Annex or at any other address
previously furnished in writing to the Indenture Trustee and the Issuer.
Any consent or waiver under this Indenture or any other Transaction
Document by the Credit Enhancer must be in writing and signed by the Credit
Enhancer to be effective.
Section 11.05. Notices to Noteholders; Waiver.
Where this Indenture provides for notice to Noteholders of any event, the
notice shall be sufficiently given (unless otherwise expressly provided in
this Indenture) if in writing and mailed, first-class, postage prepaid to each
Noteholder affected by the event, at the Holder's address as it appears on the
Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of the notice. Whenever notice to
Noteholders is given by mail, neither the failure to mail the notice nor any
defect in a notice mailed to any particular Noteholder shall affect the
sufficiency of the notice with respect to other Noteholders. Any notice that
is mailed in the manner provided in this Indenture shall conclusively be
presumed to have been duly given.
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.
61
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 contained in this Indenture.
Section 11.08. Effect of Headings and Table of Contents.
The Article and Section headings and the Table of Contents are for
convenience only and shall not affect the construction of this Indenture.
Section 11.09. Successors and Assigns.
All agreements in this Indenture and the Notes by the Issuer shall bind
its successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors, assigns,
co-trustees, and agents.
Section 11.10. Separability.
If any provision in this Indenture or in the Notes is invalid, illegal,
or unenforceable, the validity, legality, and enforceability of the remaining
provisions of this Indenture and the Notes shall not be affected in any way.
Section 11.11. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall give
to any person, other than the parties to this Indenture and their successors
under this Indenture, the Master Servicer (under Article VIII), the Credit
Enhancer, any person with an ownership interest in the Trust, and the
Noteholders, any benefit or any legal or equitable right under this Indenture.
The Credit Enhancer is a third party beneficiary of this Indenture.
62
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 Counsel (which may be counsel to
the Indenture Trustee or any other counsel reasonably acceptable to the
Indenture Trustee) to the effect that the recording materially and
beneficially affects the interests of the Noteholders or any other person
secured under this Indenture or the enforcement of any right granted to the
Indenture Trustee under this Indenture.
Section 11.16. No Petition.
The Indenture Trustee, by entering into this Indenture, any Paying Agent,
by accepting its appointment as such, the Issuer, and each Noteholder, by
accepting a Note, hereby covenant that they will not at any time institute
against the Issuer or the Depositor, or join in any institution against the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency, or
liquidation proceedings, or other proceedings under any United States federal
or State bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture, or any of the other Transaction Documents. This
Section shall survive the termination of this Indenture.
Section 11.17. Act on Instructions from Credit Enhancer.
Notwithstanding any provision of this Indenture to the contrary other
than Section 9.01(b)(i), (ii), (iii), (iv), or (v), so long as no Credit
Enhancer Default exists, the Credit Enhancer shall at all times be treated as
if it were the exclusive owner of all Notes Outstanding for the purposes of
all approvals, consents, waivers, and the institution of any action and the
63
direction of all remedies, and the Indenture Trustee shall act in accordance
with the directions of the Credit Enhancer so long as it is indemnified
therefor to its reasonable satisfaction. The Credit Enhancer shall not be
treated as if it were the exclusive owner of any Notes (other than those it
may actually own) for the purposes of Section 9.01(b)(i), (ii), (iii), (iv),
or (v).
Section 11.18. Non-recourse.
The Issuer and each Noteholder, by its acceptance of its Note, agree that
the indebtedness represented by the Notes is non-recourse to the Issuer, and
is payable solely from the assets of the Trust.
Section 11.19. Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, or the Indenture Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection this Indenture, against (i) the Indenture Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer, or (iii) any partner, owner, beneficiary, agent, officer,
director, employee, or agent of the Indenture Trustee or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Issuer,
the Owner Trustee, or the Indenture Trustee or of any successor or assign of
the Indenture Trustee or the Owner Trustee in its individual capacity. For all
purposes of this Indenture, in the performance of any obligations of the
Issuer under this Indenture, the Owner Trustee shall be subject to, and
entitled to the benefits of, Articles VI, VII, and VIII of the Trust
Agreement.
64
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 200_-_
By: WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee
By: __________________________
Name:
Title:
__________________________
not in its individual capacity but
solely as Indenture Trustee,
By: __________________________
Name:
Title:
65
EXHIBIT A
FORM OF NOTES
Each transferee or purchaser of this Note that is a plan or is investing
plan assets, by acceptance of this Note or an interest in this Note,
represents that the investment and holding of this Note satisfy the conditions
for exemptive relief under ββββ ββ-ββ, ββββ ββ-β�, ββββ ββ-ββ, ββββ ββ-ββ, ββββ
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.
Any transfer in violation of either of the foregoing will be void ab
initio, and will not operate to transfer any rights to the transferee,
notwithstanding any instructions to the contrary.
A-1
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200_-_
REVOLVING HOME EQUITY LOAN ASSET BACKED NOTE
SERIES 200_-_
-------------------------------- ----------------------------------------------
Registered Principal Amount: $[___________]
-------------------------------- ----------------------------------------------
-------------------------------- ----------------------------------------------
No. [____] Percentage Interest: [__]%
-------------------------------- ----------------------------------------------
-------------------------------- ----------------------------------------------
CUSIP No. [_______] Initial Payment Date: [___________]
-------------------------------- ----------------------------------------------
-------------------------------- ----------------------------------------------
Note Rate: Variable
-------------------------------- ----------------------------------------------
Unless this Note is presented by an authorized representative of the
Depository to the Issuer or its agent for registration of transfer, exchange,
or payment, and any Note issued in exchange for this Note is registered in the
name of the Depository or in another name requested by an authorized
representative of the Depository (and any payment on this Note is made to the
Depository or to another entity requested by an authorized representative of
the Depository), any transfer, pledge, or other use of this Note for value or
otherwise by or to any person is wrongful inasmuch as the registered owner of
this Note, the Depository, has an interest in this Note.
The Issuer, CWHEQ Revolving Home Equity Loan Trust, Series 200_-_,
promises to pay to [CEDE & CO.] or registered assigns the Principal Amount,
payable on each Payment Date in an amount equal to the Percentage Interest of
the aggregate amount payable from the Payment Account as principal on the
Notes pursuant to Section 8.03 of the Indenture, dated as of __________, 200_
(the "Indenture"), between the Issuer and _____________________, as Indenture
Trustee. The entire remaining outstanding principal balance of this Note is
payable on the Payment Date in [?]. Capitalized terms used in this Note that
are not otherwise defined have the meanings given to them in the Indenture,
and if not defined there, in the Sale and Servicing Agreement, and if not
defined there, in the Trust Agreement between the Issuer and Wilmington Trust
Company, as Owner Trustee.
Interest will be paid on the ____ day of each month or if that is not a
Business Day, then on the next Business Day (the "Payment Date"), commencing
on the first Payment Date specified above, to the person in whose name this
Note is registered at the close of business on the last day preceding the
Payment Date (the "Record Date") at the Note Rate. Interest will be computed
on the basis of the actual number of days in the Interest Period and a 360-day
year.
The "Note Rate" is, for the first Interest Period, a per annum rate equal
to the sum of (a) the interpolated one-month and two-month LIBOR and (b) [o]%
, 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) [o]%, (ii) the Maximum Rate for the
[Class _____] Notes for that Interest Period, and (iii) [______]%.
A-2
The interpolated one-month and two-month LIBOR shall be equal to the sum
of one-month LIBOR for the first Interest Period plus the product of
o the excess of two-month LIBOR for the first Interest Period over
one-month LIBOR for the first Interest Period, multiplied by
o a fraction whose numerator is the number of days from the one month
anniversary of the Closing Date to the first Payment Date and whose
denominator is 30.
The "Maximum Rate" for a Class of 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).
"LIBOR" for any day means the rate for United States dollar deposits for
one month that appears on the Moneyline Telerate Screen Page 3750 as of 11:00
A.M., London time that day. If LIBOR does not appear on that page (or a page
replacing that page on that service or, if that service is no longer offered,
any other service for displaying LIBOR or comparable rates reasonably selected
by the Depositor after consultation with the Indenture Trustee), the rate will
be the reference bank rate.
The reference bank rate for an Interest Period means the arithmetic mean
(rounded upwards to the nearest one sixteenth of a percent) of the offered
rates for United States dollar deposits offered by three major banks engaged
in transactions in the London interbank market, selected by the Depositor
after consultation with the Indenture Trustee, as of 11:00 A.M., London time,
on the second LIBOR Business Day before the first day of the Interest Period,
to prime banks in the London interbank market for a period of one month in
amounts approximately equal to the outstanding Note Principal Balance if at
least two of the banks provide an offered rate.
If fewer than two offered rates are quoted, the reference bank rate will
be the arithmetic mean of the rates quoted by one or more major banks in New
York City, selected by the Depositor after consultation with the Indenture
Trustee, as of 11:00 A.M., New York City time, on the second LIBOR Business
Day before the first day of the Interest Period, for loans in U.S. dollars to
leading European banks for a period of one month in amounts approximately
equal to the outstanding Note Principal Balance. If no such quotations can be
obtained, the reference bank rate shall be LIBOR for the preceding Interest
Period.
"LIBOR Business Day" means any day other than a Saturday, a Sunday, or a
day on which banking institutions in the State of New York or in the City of
London, England are required or authorized by law to be closed.
A-3
This Note is one of the Notes from a duly authorized issue of Notes
issued by CWHEQ Revolving Home Equity Loan Trust, Series 200_-_, designated as
Revolving Home Equity Loan Asset Backed Notes, Series 200_-_.
Payments on this Note will be made by the Indenture Trustee, or by the
Paying Agent appointed pursuant to the Indenture, by check mailed to the
person entitled thereto as its name and address appears on the Note Register
or, upon written request by the person delivered to the Indenture Trustee at
least five Business Days before the related Record Date, by wire transfer (but
only if the person owns of record Notes having principal denominations
aggregating at least $1,000,000), or by any other means of payment the person
and the Indenture Trustee agree to. Notwithstanding the above, the final
payment on this Note will be made after due notice by the Indenture Trustee or
the Paying Agent, and only upon presentation and surrender of this Note at the
office or agency appointed by the Indenture Trustee for that purpose.
This Note does not purport to summarize the Indenture and reference is
made to the Indenture for the rights and obligations under it.
The Transferor, the Depositor, and the Noteholders intend that the Notes
will be indebtedness for federal, State, and local income and franchise tax
purposes and for purposes of any other tax imposed on or measured by income.
The Depositor, the Indenture Trustee, and the Holder (or beneficial owner) of
this Note by acceptance of this Note (or by acquiring its beneficial interest
in this Note) agrees to treat the Notes, for purposes of federal, State, and
local income or franchise taxes and any other tax imposed on or measured by
income, as indebtedness secured by the Collateral and to report the
transactions contemplated by the Indenture on all applicable tax returns in a
manner consistent with that treatment. Each Holder of this Note agrees that it
will cause any beneficial owner acquiring an interest in this Note through it
to comply with the Indenture as to treatment as indebtedness for federal,
State, and local income and franchise tax purposes and for purposes of any
other tax imposed on or measured by income.
Without the consent of the Holders of any Notes but with the consent of
the Credit Enhancer, the Issuer and the Indenture Trustee may amend the
Indenture in certain limited ways. Without the consent of any of the
Noteholders but with satisfaction of the Rating Agency Condition, the Issuer
and the Indenture Trustee may amend the Indenture to change the Indenture in
any manner or to modify the rights of the Noteholders or the Credit Enhancer
under the Indenture except amendments that require the consent of each
affected Noteholder. No supplemental indenture may, without the consent of
each affected Noteholder:
(i) change the date of payment of any installment of principal or
interest on any Note, or reduce its principal amount, its interest rate,
or its redemption price, or change any place of payment where, or the
coin or currency in which, any Note or its interest is payable;
A-4
(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 contained 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.
A-5
No service charge will be made for any registration of transfer or
exchange, but the Indenture Trustee or the Note Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Before due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, and any agent of the Issuer or the Indenture
Trustee may treat the person in whose name this Note is registered as its
owner for all purposes, whether or not this Note is overdue, and none of the
Issuer, the Indenture Trustee, or any such agent shall be affected by notice
to the contrary.
The Issuer with the consent of the Credit Enhancer and the Master
Servicer may effect an early retirement of both 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 both Classes of Notes is less than or
equal to 10% of the Original Note Principal Balance of both Classes of Notes.
Each Holder or beneficial owner of a Note, by acceptance of a Note or, in
the case of a beneficial owner of a Note, a beneficial interest in a Note,
agrees by accepting the benefits of the Indenture that will not at any time
institute against the Depositor, the Sponsor, the Master Servicer, or the
Issuer, or join in any institution against any of them of, any bankruptcy,
reorganization, arrangement, insolvency , or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture, or the Transaction
Documents.
Anything in this Note to the contrary notwithstanding, none of
____________________ in its individual capacity, ________________________, 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.
A-6
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:
_____________________________________
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.
_________________________________
By: _______________________________
Authorized Officer
A-7
ANNEX 1
DEFINITIONS
"Accelerated Principal Payment Amount" for each Payment Date and each
Class of 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 related Class of Notes until the
difference between the Note Principal Balance and the Loan Group Balance of
the related Loan Group is an amount equal to the related Required Transferor
Subordinated Amount for the Payment Date.
"Act" has the meaning specified in Section 11.03(a).
"Additional Balance" as to any Mortgage Loan means the aggregate amount
of all additional borrowings by the mortgagor under the relevant Credit Line
Agreement after the Cut-off Date for the Mortgage Loan.
"Adjusted Loan Group Balance" means for any Payment Date and Loan Group
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.
"Adjustment Date" for any Interest Period commencing with the second
Interest Period, the second LIBOR Business Day preceding the first day of the
Interest Period.
"Administration Agreement" means the Administration Agreement specified
in the Adoption Annex.
"Administrator" means the person acting as such under the Administration
Agreement.
"Adoption Annex" means Annex 2 to this Indenture.
"Aggregate Investor Interest" for each Payment Date and each Class of
Notes means the Note Interest for that Class of 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 any Payment Date and each Loan Group
means
o the related Loan Group Balance for the Payment Date and any
amounts retained in the Payment Account pursuant to Section 8.03(e) for
that Loan Group minus
o the Note Principal Balance of the related Class of Notes on the
date of determination (after giving effect to the payment of all amounts
actually paid on the Notes on that Payment Date).
"Alternative Principal Payment" for each Payment Date and each Class of
Notes means the excess of the Principal Collections for the related Loan Group
for the Payment Date
βββ�-1-1
over the aggregate of Additional Balances for the related Loan Group created
during the related Collection Period.
"Asset Balance" on any day for any Mortgage Loan other than a liquidated
mortgage loan means its Cut-off Date Asset Balance, plus (i) any Additional
Balance for the Mortgage Loan, minus (ii) all collections credited as
principal against the Asset Balance of the Mortgage Loan in accordance with
the related Credit Line Agreement. A liquidated mortgage loan is any Mortgage
Loan that as of the end of the related Collection Period the Master Servicer
has determined in accordance with the servicing standards in the Sale and
Servicing Agreement that all liquidation proceeds that it expects to recover
on the Mortgage Loan or the related Mortgaged Property have been recovered.
"Assignment of Mortgage" for any mortgage means an assignment, notice of
transfer, or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction in which the related Mortgaged Property is located to
reflect the sale of the mortgage to the Trust, which assignment, notice of
transfer, or equivalent instrument may be in the form of one or more blanket
assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction.
"Authorized Officer" for any corporation or other entity establishing
such designations means the Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer, President, Executive Vice President, any Vice
President, the Secretary, or the Treasurer of the corporation, for any
partnership means any of its general partners, and for any person means any
person who is identified on a list of Authorized Officers delivered by the
person to the Indenture Trustee on the Closing Date. These lists may be
updated from time to time.
"Available Investor Interest" for any Payment Date 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
Notes pursuant to Section 8.03(a) on the Payment Date:
(i) the amount of 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,
(ii) the amount of 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)(v) and (viii) to be paid to the related Loan Group as Crossover
Amounts;
(iii) the funds to be deposited into the Collection Account or the
Payment Account for a Loan Group as a single deposit on the Business Day
preceding the Payment Date in accordance with Section 3.03(i) and Section
3.03(ii) (but only to the extent of Interest
βββ�-1-2
Collections) of the Sale and Servicing Agreement, as reported by the Master
Servicer to the Credit Enhancer in the servicing certificate delivered on the
related Determination Date,
(iv) 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,
(v) the amount of 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
(vi) the amount of 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,
Investor Loss Reduction Amount or to reduce the Loss Utilization Amount to
zero on the other Class of Notes pursuant to Section 8.03(c).
"Available Transferor Subordinated Amount" for any Payment Date and any
Loan Group means an amount equal to the lesser of the related Allocated
Transferor Interest and the related Required Transferor Subordinated Amount
for the Payment Date.
"Basis Risk Carryforward" for any Payment Date and Class of Notes means
the sum of
o Basis Risk Carryforward for that Class of 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 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 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 Notes
remaining unpaid from prior Payment Dates for the period from previous
Payment Date to the current the Payment Date.
Basis Risk Carryforward will not be included in interest payments on the
Notes for any Payment Date whose related Note Rate is the Maximum Rate is
created and will be paid on future Payment Dates only to the extent funds are
available therefor under Section 8.03(a)(xii).
"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.
βββ�-1-3
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in [New York, California, or _________] are
authorized or obligated by law, regulation, or executive order to remain
closed.
"Class" means the Class [1-A] Notes or the Class [2-A] Notes, as
applicable.
"Class [1-A] Note" means any note executed by the Owner Trustee and
authenticated by the Indenture Trustee substantially in the form of Exhibit A
and related to Loan Group [1].
"Class [1-A] Note Rate" means the rate specified in the Adoption Annex.
"Class[2-A] Note" means any note executed by the Owner Trustee and
authenticated by the Indenture Trustee substantially in the form of Exhibit A
and related to Loan Group [2].
"Class [2-A] Note Rate" means the rate specified in the Adoption Annex.
"Closing Date" means the Closing Date stated in the Adoption Annex.
"Code" means the Internal Revenue Code of 1986 and Treasury regulations
promulgated under the Code.
"Collateral" 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 account so designated established by the
Master Servicer pursuant to the Sale and Servicing Agreement.
"Collection Period" for any Payment Date and any Mortgage Loan means the
calendar month preceding the month of the Payment Date (or, in the case of the
first Collection Period, the period from the Cut-off Date through the date
specified in the Adoption Annex).
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business is
administered specified in the Adoption Annex, or at any other address the
Indenture Trustee designates by notice to the Noteholders and the Issuer, or
the principal corporate trust office of any successor Indenture Trustee at the
address designated by the successor Indenture Trustee by notice to the
Noteholders and the Issuer.
"Credit Enhancement Draw Amount" for each Class of Notes and each Payment
Date or other applicable date in accordance with the Policy means an amount
equal to the sum of:
(x) the excess of the related Guaranteed Payment over the related
Available Investor Interest for the Payment Date, plus
(y) for each applicable date in accordance with the Policy, any
Preference Amount related to that Class of Notes to be paid pursuant to the
terms of the Policy.
"Credit Enhancer" means the Credit Enhancer identified in the Adoption
Annex.
βββ�-1-4
"Credit Enhancer Default" means the failure by the Credit Enhancer to
make a payment required under the Policy in accordance with its terms.
"Credit Limit" means the maximum Asset Balance for each Mortgage Loan
permitted under the terms of the related Credit Line Agreement.
"Credit Line Agreement" means the related credit line account agreement
for a Mortgage Loan executed by the related mortgagor and any amendment or
modification of it.
"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)(v) and (viii).
"Custodial Agreement" means the Custodial Agreement specified in the
Adoption Annex.
"Cut-off Date" means the Cut-off Date specified in the Adoption Annex.
"Cut-off Date Asset Balance" for any Mortgage Loan acquired by the Trust
on the Closing Date means its unpaid principal balance as of the Cut-off Date.
"Depositor" means CWHEQ, Inc., a Delaware corporation, or its successor
in interest.
"Depository" means a financial institution or other person maintaining
ownership records and effecting book-entry transfers and pledges of the Notes
deposited with it pursuant to an agreement with the Issuer. The Depository
shall at all times be a "clearing corporation" as defined in Section
8-102(a)(5) of the UCC of the State of New York.
"Determination Date" for any Payment Date means the __________ Business
Day before the Payment Date.
"Eligible Account" means
(a) an account that is maintained with a depository institution whose
debt obligations throughout the time of any deposit in it have one of the two
highest short-term debt ratings by Standard & Poor's and the highest
short-term debt rating by Moody's,
(b) an account with a depository institution having a minimum long-term
unsecured debt rating of "AA-" by Standard & Poor's and "Baa3" by Moody's,
which accounts are fully insured by either the Savings Association Insurance
Fund or the Bank Insurance Fund of the Federal Deposit Insurance Corporation,
(c) a segregated trust account maintained with the Indenture Trustee or
an affiliate of the Indenture Trustee in its fiduciary capacity, or
(d) an account otherwise acceptable to each Rating Agency and the Credit
Enhancer, as evidenced at closing by delivery of a rating letter by each
Rating Agency and thereafter by delivery of a letter from
βββ�-1-5
(i) each Rating Agency to the Indenture Trustee, within 30 days of
receipt of notice of the deposit, to the effect that the deposit will not
cause the Rating Agency to reduce or withdraw its then-current rating of
the Notes (without regard to the Policy) and
(ii) from the Credit Enhancer to the Indenture Trustee, within 30
days of receipt of notice of the deposit, to the effect that the account
is acceptable to it.
"Eligible Investments" means
(a) obligations of, or guaranteed as to principal and interest by, the
United States or any U.S. agency or instrumentality that is backed by the full
faith and credit of the United States;
(b) general obligations of or obligations guaranteed by any State
receiving the highest long-term debt rating of each Rating Agency, or any
lower rating that will not result in a downgrade or withdrawal of the rating
then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(c) commercial paper issued by Countrywide Home Loans, Inc. or any of its
affiliates if it is rated no lower than A-1 by Standard & Poor's and P-2 by
Moody's, and the long-term debt of Countrywide Home Loans, Inc. is rated at
least A3 by Moody's, or any lower ratings that will not result in a downgrade
or withdrawal of the rating then assigned to the Notes by any Rating Agency
(without regard to the Policy);
(d) commercial or finance company paper that is then receiving the
highest commercial or finance company paper rating of each Rating Agency, or
any lower ratings that will not result in a downgrade or withdrawal of the
rating then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(e) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company incorporated
under the laws of the United States or any State and subject to supervision
and examination by federal or State banking authorities, if the commercial
paper or long term unsecured debt obligations of the depository institution or
trust company (or in the case of the principal depository institution in a
holding company system, the commercial paper or long-term unsecured debt
obligations of the holding company, but only if βββββ�'β� 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
βββ�-1-6
downgrade or withdrawal of the rating then assigned to the Notes by any Rating
Agency (without regard to the Policy);
(h) repurchase obligations with respect to any security described in
clauses (a) and (b) above, in either case entered into with a depository
institution or trust company (acting as principal) described in clause (e)
above;
(i) securities (other than stripped bonds, stripped coupons, or
instruments sold at a purchase price in excess of 115% of its face amount)
bearing interest or sold at a discount issued by any corporation incorporated
under the laws of the United States or any State that, at the time of the
investment, have one of the two highest ratings of each Rating Agency (except
if the Rating Agency is Moody's, the rating must be the highest commercial
paper rating of Moody's for the securities), or any lower ratings that will
not result in a downgrade or withdrawal of the rating then assigned to the
Notes by any Rating Agency (without regard to the Policy) as evidenced by a
signed writing delivered by each Rating Agency;
(j) interests in any money market fund that, at the date of acquisition
of the interests in the fund and throughout the time the interests are held in
the fund, have the highest applicable rating by each Rating Agency, or any
lower ratings that will not result in a downgrade or withdrawal of the rating
then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(k) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the United States
or any State that, on the date of acquisition, have been rated by each Rating
Agency in their respective highest applicable rating category, or any lower
ratings that will not result in a downgrade or withdrawal of the rating then
assigned to the Notes by any Rating Agency (without regard to the Policy); and
(l) any other investments having a specified stated maturity and bearing
interest or sold at a discount acceptable to each Rating Agency that will not
result in a downgrade or withdrawal of the rating then assigned to the Notes
by any Rating Agency (without regard to the Policy), as evidenced by a signed
writing delivered by each Rating Agency;
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.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Event of Default" has the meaning specified in Section 5.01.
βββ�-1-7
"Excess Overcollateralization Amount" for a Class of Notes and Payment
Date means the lesser of
(i) the related Scheduled Principal Collections Payment Amount for
the Class of Notes before reduction for the current related Excess
Overcollateralization Amount and
(ii) the excess of the related Allocated Transferor Interest over
the greater of
o the related Minimum Transferor Interest for the Payment
Date and
o the related Required Transferor Subordinated Amount for
the Payment Date.
"Exchange Act" means the Securities Exchange Act of 1934.
"Grant" means mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, and βββββ� β� ββββ 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.
"Group [1] Collateral" has the meaning given to it in the Granting
Clause.
"Group [2] Collateral" has the meaning given to it in the Granting
Clause.
"Guaranteed Payment" for each Class of Notes and any Payment Date means
the sum of (i) the related Guaranteed Principal Payment Amount plus (ii) the
related Aggregate Investor Interest for that Payment Date.
"Guaranteed Principal Payment Amount" for each Class of Notes means:
(a) on their Scheduled Maturity Date, the excess of
o the related outstanding Note Principal Balance (after giving
effect to the distribution of Interest Collections from the related Loan
Group allocable and distributable as principal on that Class of Notes on
that date and Interest Collections from the other Loan Group allocable
and distributable as principal on the other Class of Notes on that date
to the extent not distributed as principal to the Holders of the other
Class of Notes) over
βββ�-1-8
o the sum of the amounts on deposit in the Collection Account and
the Payment Account for the related Loan Group available to be
distributed to the Holders of the related Class of Notes pursuant to
Section 8.03(b), together with Interest Collections on deposit in the
Collection Account and the Payment Account for the other Loan Group that
are allocable to principal on the other Class of Notes to the extent not
distributed as Principal Collections;
(b) for any Payment Date on or before the Payment Date on which the
Available Transferor Subordinated Amount for a Class of Notes first increases
to zero, if the Available Transferor Subordinated Amount for that Payment Date
for that Class of Notes is less than the highest Available Transferor
Subordinated Amount for any preceding Payment Date for that Class of Notes,
the amount of the excess of
o the highest Available Transferor Subordinated Amount for any
preceding Payment Date for that Class of Notes over
o the Available Transferor Subordinated Amount for the current
Payment Date for that Class of Notes;
(c) for any Payment Date after the Payment Date on which the Available
Transferor Subordinated Amount for a Class of Notes has first increased to
zero, if the Available Transferor Subordinated Amount for that Class of Notes
has been reduced to zero or below, the excess of
o the related Note Principal Balance (after giving effect to all
allocations and payments on the Notes from all sources other than the
Policy on that Payment Date) over
o the related Adjusted Loan Group Balance (at the end of the related
Collection Period); and
(d) for any other Payment Date, zero.
"Holder" or "Noteholder" means the person in whose name a Note is
registered in the Note Register.
"Incipient Default" means any occurrence that is, or with notice or lapse
of time or both would become, an Event of Default.
"Indenture" means this Indenture.
"Indenture Trustee" means the Indenture Trustee identified in the
Adoption Annex, as Indenture Trustee under this Indenture, or any successor
Indenture Trustee under this Indenture.
"Independent" means that a person (a) is in fact independent of the
Issuer, any other obligor on the Notes, the Transferor, and any affiliate of
any of them, (b) 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 (c) is not connected with the
βββ�-1-9
Issuer, any other obligor on the Notes, the Transferor, or any affiliate of
any of them as an officer, employee, promoter, underwriter, trustee, partner,
director, or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered
to the Indenture Trustee made by an Independent appraiser or other expert
appointed by an Issuer Order and approved by the Indenture Trustee in the
exercise of reasonable care, and the opinion or certificate states that the
Issuer has read the definition of "Independent" in this Indenture and that the
signer is Independent.
"Insolvency Event" regarding a specified person means
(a) the person generally fails to pay its debts as they become due or
admits in writing its inability to pay its debts generally as they become due;
(b) the person has a decree or order for relief by a court or agency or
supervisory authority having jurisdiction in the premises entered against it
or any substantial part of its property in an involuntary case under any
applicable bankruptcy, insolvency, or other similar law and the decree or
order remains unstayed and in effect for a period of 60 days;
(c) the person has a conservator, receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official appointed for it or for
all or any substantial part of its property in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities, or other similar
proceedings, and the decree or order remains unstayed and in effect for a
period of 60 days;
(d) the person's business is ordered to be wound-up or liquidated or the
person's business is subject to readjustment of debt, marshalling of assets
and liabilities, or other similar proceedings, and the decree or order or the
proceedings remain unstayed and in effect for a period of 60 days; or
(e) the person commences a voluntary case under any applicable
bankruptcy, insolvency, or other similar law, or consents to the entry of an
order for relief in an involuntary case under any such law, or consents to the
appointment of or taking possession by a conservator, receiver, liquidator,
assignee for the benefit of creditors, a custodian, trustee, sequestrator, or
similar official for the person or for all or any substantial part of its
property, or the person makes any general assignment for the benefit of
creditors.
"Insurance Agreement" means the insurance and indemnity agreement
identified in the Adoption Annex.
"Interest Collections" for each Payment Date and each Class of Notes
means the sum of all payments effected 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 any optional advance for the related Loan
Group made by the Master Servicer pursuant to Section 4.03 of the Sale and
βββ�-1-10
Servicing Agreement for which the Master Servicer has not been reimbursed
minus 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 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. The related Credit Line
Agreement shall determine the portion of each payment on the Mortgage Loan
that constitutes principal or interest. Net liquidation proceeds are
liquidation proceeds net of insurance policy recoveries and out-of-pocket
expenses (exclusive of overhead) that are incurred by the Master Servicer in
connection with the liquidation of any Mortgage Loan.
"Interest Formula Rate" for a Class of Notes means the lesser of the
rates in clauses (i) and (iii) of the definition of Class [1-A] Note Rate or
Class 2-A Note Rate, as applicable.
"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.
"Investor Fixed Allocation Percentage" for any Payment Date and a Class
of Notes is calculated as provided in the Adoption Annex.
"Investor Floating Allocation Percentage" for any Payment Date and each
Class of Notes means the lesser of 100% and a fraction whose numerator is the
related Note Principal Balance and whose denominator is the related Loan Group
Balance, calculated as of the beginning of the related Collection Period.
"Investor Interest Collections" for any Class of Notes and Payment Date
means the deposits by the Master Servicer pursuant to Section 3.03 of the Sale
and Servicing Agreement plus the product of (i) the Interest Collections
received on the related Loan Group during the related Collection Period and
(ii) the related Investor Floating Allocation Percentage for the Payment Date.
"Investor Loss Amount" for any Class of Notes and Payment Date means the
product of (i) the Investor Floating Allocation Percentage for the Class of
Notes and Payment Date and (ii) the aggregate of the liquidation loss amounts
on the Mortgage Loans in the related Loan Group for the Payment Date.
Liquidation loss amounts for any Payment Date and any Mortgage Loan that
becomes a liquidated Mortgage Loan during the related Collection Period are
the unrecovered Asset Balance of the Mortgage Loan at the end of the
Collection Period after reducing the Asset Balance for the net liquidation
proceeds. Net liquidation proceeds are liquidation proceeds net of insurance
policy recoveries and out-of-pocket expenses (exclusive of overhead) that are
incurred by the Master Servicer in connection with the liquidation of any
Mortgage Loan.
βββ�-1-11
"Investor Loss Reduction Amount" for any Class of Notes and Payment Date
means the portion of the Investor Loss Amount for that Class of Notes for all
prior Payment Dates that has not been (i) paid to the Holders of the Class of
Notes on the Payment Date pursuant to Section 8.03(a)(iii), (iv), or (viii),
pursuant to Section 8.03(c), (ii) absorbed by reduction of the related
Allocated Transferor Interest pursuant to Section 8.03(c), (iii) absorbed by
the Allocated Transferor Interest of the unrelated Loan Group pursuant to
8.03(c), or (iv) funded by a Credit Enhancement Draw Amount.
"Investor Principal Collections" for any Class of Notes and Payment Date
means the related Investor Fixed Allocation Percentage of Principal
Collections on the Mortgage Loans in the related Loan Group for the Payment
Date.
"Issuer" means CWHEQ Revolving Home Equity Loan Trust, Series 200_-_
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.
"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 the Credit
Enhancer), the rate will be the Reference Bank Rate.
"LIBOR Business Day" means any day other than of a Saturday, a Sunday, or
a day on which banking institutions in the State of New York or in the City of
London, England are required or authorized by law to be closed.
"Loan 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.
βββ�-1-12
"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.
"Loss Utilization Amount" for a Loan Group and any Payment Date means the
lesser of the overcollateralization shortfall for that Loan Group and the
available overcollateralization amount for the other Loan Group, where
(x) the overcollateralization shortfall for a Loan Group on a Payment
Date is the excess of
(i) its related Note Principal Balance on that Payment Date (after
giving effect to the payment of all amounts actually paid on that
Notes on the Payment Date from sources other than the Policy) over
(ii) the related Loan Group Balance as of the last day of the
related Collection Period and any amounts retained for the Loan
Group in the Payment Account pursuant to Section 8.03(e), and
(y) the available overcollateralization amount for a Loan Group on a
Payment Date is the excess of
(i) the related Loan Group Balance as of the last day of the related
Collection Period and any amounts retained for the Loan Group in the
Payment Account pursuant to Section 8.03(e) over
(ii) its related Note Principal Balance on the Payment Date (after
giving effect to the payment of all amounts actually paid on the
Notes on the Payment Date from sources other than the Policy), but
not in excess of the related Required Transferor Subordinated
Amount.
"Managed Amortization Period" means the period from the Closing Date to
the Rapid Amortization Commencement Date.
"Master Servicer" means [Countrywide Home Loans, Inc., a New York
corporation] and any successor.
"Maximum Principal Payment" for any Class of Notes and Payment Date means
the related Investor Fixed Allocation Percentage of the Principal Collections
from the Mortgage Loans in the related Loan Group for the Payment Date.
"MERS" means Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor to it.
"MERS(R) System" means the system of recording transfers of mortgages
electronically maintained by MERS.
βββ�-1-13
"MIN" means the Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
"MOM Loan" means any Mortgage Loan as to which MERS is acting as
mortgagee, solely as nominee for the originator of the Mortgage Loan and its
successors and assigns.
"Moneyline Telerate Screen Page 3750" means the display designated as
page 3750 on the Moneyline Telerate Information Services, Inc. (or any page
replacing that page on that service for the purpose of displaying London
inter-bank offered rates of major banks).
["Moody's" means βββββ�'β� 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 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, 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 (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
βββ�-1-14
the 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 certificate
by the appropriate county recording office where the mortgage is
recorded;
(v) a title policy 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 relating to the Mortgage Loan; and
(viii) any security agreement, chattel mortgage, or equivalent
instrument executed in connection with the Mortgage Loan;
An optical image or other representation of a document specified in
clauses (iii) through (viii) above for a Mortgage Loan may be held by the
Indenture Trustee or assignee in lieu of the physical documents specified if
(a) as evidenced by an Opinion of Counsel delivered to and in form and
substance satisfactory to the Indenture Trustee and the Credit Enhancer,
(x) an optical image or other representation of the related
documents specified in clauses (iii) through (viii) above are enforceable
in the relevant jurisdictions to the same extent as the original of the
document and
(y) the optical image or other representation does not impair the
ability of an owner of the Mortgage Loan to transfer its interest in the
Mortgage Loan, and
(b) written confirmation that the retention of the documents in that
format will not result in a reduction in the then current rating of the Notes,
without regard to the Policy. A copy of any Opinion of Counsel shall in each
case be addressed and delivered to the Credit Enhancer.
"Mortgage Loan" means each of the mortgage loans, including Additional
Balances for it, that are transferred to the Trust pursuant to Section 2.01(a)
and (b) of the Sale and Servicing Agreement, together with all related
Mortgage Files, exclusive of Mortgage Loans that are retransferred to the
Depositor, the Master Servicer, or the Sponsor or purchased by the Master
Servicer pursuant to Section 2.02, 2.04, 2.06, or 3.06 of the Sale and
Servicing Agreement, held as a part of the Trust. The Mortgage Loans
originally so held are identified in the Mortgage Loan Schedule delivered on
the Closing Date. The Mortgage Loans shall also include any Eligible
Substitute Mortgage Loan (as defined in the Sale and Servicing Agreement)
substituted by the Sponsor for a defective Mortgage Loan pursuant to Sections
2.02 and 2.04 of the Sale and Servicing Agreement.
βββ�-1-15
"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 Adoption Annex. The initial
schedule of Mortgage Loans as of the Cut-off Date is Exhibit A of the Sale and
Servicing Agreement. The Mortgage Loan Schedule will automatically include any
Additional Balances. The Indenture Trustee is not responsible for preparing
the Mortgage Loan Schedule.
"Mortgage Note" means the Credit Line Agreement for a Mortgage Loan
pursuant to which the related mortgagor agrees to pay the indebtedness
evidenced by it and secured by the related mortgage.
"Mortgaged Property" means the underlying property securing a Mortgage
Loan.
"Note" means any Class [1-A] Note or Class 2-A Note executed by the
Issuer and authenticated by the Indenture Trustee substantially in the form of
Exhibit A.
"Note Interest" for any Class of 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 Notes means
(a) the related Original Note Principal Balance less (b) the aggregate of
amounts actually distributed as principal on the Class of Notes before the
Payment Date.
"Note Rate" for a Class of Notes means the related rate specified in the
Adoption Annex.
"Note Register" and "Note Registrar" have the meanings specified in
Section 2.03.
"OC Deficiency Amount"-- means the amount required to reduce a Class of
Notes to achieve the relevant overcollateralization target (the Minimum
Transferor Interest or the Required Transferor Subordinated Amount, as the
case may be) for its related Loan Group without taking into account the other
Loan Group's overcollateralization position, which amount, for any Loan Group
on any date of determination within any Collection Period, will be equal to
the excess of (A) over (B) where
o (A) is an amount equal to (x) if the relevant overcollateralization
target is the Minimum Transferor Interest, the related Minimum
Transferor Interest without taking into account adjustments with
respect to OC Deficiency Amount, and (y) if the relevant
overcollateralization target is the Required Transferor Subordinated
Amount, the related Required Transferor Subordinated Amount without
taking into
βββ�-1-16
account adjustments with respect to OC Deficiency Amount, each for such
date of determination; and
o (B) is an amount equal to the greater of (x) the related Allocated
Transferor Interest and (y) zero, for such date of determination.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer or other specified party under the circumstances
described in, and otherwise complying with, the applicable requirements of
Section 11.01 and delivered to the Indenture Trustee.
"Opinion of Counsel" means written opinions of counsel who may, except as
otherwise expressly provided in this Indenture, be an employee of or counsel
to the Issuer, the Depositor, the Sponsor, the Master Servicer, or the
Transferor (except that any opinion pursuant to Section 8.06 or relating to
taxation must be an opinion of independent outside counsel) and who is
reasonably acceptable to the parties to whom it is to be delivered. The
opinions shall be addressed to the Indenture Trustee as Indenture Trustee, any
other designated party, shall comply with any applicable requirements of
Section 11.01, and shall be in form and substance reasonably satisfactory to
the parties to whom it is to be delivered. Copies of all Opinions of Counsel
shall be delivered to the Credit Enhancer.
"Original Note Principal Balance" means the Original Note Principal
Balance of both Classes of Notes, or the Original Note Principal Balance of
the Class [1-A] Notes or the Class [2-A] Notes, as applicable, each as
reflected in the Adoption Annex.
"Outstanding" as of the date of determination means all Notes that have
been authenticated and delivered under this Indenture except:
(i) Notes that have been cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been deposited with the Indenture Trustee or any
Paying Agent in trust for the Noteholders, and if the Notes are to be
redeemed, notice of the redemption has been duly given pursuant to this
Indenture or notice has been provided for in a manner satisfactory to the
Indenture Trustee; and
(iii) Notes in exchange for or instead of which other Notes have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that those Notes are
held by a Protected Purchaser.
In determining whether the Holders of the requisite Outstanding Amount
have Acted under this Indenture or under any Transaction Document, Notes owned
by the Issuer, the Depositor, a Seller, or the Transferor, or any of their
affiliates shall be disregarded and treated as not being Outstanding, except
that, in determining whether the Indenture Trustee shall, if the Notes have
first been transferred to a non-affiliate, be protected in relying on any Act,
only Notes that a Responsible Officer knows to be so owned shall be
disregarded. Notes so owned
βββ�-1-17
that have been pledged in good faith, or for whose owner the Issuer, the
Depositor, a Seller, or the Transferor, or any of their affiliates is acting
as trustee or nominee, may be regarded as Outstanding if the pledgee or other
person establishes to the satisfaction of the Indenture Trustee the pledgee's
or other person's right to Act for the Notes and that the pledgee or other
person is not the Issuer, the Depositor, or the Transferor, or any of their
affiliates.
To effectuate the Credit Enhancer's right of subrogation under Section
4.03, all Notes that have been paid with funds provided under the Policy shall
be Outstanding until the Credit Enhancer has been paid all amounts due to it
pursuant to the Insurance Agreement with respect to those Notes.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or of a Class of Notes, as applicable, that are Outstanding at the date of
determination.
"Paying Agent" means the Indenture Trustee or any other person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.08
and is authorized by the Issuer to make payments to and distributions from the
Payment Account, including payments of principal or interest on the Notes on
behalf of the Issuer.
"Payment Account" means the Eligible Account established and maintained
by the Indenture Trustee on behalf of and for the benefit of the Noteholders,
the Transferor and the Credit Enhancer pursuant to Section 8.01.
"Payment Date" means the day of each month specified in the Adoption
Annex, or if that is not a Business Day, then the next Business Day.
"Policy" means the financial guaranty insurance policy identified in the
Adoption Annex and all its endorsements, dated as of the Closing Date, issued
by the Credit Enhancer to the Indenture Trustee for the benefit of the
Noteholders.
"Policy Payments Account" means a separate special purpose trust account
that is an Eligible Account, for the benefit of Holders of the Notes and the
Credit Enhancer over which the Indenture Trustee has exclusive control and
sole right of withdrawal.
"Preference Amount" means the Preference Amount as defined in the
Insurance Agreement.
"Preference Claim" means any proceeding or the institution of any action
seeking the avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership, or similar law of any distribution made with respect
to the Notes (other than Basis Risk Carryforward).
"Principal Collections" for the Mortgage Loans in any Loan Group and any
Payment Date means the sum of all payments effected by the mortgagors and any
other amounts constituting principal collected by the Master Servicer under
the Mortgage Loans in that Loan Group during the related Collection Period.
These amounts include any net liquidation proceeds
βββ�-1-18
and net proceeds from any insurer pursuant to any insurance policy covering a
Mortgage Loan allocable to principal of the applicable Mortgage Loan and
Transfer Deposit Amounts (as defined in the Sale and Servicing Agreement), but
exclude foreclosure profits. The terms of the related Credit Line Agreement
shall determine the portion of each payment on a Mortgage Loan that
constitutes principal or interest. Net liquidation proceeds are liquidation
proceeds net of out-of-pocket expenses (exclusive of overhead) that are
incurred by the Master Servicer in connection with the liquidation of any
Mortgage Loan. Foreclosure profits on a liquidated Mortgage Loan are the
excess of its net liquidation proceeds over the Asset Balance of the Mortgage
Loan before the final recovery on it (plus accrued and unpaid interest thereon
at the 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).
"Proceeding" means any suit in equity, action at law, or other judicial
or administrative proceeding.
"Purchase Agreement" means the Purchase Agreement of even date with this
Indenture between [Countrywide Home Loans, Inc.], as a seller, [Countrywide
LFT LLC], as a seller, and the Depositor, as purchaser, with respect to the
Mortgage Loans.
"Rapid Amortization Commencement Date" means the earlier of (i) the
Payment Date in the month specified in the Adoption Annex and (ii) the Payment
Date after the Collection Period in which a Rapid Amortization Event occurs.
"Rapid Amortization Event" has the meaning given to it in Section 5.16.
"Rapid Amortization Period" means the period beginning on the Rapid
Amortization Commencement Date until the termination of the Indenture.
"Rating Agency" means any statistical credit rating agency, or its
successor, that rated the Notes at the request of the Depositor at the time of
the initial issuance of the Notes. If a particular Rating Agency is no longer
in existence, "Rating Agency" will means a statistical credit rating agency,
or other comparable person, designated by the Depositor and the Credit
Enhancer. The Indenture Trustee will be notified of any such designation.
References to the highest short-term unsecured rating category of a Rating
Agency mean [A-1+] or better in the case of [Standard & Poor's] and [P-1] or
better in the case of [Moody's] and in the case of any other Rating Agency
mean the ratings it deems equivalent to these. References to the highest
long-term rating category of a Rating Agency mean "[AAA]" in the case of
[Standard & Poor's] and "[Aaa]" in the case of [Moody's] and in the case of
any other Rating Agency, the rating it deems equivalent to these.
"Rating Agency Condition" for any action means that each Rating Agency
has been given 10 days (or any shorter period acceptable to each Rating
Agency) notice of the action and that each of the Rating Agencies has notified
the Issuer in writing that the action, with and
βββ�-1-19
without taking the Policy into account, will not result in a reduction or
withdrawal of its then current rating of the Notes and the Credit Enhancer has
consented to the action.
"Record Date" for a Payment Date or redemption date means the close of
business on the day before the Payment Date or redemption date or, if
definitive Notes have been issued, the last day of the preceding month.
"Reference Bank Rate" for an Interest Period means the arithmetic mean
(rounded upwards to the nearest one sixteenth of a percent) of the offered
rates for United States dollar deposits offered by three major banks engaged
in transactions in the London interbank market, selected by the Depositor
after consultation with the Indenture Trustee, as of 11:00 A.M., London time,
on the Adjustment Date immediately preceding the Interest Period, to prime
banks in the London interbank market for a period of one month in amounts
approximately equal to the outstanding Note Principal Balance if at least two
of the banks provide an offered rate. If fewer than two offered rates are
quoted, the Reference Bank Rate will be the arithmetic mean of the rates
quoted by one or more major banks in New York City, selected by the Depositor
after consultation with the Indenture Trustee and the Credit Enhancer, as of
11:00 A.M., New York City time, on the Adjustment Date immediately preceding
the Interest Period, for loans in U.S. dollars to leading European banks for a
period of one month in amounts approximately equal to the outstanding Note
Principal Balance. If no such quotations can be obtained, the Reference Bank
Rate shall be LIBOR for the preceding Interest Period.
"Registered Holder" means the person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Required Amount" for any Class of Notes and Payment Date means the
amount by which the sum of the amounts distributable pursuant to Sections
8.03(a)(i) through 8.03(a)(iv) on the Payment Date exceed Investor Interest
Collections for the Class of Notes and any Crossover Amounts payable thereon
for the Payment Date.
"Responsible Officer" any officer of the Indenture Trustee with direct
responsibility for the administration of this Indenture and also, with respect
to a particular matter, any other officer to whom a matter is referred because
of the officer's knowledge of and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
specified in the Adoption Annex.
"Scheduled Maturity Date" means the date specified in the Adoption Annex.
"Scheduled Principal Collections Payment Amount" for any Payment Date
during the Managed Amortization Period and a Class of Notes means the lesser
of (i) the related Maximum Principal Payment and (ii) the related Alternative
Principal Payment. For any Payment Date in the Rapid Amortization Period the
Scheduled Principal Collections Payment Amount means the related Maximum
Principal Payment.
βββ�-1-20
"Securities Act" means the Securities Act of 1933.
"Seller" any seller of the Mortgage Loans pursuant to the Purchase
Agreement.
"Servicing Certificate" means the certificate delivered each month
pursuant to the Sale and Servicing Agreement to the Indenture Trustee
completed and executed by any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished
to the Indenture Trustee (with a copy to the Credit Enhancer) by the Master
Servicer on the Closing Date, as it may be amended from time to time.
"Servicing Fee" for a Loan Group and any Payment Date means the product
of (i) the Servicing Fee Rate specified in the Adoption Annex divided by 12
and (ii) 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).
"Sponsor" means [Countrywide Home Loans, Inc., a New York corporation]
and any successor.
["Standard & Poor's" means Standard & Poor's, a division of The
ββββββ-ββββ Companies, Inc., or its successor in interest.]
"State" means any one of the ββ ββββββ ββ βββ� ββββββ ββββββ or the
District of Columbia.
"Subordinated Transferor Collections" for a Loan Group and Payment Date
means interest collections and principal collections from the Mortgage Loans
in that Loan Group allocable to the portion of the related Allocated
Transferor Interest not in excess of the Available Transferor Subordinated
Amount for that Loan Group and Payment Date.
"Transaction Documents" means this Indenture, the Notes, the Sale and
Servicing Agreement, the Purchase Agreement, the Custodial Agreement, the
Administration Agreement, the Trust Agreement, the Policy, and the Insurance
Agreement.
"Transferor" means the Holders of the Transferor Certificates.
"Transferor Certificates" means the certificates executed and
authenticated by the Owner Trustee under the Trust Agreement.
"Transferor Interest" for any Payment Date means the aggregate undivided
beneficial interest represented by the Transferor Certificate in the Trust
(other than the right to distributions resulting from Section 8.03(a)(xiii)),
calculated as the sum of the Allocated Transferor Interest for each Loan
Group.
"Transferor Principal Collections" for any Payment Date means Principal
Collections received on a Loan Group during the related Collection Period
minus the amount of those Principal Collections required to be distributed to
Holders of the related Class of Notes pursuant to Section 8.03(b).
βββ�-1-21
"Trust" means the trust specified in the Adoption Annex.
"Trust Agreement" means the Trust Agreement between [Countrywide Home
Loans, Inc.,] the Depositor and the Owner Trustee.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force on the date of this Indenture, unless otherwise specifically
provided.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the relevant jurisdiction, unless the context otherwise requires.
"Unpaid Investor Interest Shortfall" for any Payment Date and Class of
Notes means the aggregate amount of Note Interest on that Class of Notes that
was accrued for a prior Payment Date and has not been paid to Holders of that
Class of Notes.
"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 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.
βββ�-β�-ββ
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ββββββββ βββββ�
The Indenture Trustee shall issue under Section 2.02(b):
o Class [1-A] Notes in an aggregate principal amount of
$____________, and
o Class [2-A] Notes in an aggregate principal amount of
$____________
The "Administration Agreement" is the Administration Agreement of even
date with this Indenture among the Issuer, the Master Servicer, and the
Indenture Trustee.
The "Class [1-A] Note Rate" is, for the first Interest Period, a per
annum rate equal to the sum of (a) the interpolated one-month and two-month
LIBOR and (b) ____%, and for any subsequent Interest Period, a per annum rate
equal to the least of: (i) the sum of (a) LIBOR as of the Adjustment Date for
that Interest Period and (b) ____%, (ii) the Maximum Rate for the Class [1-A]
Notes for that Interest Period, and (iii) [16.00]%.
The "Class 2-A Note Rate" is, for the first Interest Period, a per annum
rate equal to the sum of (a) the interpolated one-month and two-month LIBOR
and (b) ____%, and for any subsequent Interest Period, a per annum rate equal
to the least of: (i) the sum of (a) LIBOR as of the Adjustment Date for the
day of that Interest Period and (b) ____%, (ii) the Maximum Rate for the Class
[2-A] Notes for that Interest Period, and (iii) [16.00]%.
The interpolated one-month and two-month LIBOR shall be equal to the sum
of one-month LIBOR for the first Interest Period plus the product of
o the excess of two-month LIBOR for the first Interest Period over
one-month LIBOR for the first Interest Period, multiplied by
o a fraction whose numerator is the number of days from the one-month
anniversary of the Closing Date to the first Payment Date and whose
denominator is 30.
The "Closing Date" is ________, 200_.
The last day of the first "Collection Period" is the last day of July
2005.
The "Corporate Trust Office" of the Indenture Trustee at the date of
execution of this Indenture is located at _____________________, Attention:
___________________________.
The "Credit Enhancer" is ________________________ and any successor or
replacement for the Credit Enhancer.
"Custodial Agreement" is the Custodial Agreement of even date with this
Indenture between the Indenture Trustee, the Issuer, the Depositor, the Master
Servicer, and [Treasury Bank, National Association], as custodian.
The "Cut-off Date" is _____________, 200_.
βββ�-2-1
The "Indenture Trustee" is ________________________________________.
The "Insurance Agreement" is the insurance and indemnity agreement of
even date with this Indenture among the Sponsor, the Depositor, the Issuer,
the Indenture Trustee, and the Credit Enhancer.
The "Investor Fixed Allocation Percentage" for any Class of Notes and
Payment Date is (i) on any date on which the related Allocated Transferor
Interest is less than the related Required Transferor Subordinated Amount,
100%; and (ii) on any date on which the related Allocated Transferor Interest
equals or exceeds the related Required Transferor Subordinated Amount, _____%.
The "Maximum Rate" for any Class of Notes and 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 "Minimum Transferor Interest" for a Loan Group is an amount equal to
(i) the lesser of (a) _____% of the related Loan Group Balance at the
beginning of the immediately preceding Collection Period and (b) _____% of the
Original Note Principal Balance of the related Class of Notes plus (ii) the OC
Deficiency Amount of the unrelated Loan Group.
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, (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 (i) the Servicing Fee Rate, (ii) the Premium Percentage defined in the
Insurance Agreement, and (iii) commencing with the Payment Date in _______
200_, _____% per annum.
The "Note Rate" refers to either the Class [1-A] Note Rate or Class 2-A
Note Rate, as applicable.
The "Original Note Principal Balance" of the Class [1-A] Notes is
$____________ and of the Class [2-A] Notes is $__________________.
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 ________ 200_.
βββ�-2-2
The "Policy" is the note guaranty insurance policy number ________,
issued by the Credit Enhancer.
The Payment Date referred to in the definition of "Rapid Amortization
Commencement Date" is the Payment Date in __________ 200_.
The percentage of the aggregate of the Original Note Principal Balance
that the aggregate of all draws under the Policy would exceed to result in a
"Rapid Amortization Event" under Section 5.16(g) is _____%.
The "Required Transferor Subordinated Amount" has the meaning in the
Insurance Agreement.
The "Sale and Servicing Agreement" is the Sale and Servicing Agreement of
even date with this Indenture among the Sponsor, the Depositor, the Trust, and
the Indenture Trustee.
The "Scheduled Maturity Date" is the Payment Date in _____ 200__.
The "Servicing Fee Rate" is _____% per annum.
The "Trust" is the CWHEQ Revolving Home Equity Loan Trust, Series 200_-_,
a Delaware statutory trust established pursuant to the Trust Agreement, dated
as of _____, 200_, between [Countrywide Home Loans, Inc.], the Depositor, and
_________________________.
The date in each year by which the Issuer will furnish an Opinion of
Counsel pursuant to Section 3.06(b) is _________________ beginning in 200_.
The first year after which an annual compliance statement pursuant to
Section 3.09 is due is 200_.
The date in each year by which the Indenture Trustee will furnish reports
pursuant to Section 7.04 is _______________ beginning in 200_.
The title of the Payment Account is "___________________________________"
The Payment Date referred to in Section 8.03(b) is the Payment Date in
____ 200__.
The date of the Prospectus Supplement is ________, 200_.
Addresses for notices under Section 11.04 are:
For the Issuer at:
CWHEQ Revolving Home Equity Loan Trust, Series 200_-_
_________________________________________
_________________________________________
_________________________________________
_________________________________________
_________________________________________
Attention:_______________________________
βββ�-2-3
For the Credit Enhancer at:
_____________________________________________________
_____________________________________________________
_____________________________________________________
Attention:___________________________________________
_____________________________________________________
Facsimile:___________________________________________
Confirmation:________________________________________
For the Rating Agencies at:
in the case of [Rating Agency]:
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
and in the case of ____________,
_____________________________________________________
_____________________________________________________
_____________________________________________________
βββ�-2-4
EXHIBIT B
FORM OF CUSTODIAL AGREEMENT
------------------------------------------------------------------------------
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200_-_
Issuer
[COUNTRYWIDE HOME LOANS, INC.]
Master Servicer
Indenture Trustee
[TREASURY BANK, NATIONAL ASSOCIATION]
Custodian
------------------------------
CUSTODIAL AGREEMENT
Dated as of [___________], 20[__]
20[__]-[_]
------------------------------
------------------------------------------------------------------------------
B-1
CUSTODIAL AGREEMENT
This Custodial Agreement, dated as of [______________], 20[__] (this
"Agreement"), among CWHEQ, Inc. (the "Depositor"), Countrywide Home Loans,
Inc., as master servicer (the "Master Servicer"), CWHEQ Revolving Home Equity
Loan Trust, Series 200_-_ (the "Issuer"), and Treasury Bank, National
Association, 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
_______________________, 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 Noteholders and the Credit Enhancer 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 200_-_ 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
B-2
hold them for the Issuer, and deliver any of them to the Indenture Trustee as
called for under the Indenture. The Indenture Trustee appoints the Indenture
Custodian to act as its agent, custodian, and bailee to maintain custody of
the Mortgage Files for the Indenture Trustee for the benefit of the
Noteholders and the Credit Enhancer. [Treasury Bank, National Association]
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 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 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
B-3
policy, or a preliminary title report (in those states in which preliminary
title reports are the customary form of title policy commitment). For any
Mortgage File whose Final Certification is based on a signed binder or
commitment for a title policy or a preliminary title report (in those states
in which preliminary title reports are the customary form of title policy
commitment), the Custodian will deliver to the Depositor, the Master Servicer,
and the Sponsor (with a copy to the Issuer, the Indenture Trustee, and the
Credit Enhancer), not later than the one year anniversary of the Closing Date,
a further Final Certification in the form of Exhibit D, noting any applicable
exceptions. For the purpose of this further Final Certification, the title
policy required for the Mortgage File must be the final original title policy.
If, in the course of its review in connection with the Final
Certification, the Custodian finds any document constituting a part of a
Mortgage File that does not meet the requirements of Section 2.02 of the Sale
and Servicing Agreement, the Custodian shall list the defect as an exception
in the Final Certification.
The Custodian is not obligated to examine the documents delivered to it
to determine that they are genuine, enforceable, or appropriate for the
represented purpose, or that they have actually been recorded in the real
estate records, or that they are other than what they purport to be on their
face.
In reviewing any Mortgage File pursuant to this Section, the Custodian is
not responsible for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form (except, if applicable, to determine if the Issuer or the Indenture
Trustee is the assignee or endorsee), whether any document has been recorded
in accordance with the requirements of any applicable jurisdiction, or whether
a blanket assignment is permitted in any applicable jurisdiction, whether any
person executing any document is authorized to do so or whether any signature
on any document is genuine, but shall only be required to determine whether a
document has been executed, that it appears to be what it purports to be, and,
where applicable, that it purports to be recorded.
The Sponsor will deliver and the Indenture Custodian will maintain
continuous custody at its office identified in Section 3 of the documents
required to be held by the Indenture Trustee in accordance with Section 2.01
of the Sale and Servicing Agreement with respect to any Eligible Substitute
Mortgage Loans.
The Master Servicer shall promptly deliver to the Indenture Custodian,
and the Indenture Custodian will maintain continuous custody at its office
identified in Section 3 of the originals of any other documents constituting
the Mortgage File that come into the possession of the Master Servicer from
time to time.
Section 3. Maintenance of Office.
The Custodian agrees to maintain the items for which it acts as Trust
Custodian or Indenture Custodian at the office of the Indenture Custodian
located in California.
B-4
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
B-5
considered in full force until receipt of written notice to the contrary by
the Trust Custodian from the Issuer.
Section 7. Advice of Counsel.
The Custodian may rely and act on the advice of counsel, including
in-house counsel, with respect to its performance under this Agreement as
Custodian and shall not be liable for any action reasonably taken pursuant to
advice of counsel.
Section 8. Representations and Warranties.
The Custodian represents and warrants that on the Closing Date:
(a) it is a corporation duly organized, validly existing, and in good
standing under the laws of its place of incorporation;
(b) it has full power and authority to execute, deliver, and perform this
Agreement, and has taken all necessary action to authorize the execution,
delivery, and performance by it of this Agreement;
(c) the consummation of the transactions contemplated by this Indenture
and the fulfillment of its terms do not conflict with, result in any breach
of, or constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or bylaws of the Custodian or any agreement
or other instrument to which it is a party or by which it is bound;
(d) to the Custodian's best knowledge, no proceedings or investigations
concerning the Custodian are pending or threatened before any court,
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over it or its properties:
(1) asserting the invalidity of this Agreement,
(2) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or
(3) seeking any determination that might affect its performance of
its obligations under this Agreement or the validity or enforceability of
this Agreement; and
(e) it is acting solely as the agent for the Indenture Trustee.
Section 9. Effective Period, Termination, and Amendment, and Interpretive
and Additional Provisions.
This Agreement shall become effective as of its date and shall continue
in full force until terminated in accordance with its terms. This Agreement
may be terminated by either the Indenture Trustee with the consent of the
Issuer and the Credit Enhancer or by the Custodian in a writing delivered or
mailed, postage prepaid, to the other parties and the Credit Enhancer. The
termination shall take effect no sooner than sixty days after the date of
delivery or mailing. Concurrently with, or as soon as practicable after, the
termination of this Agreement, the
B-6
Indenture Custodian shall deliver the Collateral to the Indenture Trustee (or
to a person designated by the Indenture Trustee) anywhere the Indenture
Trustee reasonably designates with the consent of the Credit Enhancer, and the
Trust Custodian shall deliver any items held exclusively for the Issuer to the
Issuer (or to a person designated by the Issuer) anywhere the Issuer
reasonably designates with the consent of the Credit Enhancer.
Section 10. Limitation of Liability.
(a) The Custodian undertakes to perform only the obligations specified in
this Agreement. The Issuer, the Owner Trustee, Master Servicer, and Indenture
Trustee acknowledge that no implied obligations exist under this Agreement.
Neither the Custodian nor any of its affiliates, officers, directors,
employees, or agents shall be liable, directly or indirectly, for any damages
or expenses arising out of the services performed under this Agreement other
than damages that result from their gross negligence, willful misconduct, or
bad faith. The Custodian and its officers, directors, employees, and agents
will not be liable for any consequential, indirect, punitive, or special
damages.
(b) Except as provided in Section 2, the Custodian makes no warranty or
representation and has no responsibility for the completeness, validity,
sufficiency, value, genuineness, ownership, or transferability of the Mortgage
Loans or any of the documents in the Mortgage Files.
(c) The Custodian need not expend or risk its own funds or otherwise
incur financial liability in the performance of any of its duties under this
Agreement, or in the exercise of its rights, if the Custodian believes that
repayment of the funds or adequate indemnity against the risk or liability is
not reasonably assured to it.
(d) Without limiting the generality of the foregoing, the Custodian may
rely on and shall be protected in acting in good faith on any notice or other
communication received by it that it reasonably believes to be genuine and
duly authorized with respect to all matters pertaining to this Agreement and
its duties under this Agreement.
(e) The Custodian shall not be responsible or liable for, and makes no
representation or warranty with respect to, the validity, adequacy, or
perfection of any lien on or security interest in any Mortgage Loan.
(f) Any other provision of this Agreement to the contrary
notwithstanding, the Custodian shall have no notice of, and shall not be bound
by, any other document or agreement executed or delivered in connection with,
or intended to control any part of, the transactions anticipated by or
referred to in this Agreement unless the Custodian is a signatory party to
that document or agreement. Notwithstanding the foregoing sentence, the
Custodian shall be deemed to have notice of the terms (including definitions
not otherwise set forth in full in this Agreement) of other documents and
agreements executed or delivered in connection with, or intended to control
any part of, the transactions anticipated by or referred to in this Agreement,
B-7
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.
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 200_-_
_________________________________________
_________________________________________
_________________________________________
_________________________________________
_________________________________________
Attention:_______________________________
if to the Depositor at:
CWHEQ, Inc.
ββββ ββββ βββββββ�
βββββββββ�, ββββββββββ βββββ�
Attention: Legal Department
if to the Master Servicer at
[Countrywide Home Loans, Inc.
ββββ ββββ βββββββ�
βββββββββ�, ββββββββββ βββββ�
Attention: Legal Department]
if to the Indenture Trustee at
the Corporate Trust Office
B-9
if to the Custodian at
[Treasury Bank, National Association
ββββ ββββ βββ� βββββββ� ββββββ
ββββ ββββββ, ββββββββββ βββββ�
Attention: Document Custodian]
if to the Credit Enhancer at
[______]
[______]
[______]
[______]
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. The Custodian may assign its rights
and obligations under this Agreement, in whole or in part, to any affiliate.
The Custodian agrees to notify the other parties of any assignment. An
affiliate is any entity that directly or indirectly is under common control
with the Custodian, or is under contract to be under common control with the
Custodian, and includes a subsidiary or parent company of the Custodian.
Section 15. Counterparts.
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
B-10
any further act on the part of any of the parties to this Agreement, anything
in this Agreement to the contrary notwithstanding.
Section 19. Indemnification.
The Issuer agrees to indemnify the Custodian and its affiliates,
directors, officers, agents, and employees, against any losses, claims,
damages, or liabilities of any kind, including reasonable attorneys' fees,
that may arise against Custodian or its affiliates, directors, officers,
agents, or employees, in any way arising out of this Agreement or any action
taken or not taken by Custodian or its permitted successors and assigns under
this Agreement unless they arise because of the breach by the Custodian of its
obligations under this Agreement, which breach was caused by the gross
negligence, lack of good faith, or willful misconduct on the part of Custodian
or any of its affiliates, directors, officers, agents, or employees.
The Custodian agrees to indemnify the Issuer against any losses, claims,
damages, or liabilities of any kind, including reasonable attorneys' fees, it
suffers arising out of the gross negligence, lack of good faith, or willful
misconduct on the part of Custodian or any of its affiliates, directors,
officers, agents, or employees.
The foregoing indemnifications shall survive any termination or
expiration of this Agreement or the resignation or removal of the Custodian.
Section 20. Dispute Resolution, Arbitration.
This Agreement evidences a transaction involving interstate commerce. Any
disputes arising from this Agreement shall be decided by binding arbitration
which shall be conducted, at the request of any party, in New York, New York,
before one arbitrator designated by the 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 ___________________________, 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,
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undertakings and agreements by _______________________________ but is made and
intended for the purpose of binding only the Issuer and (c) under no
circumstances shall ______________________________be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligations, representation, warranty or covenant
made or undertaken by the Issuer under this Agreement or the other related
documents.
B-12
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
CWHEQ, INC.
By: _________________________________
Name:
Title:
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 200_-_
By: _________________________________
not in its individual capacity but
solely as Owner Trustee
By: _________________________________
Name:
Title:
_____________________________________
not in its individual capacity
but solely as Indenture Trustee
By: _________________________________
Name:
Title:
[TREASURY BANK, NATIONAL ASSOCIATION],
as Custodian for the Indenture Trustee
By: _________________________________
Name:
Title:
[TREASURY BANK, NATIONAL ASSOCIATION],
as Custodian for the Issuer
By: _________________________________
Name:
Title:
B-13
EXHIBIT C
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 200_-_, as the Trust, and
_______________________________, as Indenture Trustee, Revolving
Home Equity Loan Asset Backed Notes, Series 200 -_
__________________________________________________
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.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
C-1
The Indenture Custodian has made no independent examination of any
documents contained 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 contained 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.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
[Treasury Bank, National Association],
as Custodian for the Indenture Trustee
By:____________________________
Name:
Title:
C-2
EXHIBIT D
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 200_-_, as the Trust, and
______________________________, as Indenture Trustee, Revolving Home
Equity Loan Asset Backed Notes, Series 200_-_
_____________________________________________
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.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
D-1
The Indenture Custodian has made no independent examination of any
documents contained 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 contained 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.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
[Treasury Bank, National Association],
as Custodian for the Indenture Trustee
By:______________________________________
Name:
Title:
D-2
EXHIBIT E
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 200_-_, as the Trust,
and ______________________________, as Indenture Trustee, Revolving
Home Equity Loan Asset Backed Notes, Series 200_-_
__________________________________________________
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;
(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
E-1
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 and related to such
Mortgage Loan, and (b) the information set forth in items (ii), (iii), and
(iv), of the itemization of contents of the "Mortgage Loan Schedule" in the
Adoption Annex to the Indenture accurately reflects information set forth in
the Mortgage File, and (c) the information set forth in item (v) of the
itemization of contents
E-2
of the "Mortgage Loan Schedule" in the Adoption Annex to the Indenture was
delivered to the Custodian.
The Indenture Custodian has made no independent examination of any
documents contained 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 contained 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.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
[Treasury Bank, National Association],
as Custodian for the Indenture Trustee
By:____________________________
Name:
Title:
E-3
EXHIBIT F
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 200_-_, as the Trust,
and _______________________________, as Indenture Trustee, Revolving
Home Equity Loan Asset Backed Notes, Series 200_-_
__________________________________________________
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 and related to such
Mortgage Loan.
The Indenture Custodian has made no independent examination of any
documents contained 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,
F-1
legality, sufficiency, enforceability, or genuineness of any of the documents
contained 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.
Capitalized words and phrases used in this Certification have the
meanings assigned to them in the Sale and Servicing Agreement.
[Treasury Bank, National Association],
as Custodian for the Indenture Trustee
By: ________________________
Name:
Title: