Exhibit 99.3
EXECUTION COPY
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CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2006-I
Issuer
and
THE BANK OF NEW YORK
Indenture Trustee
___________________________
INDENTURE
Dated as of December 29, 2006
___________________________
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions and Other Provisions of General Application 3
Section 1.01. Definitions....................................................3
Section 1.02. Incorporation by Reference of Trust Indenture Act..............3
Section 1.03. Other Terms....................................................4
Section 1.04. Rules of Construction..........................................4
ARTICLE II The Notes 6
Section 2.01. Form...........................................................6
Section 2.02. Execution, Authentication, and Delivery........................6
Section 2.03. Registration; Registration of Transfer and Exchange............7
Section 2.04. Mutilated, Destroyed, Lost, or Stolen Notes....................8
Section 2.05. Persons Considered Owner.......................................9
Section 2.06. Payment of Principal and Interest; Defaulted Interest..........9
Section 2.07. Cancellation..................................................10
Section 2.08. Book-Entry Notes..............................................11
Section 2.09. Notices To Depository.........................................12
Section 2.10. Definitive Notes..............................................12
Section 2.11. Tax Treatment.................................................12
Section 2.12. Transfer Restrictions; Restrictive Legends....................12
ARTICLE III Covenants 13
Section 3.01. Payment of Principal and Interest.............................13
Section 3.02. Maintenance of Office or Agency...............................14
Section 3.03. Money For Payments To Be Held in Trust........................14
Section 3.04. Existence.....................................................15
Section 3.05. Protection of the Collateral..................................16
Section 3.06. Opinions About Collateral.....................................17
Section 3.07. Performance of Obligations....................................17
Section 3.08. Negative Covenants............................................19
Section 3.09. Annual Compliance Statement...................................20
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms...........20
Section 3.11. Successor or Transferee.......................................21
Section 3.12. Further Instruments and Acts..................................21
Section 3.13. Compliance with Laws..........................................21
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Section 3.14. Master Servicer as Agent and Bailee of the Indenture Trustee..21
Section 3.15. Investment Company Act........................................22
Section 3.16. Representations...............................................22
ARTICLE IV Satisfaction and Discharge 23
Section 4.01. Satisfaction and Discharge of Indenture.......................23
Section 4.02. Application of Trust Money....................................24
Section 4.03. Subrogation and Cooperation...................................24
Section 4.04. Release of Collateral.........................................25
ARTICLE V Remedies 26
Section 5.01. Events of Default.............................................26
Section 5.02. Acceleration of Maturity; Rescission and Annulment............27
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.............................................28
Section 5.04. Indenture Trustee May File Proofs of Claim....................28
Section 5.05. Remedies; Priorities..........................................30
Section 5.06. Optional Preservation of the Collateral.......................32
Section 5.07. Limitation of Suits...........................................32
Section 5.08. Unconditional Right to Receive Principal and Interest.........33
Section 5.09. Restoration of Rights and Remedies............................33
Section 5.10. Rights and Remedies Cumulative................................33
Section 5.11. Delay or Omission Not a Waiver................................33
Section 5.12. Control by Credit Enhancer or Noteholders.....................33
Section 5.13. Waiver of Past Defaults.......................................34
Section 5.14. Undertaking For Costs.........................................34
Section 5.15. Waiver of Stay or Extension Laws..............................35
Section 5.16. Rapid Amortization Events.....................................35
Section 5.17. Sale of Collateral............................................36
Section 5.18. Performance and Enforcement of Certain Obligations............37
ARTICLE VI The Indenture Trustee 37
Section 6.01. Duties of Indenture Trustee...................................37
Section 6.02. Notice of Defaults............................................39
Section 6.03. Rights of Indenture Trustee...................................39
Section 6.04. Indenture Trustee Not Responsible for Certain Things..........40
Section 6.05. Individual Rights of Indenture Trustee........................41
Section 6.06. Money Held in Trust...........................................41
Section 6.07. Compensation..................................................41
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Section 6.08. Eligibility...................................................42
Section 6.09. Preferential Collection of Claims Against Issuer..............42
Section 6.10. Replacement of Indenture Trustee..............................42
Section 6.11. Acceptance of Appointment by Successor........................43
Section 6.12. Successor Indenture Trustee by Merger.........................44
Section 6.13. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.............................................44
Section 6.14. Representations and Warranties of Indenture Trustee...........45
ARTICLE VII Noteholders' Lists and Reports 46
Section 7.01. Issuer to Furnish Names and Addresses of Noteholders..........46
Section 7.02. Preservation of Information; Communications...................46
Section 7.03. Exchange Act Reports..........................................47
Section 7.04. Reports by Indenture Trustee..................................48
ARTICLE VIII Accounts, Cap Contracts, Disbursements, and Releases 49
Section 8.01. Accounts......................................................49
Section 8.02. Withdrawals from the Collection Account and the Additional
Loan Accounts.................................................51
Section 8.03. Payments......................................................52
Section 8.04. Calculation of the Note Rate..................................56
Section 8.05. Claims on the Policy; Policy Payments Account.................56
Section 8.06. Replacement Policy............................................58
Section 8.07. Cap Contracts.................................................58
Section 8.08. Cap Trust; Payment of Cap Payment Entitlement.................59
Section 8.09. Monitoring of Significance Percentage.........................59
ARTICLE IX Supplemental Indentures 60
Section 9.01. Supplemental Indentures.......................................60
Section 9.02. Execution of Supplemental Indentures..........................62
Section 9.03. Effect of Supplemental Indenture..............................63
Section 9.04. Reference in Notes to Supplemental Indentures.................63
Section 9.05. Tax Opinion...................................................63
Section 9.06. Tax Matters...................................................63
ARTICLE X Redemption of Notes 65
Section 10.01. Redemption....................................................65
Section 10.02. Form of Redemption Notice.....................................67
Section 10.03. Notes Payable on Redemption Date..............................67
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ARTICLE XI Miscellaneous 67
Section 11.01. Compliance Certificates and Opinions, etc.....................67
Section 11.02. Form of Documents Delivered to Indenture Trustee..............69
Section 11.03. Acts of Noteholders...........................................70
Section 11.04. Notices.......................................................70
Section 11.05. Notices to Noteholders; Waiver................................71
Section 11.06. Alternate Payment and Notice Provisions.......................72
Section 11.07. Conflict with Trust Indenture Act.............................72
Section 11.08. Effect of Headings and Table of Contents......................73
Section 11.09. Successors and Assigns........................................73
Section 11.10. Separability..................................................73
Section 11.11. Benefits of Indenture.........................................73
Section 11.12. Legal Holidays................................................73
Section 11.13. Governing Law.................................................73
Section 11.14. Counterparts; Electronic Delivery.............................73
Section 11.15. Recording of Indenture........................................73
Section 11.16. No Petition...................................................74
Section 11.17. Non-recourse..................................................74
Section 11.18. Act on Instructions from Credit Enhancer......................74
Section 11.19. Trust Obligation..............................................74
ANNEXES
ANNEX 1 - MASTER GLOSSARY OF DEFINED TERMS.................................▇▇▇-1
EXHIBITS
EXHIBIT A - FORM OF NOTES....................................................A-1
EXHIBIT B - FORM OF CUSTODIAL AGREEMENT .....................................B-1
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THIS INDENTURE, dated as of December 29, 2006, between CWHEQ Revolving Home
Equity Loan Trust, Series 2006-I, a Delaware statutory trust and the INDENTURE
TRUSTEE, as indenture trustee,
WITNESSETH THAT
Each party agrees for the benefit of the other party and for the benefit of
the Secured Parties as follows.
GRANTING CLAUSE
The Issuer Grants to the Indenture Trustee for the Classes of Notes and
series referred to in the Adoption Annex as of the Closing Date, as Indenture
Trustee for the benefit of the relevant Secured Parties, all of the Issuer's
interest existing now or in the future in:
o the Loan Group 1 Mortgage Loans including their Asset Balances
(including all Additional Balances) and the related Mortgage Files and all
property that secures the Loan Group 1 Mortgage Loans and all property that
is acquired by foreclosure or deed in lieu of foreclosure, and all
collections received on each Loan Group 1 Mortgage Loan after the Cut-off
Date (excluding payments due by the Cut-off Date);
o the Additional Loan Account related to Loan Group 1;
o the Additional Home Equity Loans related to Loan Group 1 acquired
by the Trust from funds in the related Additional Loan Account;
o the Issuer's rights under hazard insurance policies 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 of Notes related to Loan Group 1 are entitled to from Loan Group 2;
and
o all present and future claims, demands, causes of action, and
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
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cash or other liquid property, all cash proceeds, accounts, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of every kind, and other forms of
obligations, instruments, and other property that at any time constitute
any part of or are included in the proceeds of any of the foregoing
(collectively, the "Group 1 Collateral").
The Issuer Grants to the Indenture Trustee for the Classes of Notes and
series referred to in the Adoption Annex as of the Closing Date, as Indenture
Trustee for the benefit of the relevant Secured Parties, all of the Issuer's
interest existing now or in the future in:
o the Loan Group 2 Mortgage Loans including their Asset Balances
(including all Additional Balances) and the related Mortgage Files and all
property that secures the Loan Group 2 Mortgage Loans and all property that
is acquired by foreclosure or deed in lieu of foreclosure, and all
collections received on each Loan Group 2 Mortgage Loan after the Cut-off
Date (excluding payments due by the Cut-off Date);
o the Additional Loan Account related to Loan Group 2;
o the Additional Home Equity Loans related to Loan Group 2 acquired
by the Trust from funds in the related Additional Loan Account;
o the Issuer's rights under hazard insurance policies 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 of Notes related to Loan Group 2 are entitled to from Loan Group 1;
and
o all present and future claims, demands, causes of action, and
choses in action regarding any of the foregoing and all payments on and all
proceeds from any of the foregoing, including all proceeds of their
conversion, voluntary or involuntary, into cash or other liquid property,
all cash proceeds, accounts, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights
to payment of every kind, and other forms of obligations, instruments, and
other
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property that at any time constitute any part of or are included in the
proceeds of any of the foregoing (collectively, the "Group 2 Collateral").
Additionally, the Class 1-A Notes and the Class 2-A Notes will have the
benefit of the Class 1-A Cap Contract and the Class 2-A Cap Contract,
respectively, to the extent of the related Cap Payment (Cap Trust Share) for
payment of related Cap Payment Entitlement. The Indenture Trustee has accepted
an assignment of Cap Contract as Cap Contract Administrator and hereby agrees to
hold each Cap Contract for the benefit of the Holders of the related Class of
Notes pursuant to the Cap Contract Administration Agreement.
The Insured Notes will have the benefit of the Policy issued by the Credit
Enhancer.
The Issuer agrees that the foregoing Grants are intended to grant in favor
of the Indenture Trustee, for the respective benefit of the Secured Parties, a
first priority, continuing lien and security interest in all of the Issuer's
personal property. The Issuer authorizes the Indenture Trustee to file one or
more financing statements describing the collateral as "all personal property"
or "all assets" of the Issuer.
These Grants are made in trust to secure the payment of principal and
interest on, and any other amounts owing on, the Notes, without prejudice,
priority, or distinction (except as specifically provided in this Indenture),
and to secure compliance with the provisions of this Indenture, all as provided
in this Indenture.
The foregoing Grants shall inure to the benefit of the Credit Enhancer to
the extent of draws made on the Policy and amounts owing under the Insurance
Agreement, and shall continue for the benefit of the Credit Enhancer until all
amounts owed the Credit Enhancer have been repaid in full.
The Indenture Trustee, as Indenture Trustee on behalf of the Secured
Parties, acknowledges the Grants, accepts the trusts under this Indenture in
accordance with this Indenture, and agrees to perform its duties required in
this Indenture in accordance with its terms and the terms of the Transaction
Documents.
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized terms are used
in this Indenture as defined in Master Glossary of Defined Terms attached as
Annex 1.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference into this Indenture. The following TIA terms used in
this Indenture have the following meanings:
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"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute, or defined by Commission rule have
the meanings so assigned to them.
Section 1.03. Other Terms.
Defined terms that are used only in one section or only in another
definition may be omitted from the Master Glossary of Defined Terms. Defined
terms used in this Indenture are sometimes defined after their first use without
a reference such as "(as hereinafter defined)."
Section 1.04. Rules of Construction.
Except as otherwise expressly provided in this Indenture or unless the
context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural as
well as the singular.
(b) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Indenture, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Indenture as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Indenture are a part of this Indenture. The words "herein,"
"hereof," "hereto," "hereunder," and other words of similar import refer to this
Indenture as a whole and not to any particular article, section, exhibit, or
other subdivision of this Indenture.
(c) The headings of the various Articles and Sections in this Indenture
are for convenience of reference only and shall not define or limit any of the
provisions of this Indenture.
(d) Any term that relates to a document or a statute, rule, or regulation
includes any amendments, modifications, supplements, or any other changes that
may have occurred since the document, statute, rule, or regulation came into
being, including changes that occur after the date of this Indenture, except in
the case of the TIA. References to law are not limited to statutes. References
to statutes include any rules or regulations promulgated under them by a
governmental authority charged with the administration of the statute. Any
reference to any person includes references to its successors and assigns.
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(e) Any party may execute any of the requirements under this Indenture
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under this
Indenture. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Indenture are implicitly available from
time to time.
(f) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or B
or both," not "either A or B but not both").
(g) A reference to "a [thing]" or "any [of a thing]" does not imply the
existence or occurrence of the thing referred to even though not followed by "if
any," and "any [of a thing]" is any and all of it. A reference to the plural of
anything as to which there could be either one or more than one does not imply
the existence of more than one (for instance, the phrase "the obligors on a
note" means "the obligor or obligors on a note"). "Until [something occurs]"
does not imply that it must occur, and will not be modified by the word
"unless." The word "due" and the word "payable" are each used in the sense that
the stated time for payment has passed. The word "accrued" is used in its
accounting sense, i.e., an amount paid is no longer accrued. In the calculation
of amounts of things, differences and sums may generally result in negative
numbers, but when the calculation of the excess of one thing over another
results in zero or a negative number, the calculation is disregarded and an
"excess" does not exist. Portions of things may be expressed as fractions or
percentages interchangeably. The word "shall" is used in its imperative sense,
as for instance meaning a party agrees to something or something must occur or
exist.
(h) All accounting terms used in an accounting context and not otherwise
defined, and accounting terms partly defined in this Indenture, to the extent
not completely defined, shall be construed in accordance with generally accepted
accounting principles in the United States. To the extent that the definitions
of accounting terms in this Indenture are inconsistent with their meanings under
generally accepted accounting principles, the definitions in this Indenture
shall control. Capitalized terms used in this Indenture without definition that
are defined in the Uniform Commercial Code of the relevant jurisdiction are used
in this Indenture as defined in that Uniform Commercial Code.
(i) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means "to
and including." Likewise, in setting deadlines or other periods, "by" means "on
or before." The words "preceding," "following," and words of similar import,
mean immediately preceding or following. References to a month or a year refer
to calendar months and calendar years. The words "amended" and "modified" and
their
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derivatives as they relate to agreements refer to any changes in the agreement
and may be used interchangeably.
(j) Any reference to the enforceability of any agreement against a party
means that it is enforceable against the party in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, and other similar
laws of general applicability relating to or affecting creditors' rights and to
general equity principles.
(k) Generally only the registered holder of a Note is recognized, such as
in "Section 2.05. Persons Considered Owner" and payment provisions. However, for
the purposes of the transfer restrictions and related provisions, such as
agreements, representations, and warranties by holders of Notes, references to
Noteholders, holders, and the like refer equally to beneficial owners who have
an interest in a Note but are not reflected in the note register as the owner
and references to transfers of Notes include transfers of interests in a Note.
(l) A Mortgage Loan is "30 days delinquent" if a Minimum Monthly Payment
has not been received by the close of business on the Due Date on which the next
Minimum Monthly Payment is due. Similarly for "60 days delinquent," "90 days
delinquent," and so on.
ARTICLE II
THE NOTES
Section 2.01. Form.
The Notes, together with the Indenture Trustee's certificate of
authentication, shall be in substantially the form of Exhibit A, with any
appropriate insertions, omissions, substitutions, and other variations required
or permitted by this Indenture. The Notes may have any letters, numbers, or
other marks of identification and any legends or endorsements placed on them
that the officers executing them determine appropriate and that are consistent
with this Indenture, as evidenced by their execution of the Notes. Any portion
of the text of any Note may be on its reverse.
The Notes may be typewritten, printed, lithographed, or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing them, as evidenced by
their execution of them.
The terms of the Notes are part of the terms of this Indenture.
Section 2.02. Execution, Authentication, and Delivery.
(a) The Notes shall be executed on behalf of the Issuer by any of its
Authorized Officers. The signature of any Authorized Officer on the Notes may be
manual or facsimile. Notes bearing the manual or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that they may have ceased to hold
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their offices before the authentication and delivery of the Notes or did not
hold their offices at the date of the Notes.
(b) The Indenture Trustee shall upon Issuer Order authenticate and deliver
for original issue the Classes of Notes in the amounts reflected in the Adoption
Annex. The aggregate principal amount of each Class of Notes outstanding at any
time may not exceed those amounts except as provided in Section 2.04. Each Note
shall be dated the date of its authentication. The Notes shall be issuable as
registered Notes in the minimum denomination of $25,000 and in integral
multiples of $1 above that.
(c) No Note shall be entitled to any benefit under this Indenture or be a
valid obligation of the Issuer for any purpose, unless a certificate of
authentication appears on it executed by the Indenture Trustee by the manual
signature of one of its authorized signatories. A certificate of authentication
on any Note shall be conclusive evidence, and the only evidence, that it has
been duly authenticated and delivered under this Indenture.
Section 2.03. Registration; Registration of Transfer and Exchange.
(a) The Issuer shall cause a register (the "Note Register") to be kept in
which the Issuer shall provide for the registration of Notes and the
registration of transfers of Notes. The Indenture Trustee initially shall be the
"Note Registrar" for registering Notes and transfers of Notes. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to, it shall assume the duties of Note Registrar.
If the Issuer appoints a person other than the Indenture Trustee to be Note
Registrar, the Issuer will give the Indenture Trustee prompt notice of the
appointment of the Note Registrar and of the location, and any change in the
location, of the Note Register. The Indenture Trustee may inspect the Note
Register at all reasonable times and obtain copies of it. The Indenture Trustee
may rely on a certificate executed on behalf of the Note Registrar by one of its
Authorized Officers as to the names and addresses of the Noteholders and the
principal amounts and number of the Notes.
(b) Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained pursuant to Section 3.02, if the
requirements of this Indenture and Section 8-401(a) of the UCC are met, the
Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferees, new Notes of the same Class in any authorized
denominations, of a like aggregate principal amount.
(c) At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at the office or agency of
the Issuer maintained pursuant to Section 3.02. Whenever any Notes are so
surrendered for exchange, if the requirements of Section 8-401(a) of the UCC are
met the Issuer shall execute, and the Indenture Trustee shall
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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 Principal Amount Notes selected for redemption or transfers or exchanges of
any Note during the 15 days preceding the due date for any payment on it.
Section 2.04. Mutilated, Destroyed, Lost, or Stolen Notes.
If any mutilated Note is surrendered to the Indenture Trustee, then the
Issuer shall execute, and on its request the Indenture Trustee shall
authenticate and deliver, in exchange for the Note, a replacement Note of the
same Class of like tenor and principal amount.
If the Indenture Trustee receives evidence to its satisfaction of the
destruction, loss, or theft of any Note, and each of the Issuer and the
Indenture Trustee receive the security or indemnity they require to hold the
Issuer and the Indenture Trustee harmless, then, in the absence of notice to the
Issuer, the Note Registrar, or the Indenture Trustee that the Note has been
acquired by a Protected Purchaser, and if the requirements of Section 8-406 of
the UCC are met and subject to Section 8-405 of the UCC, the Issuer shall
execute, and on its request the Indenture Trustee shall authenticate and
deliver, in exchange for the Note, a replacement Note of the same Class of like
tenor and principal amount. If the mutilated, destroyed, lost, or stolen Note
is, or within seven days becomes, payable, instead of issuing a replacement Note
the Issuer may pay the mutilated, destroyed, lost, or stolen Note when payable.
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If, after the delivery of the replacement Note or payment of a destroyed,
lost, or stolen Note pursuant to this Section, a Protected Purchaser of the
original Note in lieu of which the replacement Note was issued presents it for
payment, the Issuer and the Indenture Trustee may recover the replacement Note
(or the payment) from the person to whom it was delivered or any person taking
the replacement Note from the person to whom the replacement Note was delivered
or any assignee of that person, except a Protected Purchaser, and may recover on
the security or indemnity provided for it to the extent of any expense incurred
by the Issuer or the Indenture Trustee in connection with it.
Upon the issuance of any replacement Note under this Section, the Issuer
may require the payment by the Holder of the Note of a sum sufficient to cover
any tax or other governmental charge that may be imposed on it and any other
reasonable expenses (including the fees and expenses of the Indenture Trustee)
in connection with it.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost, or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost, or stolen Note is enforceable by anyone at any time, and shall
be entitled to all the benefits of this Indenture equally and proportionately
with any other Notes duly issued under this Indenture.
The provisions of this Section are exclusive and shall preclude all other
rights and remedies with respect to the replacement or payment of mutilated,
destroyed, lost, or stolen Notes.
Section 2.05. Persons Considered Owner.
Before due presentment for registration of transfer of any Note, the
Issuer, the Indenture Trustee, and any agent of the Issuer or the Indenture
Trustee may treat the person in whose name any Note is registered (as of the day
of determination) as the owner of the Note for the purpose of receiving payments
of principal and interest on the Note and for all other purposes whatsoever,
whether or not the Note is overdue. None of the Issuer, the Indenture Trustee,
or any agent of the Issuer or the Indenture Trustee shall be affected by notice
to the contrary.
Section 2.06. Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Interest Bearing Notes shall accrue interest on its
Outstanding Amount at its Note Rate before and after maturity. Interest shall be
payable on each Payment Date as specified in Section 8.03 or 5.05, subject to
Section 3.01. Any installment of interest payable on an Interest Bearing Note or
installment of principal payable on a Principal Amount Note that is punctually
paid or duly provided for by the Issuer on the applicable Payment Date shall be
paid to the person in whose name the Note (or its predecessor Note) is
registered on the Record Date by wire transfer of immediately available funds to
the account designated by the Holder at a bank or other entity having
appropriate facilities, if the Holder has so notified the Indenture Trustee in
writing at least five Business Days before the Record Date and is either the
Depository or owner of record of Notes having an aggregate principal or notional
amount of at
9
least $1,000,000, and otherwise by check mailed first-class postage prepaid to
the Holder's address as it appears on the Note Register on the Record Date, or
by any other means the Noteholder and the Indenture Trustee agree to, except for
the final installment of principal payable on a Principal Amount Note on a
Payment Date, a redemption date, or the Scheduled Maturity Date (and except for
the redemption price for any Class of Principal Amount Notes called for
redemption pursuant to Section 10.01) which shall be payable as provided below.
(b) The principal of each Principal Amount Note shall be payable, if not
previously paid, on the related Scheduled Maturity Date in the manner specified
in Section 8.03. All principal payments on each Class of Principal Amount Notes
shall be made pro rata to the Noteholders of that Class. The Indenture Trustee
shall send a notice to each person in whose name a Principal Amount Note is
registered at the close of business on the Record Date preceding the Scheduled
Maturity Date. The notice shall be sent by first-class mail, postage prepaid, or
by facsimile (promptly confirmed by mail) not later than ten days before the
Scheduled Maturity Date to each Holder of Principal Amount Notes as of the close
of business on the Record Date preceding the Scheduled Maturity Date, at the
Holder's address or facsimile number appearing in the Note Register, and shall
specify that the principal of the Note will be payable only on presentation and
surrender of the Note and shall specify the place where the Note may be
presented and surrendered for payment. Notices in connection with redemptions of
Notes shall be mailed to Noteholders as provided in Section 10.02.
(c) If the Issuer defaults in a payment of interest on a Class of Interest
Bearing Notes, the Issuer shall pay defaulted interest (plus interest on the
defaulted interest to the extent lawful) at the applicable Note Rate in any
lawful manner. The Issuer may pay the defaulted interest to the persons who are
Noteholders on a subsequent special record date, which date shall be at least
five Business Days before the Payment Date. The Issuer shall fix the special
record date and Payment Date, and, at least 15 days before the special record
date, the Issuer shall mail to each affected Holder a notice that states the
special record date, the Payment Date, and the amount of defaulted interest to
be paid.
Section 2.07. Cancellation.
All Notes surrendered for payment, registration of transfer, exchange, or
redemption shall, if surrendered to any person other than the Indenture Trustee,
be delivered to the Indenture Trustee and shall be promptly cancelled by the
Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee
for cancellation any Notes previously authenticated and delivered under this
Indenture that the Issuer may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly cancelled by the Indenture Trustee. No
Notes shall be authenticated instead of or in exchange for any Notes cancelled
as provided in this Section, except as expressly permitted by this Indenture.
All cancelled Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless before their disposal the Issuer directs by an Issuer Order that
they be returned to it.
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Section 2.08. Book-Entry Notes.
(a) The Book-Entry Notes, on original issuance, will be issued by the
Issuer in the form of typewritten Notes representing the Book-Entry Notes, to
the Depository Trust Company, the initial Depository. The Book-Entry Notes shall
be registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Depository, and no Note Owner will receive a definitive
Note representing its interest in a Note, except as provided in Section 2.10.
Until definitive, fully registered Notes have been issued to the Note Owners
pursuant to Section 2.10:
(i) the provisions of this Section shall be in full force;
(ii) the Note Registrar and the Indenture Trustee may deal with the
Depository for all purposes of this Indenture (including the payment of
principal and interest on the Notes and accepting instructions under this
Indenture) as the sole holder of the Notes, and shall have no obligation to
the Note Owners;
(iii) to the extent that this Section conflicts with any other
provisions of this Indenture, this Section shall control;
(iv) the rights of Note Owners shall be exercised only through the
Depository and shall be limited to those established by law and agreements
between the Note Owners and the Depository;
(v) until definitive Notes are issued for the Book-Entry Notes
pursuant to Section 2.10, the Depository will make book-entry transfers
among the Depository's participants and receive and transmit payments of
principal and interest on the Book-Entry Notes to the Depository's
participants;
(vi) whenever this Indenture requires or permits actions to be taken
based on instructions from Holders of Notes evidencing a specified
percentage of the Outstanding Amount, the Depository shall be treated as
representing that percentage only to the extent that it has received
instructions to that effect from Note Owners owning the required percentage
of the beneficial interest in the Notes and has delivered the instructions
to the Indenture Trustee; and
(vii) the Indenture Trustee may conclusively rely on information
furnished by the Depository about its participants and furnished by the
participants about indirect participating firms and persons shown on the
books of the indirect participating firms as direct or indirect Note
Owners.
(b) The Book-Entry Notes may not be transferred except as a whole and then
only by the Depository to its nominee or by its nominee to the Depository or
another nominee of the Depository, or by the Depository or its nominee to a
successor to the Depository or the successor's nominee.
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Section 2.09. Notices To Depository.
Whenever a communication to the Noteholders is required under this
Indenture, until definitive Notes have been issued to the Note Owners pursuant
to Section 2.10, the Indenture Trustee shall communicate with the Depository as
Holder of the Notes, and shall have no obligation to the Note Owners.
Section 2.10. Definitive Notes.
If
(i) the Issuer advises the Indenture Trustee in writing that the
Depository is no longer willing or able to discharge its responsibilities
properly with respect to the Book-Entry Notes and the Issuer is unable to
locate a qualified successor, or
(ii) after the occurrence of an Event of Default, Note Owners of not
less than 51% of the aggregate Outstanding Amount of all Classes of
Book-Entry Notes advise the Depository in writing that the continuation of
a book-entry system through the Depository is no longer in the best
interests of the Note Owners,
then the Depository shall notify all Note Owners and the Indenture Trustee of
the occurrence of the event and of the availability of definitive Notes to Note
Owners requesting them. Upon surrender to the Indenture Trustee of the
Book-Entry Notes by the Depository, accompanied by registration instructions,
the Issuer shall execute and the Indenture Trustee shall authenticate and
deliver the definitive Notes in accordance with the instructions of the
Depository. None of the Issuer, the Note Registrar, or the Indenture Trustee
shall be liable for any delay in delivery of the instructions and may
conclusively rely on, and shall be protected in relying on, the instructions. On
the issuance of definitive Notes, the Indenture Trustee shall recognize the
Holders of the definitive Notes as Noteholders.
Section 2.11. Tax Treatment.
The Issuer has agreed to make a REMIC election pursuant to the Trust
Agreement, and the Notes will be REMIC regular interests.
Section 2.12. Transfer Restrictions; Restrictive Legends.
(a) Each transferee or purchaser of a Note that is a plan or is investing
plan assets shall represent (or, in the case of a Book-Entry Note, shall be
deemed to represent) that the investment and holding of the Note satisfy the
conditions for exemptive relief under ▇▇▇▇ ▇▇-▇▇, ▇▇▇▇ ▇▇-▇, ▇▇▇▇ ▇▇-▇▇, ▇▇▇▇
▇▇-▇▇, ▇▇▇▇ 96-23, the service provider exemption provided under Section
408(b)(17) of ERISA and Section 4975(d)(20) of the Code or a similar exemption.
No plan advised by the Issuer, the Master Servicer, any other servicer, the
Indenture Trustee, the underwriter or any of their respective affiliates may
invest in the Notes unless an appropriate administrative prohibited transaction
exemption applies to the investment. A plan is advised by a person if the person
has investment or administrative discretion with respect to plan assets to be
invested in the Notes, has authority or responsibility to give, or regularly
gives, investment advice with respect to those plan assets for a fee and
pursuant to an agreement or
12
understanding that the advice will serve as a primary basis for investment
decisions with respect to those plan assets, and will be based on the particular
investment needs for the plan, or the person is an employer maintaining or
contributing to the plan. The Note Registrar will not register any transfer of a
Note that violates the foregoing representation or prohibitions. A "plan" is an
employee benefit plan (as defined in section 3(3) of ERISA) that is subject to
Title I of ERISA, a plan (as defined in and subject to section 4975 of the
Code), and any entity whose underlying assets include plan assets by reason of a
plan's investment in the entity or otherwise.
(b) Unless the Indenture Trustee and the Credit Enhancer receive an
Opinion of Counsel to the effect that it is no longer appropriate, each
definitive Note shall bear the following legend on its face:
"Each transferee or purchaser of this Note that is a plan or is investing plan
assets, by acceptance of this Note or an interest in this Note, represents that
the investment and holding of this Note satisfy the conditions for exemptive
relief under ▇▇▇▇ ▇▇-▇▇, ▇▇▇▇ ▇▇-▇, ▇▇▇▇ ▇▇-▇▇, ▇▇▇▇ ▇▇-▇▇, ▇▇▇▇ 96-23, the
service provider exemption provided under Section 408(b)(17) of ERISA and
Section 4975(d)(20) of the Code or a similar exemption. A "plan" is an employee
benefit plan (as defined in section 3(3) of ERISA) that is subject to Title I of
ERISA, a plan (as defined in and subject to section 4975 of the Code) and any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity or otherwise.
Any transfer in violation of either of the foregoing will be void ab
initio, and will not operate to transfer any rights to the transferee,
notwithstanding any instructions to the contrary."
(c) Each Book-Entry Note shall bear the following legend on its face:
"Unless this Note is presented by an authorized representative of the
Depository to the Issuer or its agent for registration of transfer, exchange, or
payment, and any Note issued in exchange for this Note is registered in the name
of the Depository or in another name requested by an authorized representative
of the Depository (and any payment on this Note is made to the Depository or to
another entity requested by an authorized representative of the Depository), any
transfer, pledge, or other use of this Note for value or otherwise by or to any
person is wrongful inasmuch as the registered owner of this Note, the
Depository, has an interest in this Note."
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest.
The Issuer will duly and punctually pay the principal of the Principal
Amount Notes and interest on the Interest Bearing Notes and other amounts
payable on the Notes in
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accordance with the terms of the Notes and this Indenture. Amounts properly
withheld under the Code or other applicable tax laws by any person from a
payment to any Noteholder of interest or principal or other amounts shall be
considered to have been paid by the Issuer to the Noteholder for all purposes of
this Indenture.
The Notes are non-recourse obligations of the Issuer and are limited in
right of payment to amounts available from the Trust. The Issuer shall not
otherwise be liable for payments on the Notes.
Section 3.02. Maintenance of Office or Agency.
The Issuer will maintain in the Borough of Manhattan, The City of New York,
an office or agency where Notes may be surrendered for registration of transfer
or exchange, and where notices to and demands on the Issuer regarding the Notes
and this Indenture may be served. The Issuer initially appoints the Indenture
Trustee to serve as its agent for these purposes. The Indenture Trustee will
give prompt notice to the Issuer of the location, and of any change in the
location, where the Indenture Trustee maintains this office or agency. If the
Issuer ever fails to maintain the required office or agency, then surrenders,
notices, and demands may be made or served at the Corporate Trust Office.
Section 3.03. Money For Payments To Be Held in Trust.
All payments of amounts payable on any Notes pursuant to Section 8.03,
shall be made from amounts deposited in the Payment Account by the Indenture
Trustee or by another Paying Agent, and no amounts so deposited in the Payment
Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section or Section 8.03.
The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee an instrument in which the Paying
Agent agrees with the Indenture Trustee that it will, and the Indenture Trustee
hereby agrees in its capacity as Paying Agent that it will:
(i) hold all sums held by it for the payment of amounts due on the
Notes in trust for the benefit of the persons entitled to them until they
are paid to the persons entitled to them or otherwise disposed of as
provided in this Indenture, and pay them to the persons entitled to them as
provided in this Indenture;
(ii) give the Indenture Trustee and the Credit Enhancer notice of any
payment default by the Issuer on the Notes of which it has actual
knowledge;
(iii) at any time during the continuance of any payment default on the
Notes, at the request of the Indenture Trustee, immediately pay to the
Indenture Trustee all sums held in trust by it for the payment of the
Notes;
(iv) immediately resign as a Paying Agent and immediately pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it
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ceases to meet the standards required to be met by a Paying Agent at the
time of its appointment;
(v) be bound by Section 11.16; and
(vi) comply with all requirements of the Code to withhold from any
payments made by it on any Notes any applicable withholding taxes imposed
on them and comply with any applicable reporting requirements.
To obtain the satisfaction and discharge of this Indenture or for any other
purpose, the Issuer may at any time by Issuer Order direct any Paying Agent to
pay to the Indenture Trustee all sums held by it in trust. Those sums shall be
held by the Indenture Trustee on the same trusts as those on which the sums were
held by the Paying Agent. On payment by a Paying Agent to the Indenture Trustee,
it shall be released from all further liability with respect to that money.
Subject to applicable laws on abandoned property, any money held in trust
by the Indenture Trustee or any Paying Agent for the payment of any amount due
on any Note remaining unclaimed for two years after it has become payable shall
be discharged from the trust and be paid to the Issuer on Issuer Request. After
that the Holder of the unpaid Note shall look only to the Issuer for its payment
as an unsecured general creditor (but only to the extent of the amounts paid to
the Issuer). On its payment to the Issuer all liability of the Indenture Trustee
or the Paying Agent with respect to that trust money shall cease. The Indenture
Trustee or the Paying Agent, before being required to make the payment to the
Issuer, shall at the expense and direction of the Issuer cause to be published
once a notice that the money remains unclaimed and that, after a date specified
in the notice not less than 30 days from the date of the publication, any
unclaimed balance of the money then remaining will be repaid to the Issuer. The
notice shall be published in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in The
City of New York. The Indenture Trustee may also adopt and employ, at the
expense and direction of the Issuer, any other reasonable means of notification
of the repayment (including mailing notice of the repayment to their last
address of record to Holders whose Principal Amount Notes have been called but
have not been surrendered for redemption or whose right to or interest in moneys
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent).
Section 3.04. Existence.
The Issuer will preserve its existence, rights, and franchises as a
Delaware statutory trust (unless it or any successor becomes organized under the
laws of any other State or of the United States, in which case the Issuer will
preserve its existence, rights, and franchises under the laws of that other
jurisdiction) and will obtain and preserve its qualification to do business in
each jurisdiction in which qualification to do business is necessary to protect
the validity and enforceability of this Indenture, the Notes, the Collateral,
and each other material agreement of the Issuer.
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Section 3.05. Protection of the Collateral.
(a) The Issuer intends the Security Interest Granted pursuant to this
Indenture in favor of the Indenture Trustee on behalf of the Secured Parties to
be before all other liens on the Collateral (except as otherwise provided in the
Transaction Documents). The Issuer shall take all actions necessary to obtain
and maintain, for the benefit of the Indenture Trustee on behalf of the Secured
Parties, a first priority perfected Security Interest in the Collateral (except
as otherwise provided in the Transaction Documents). The Issuer will execute and
deliver any supplements and amendments to this Indenture and any Financing
Statements, Continuation Statements, instruments of further assurance, and other
instruments and will take any other action appropriate to:
(i) Grant more effectively any portion of the Collateral;
(ii) preserve the Security Interest (and its priority) created by this
Indenture or carry out more effectively the purposes of this Indenture;
(iii) perfect, publish notice of, or protect the validity of any Grant
made or to be made by this Indenture;
(iv) enforce any rights with respect to any of the Collateral;
(v) preserve and defend title to the Collateral and the rights of the
Indenture Trustee, the Credit Enhancer, and the Noteholders in the
Collateral against all adverse claims; or
(vi) pay all taxes or assessments levied or assessed on the Collateral
when due.
(b) Except as otherwise provided in this Indenture or the other
Transaction Documents, the Indenture Trustee shall not remove any portion of the
Collateral that consists of money or is evidenced by an instrument, certificate,
or other writing from the jurisdiction in which it was held at the date of the
most recent Opinion of Counsel delivered pursuant to Section 3.06 unless the
Indenture Trustee and the Credit Enhancer receive an Opinion of Counsel to the
effect that the lien and Security Interest created by this Indenture will
continue to be maintained on any removed property after giving effect to its
removal.
(c) The Issuer designates the Indenture Trustee its agent and
attorney-in-fact to execute any Financing Statement, Continuation Statement, or
other instrument required to be executed pursuant to this Section. The Issuer
authorizes the Indenture Trustee to file Financing Statements or Continuation
Statements, and amendments to them, relating to any part of the Collateral
without the signature of the Issuer where permitted by law. A carbon,
photographic, or other reproduction of this Indenture or any filed Financing
Statement covering the Collateral or any part of it shall be sufficient as a
Financing Statement where permitted by law. The Indenture Trustee will promptly
send to the Issuer any Financing Statements or Continuation Statements that it
files without the signature of the Issuer. Any Financing Statement filed
16
relating to any part of the Collateral will state in bold-faced type that a
purchase of the Mortgage Loans included in the collateral covered by the
Financing Statement from the debtor will violate the rights of the secured party
and its assignee.
Section 3.06. Opinions About Collateral.
(a) On the Closing Date, the Issuer shall furnish to the Indenture Trustee
and the Credit Enhancer an Opinion of Counsel either
(i) stating that, in its opinion, no action is necessary to perfect
the Security Interest of this Indenture in the Mortgage Loans or
(ii) stating that, in its opinion, all action
o with respect to the recording and filing of this Indenture,
any indentures supplemental to this Indenture, and any other requisite
documents and
o with respect to the execution and filing of any Financing
Statements and Continuation Statements
has been taken that is necessary to perfect the Security Interest of this
Indenture in the Mortgage Loans, and reciting the details of the action.
(b) By the date specified in the Adoption Annex in each calendar year
beginning in the year specified in the Adoption Annex, the Issuer shall furnish
to the Indenture Trustee and the Credit Enhancer an Opinion of Counsel either
stating that, in its opinion, no action is necessary to maintain the perfected
Security Interest of this Indenture in the Mortgage Loans or stating that, in
its opinion, all action has been taken
(i) with respect to the recording, filing, re-recording, and refiling
of this Indenture, any indentures supplemental to this Indenture, and any
other requisite documents and
(ii) with respect to the execution and filing of any Financing
Statements and Continuation Statements
necessary to maintain the perfected Security Interest created by this Indenture
in the Mortgage Loans and reciting the details of the action. The Opinion of
Counsel shall also describe the recording, filing, re-recording, and refiling of
this Indenture, any indentures supplemental to this Indenture, and any other
requisite documents and the execution and filing of any Financing Statements and
Continuation Statements that will, in counsel's opinion, be required to maintain
the perfected Security Interest of this Indenture in the Mortgage Loans until
the date specified in the Adoption Annex in the following calendar year.
Section 3.07. Performance of Obligations.
(a) The Issuer will not take any action (and will not permit others to
take any action) that would release any person from any of their material
obligations under any of the
17
Transaction Documents, that would create any Security Interests that are not
provided for in the Transaction Documents, or that would change or impair the
validity or effectiveness of the Transaction Documents or any Security Interest
granted under them, except as expressly provided in the Transaction Documents.
The Indenture Trustee, as pledgee of the Mortgage Loans and an assignee of the
Issuer's rights under the Sale and Servicing Agreement may exercise all of the
rights of the Issuer to direct the actions of the Master Servicer pursuant to
the Sale and Servicing Agreement. Unless granted or permitted by the Credit
Enhancer, the Issuer may not waive any default by the Master Servicer under the
Sale and Servicing Agreement or terminate the Master Servicer under the Sale and
Servicing Agreement.
(b) The Issuer may contract with other persons to assist it in performing
its duties under this Indenture, and the performance of those duties by a person
identified to the Indenture Trustee in an Officer's Certificate shall be
considered to be action taken by the Issuer.
(c) The Issuer will punctually perform all of its obligations under the
Transaction Documents, including properly filing all Financing Statements and
Continuation Statements required to be filed by the Transaction Documents.
Except as provided in Section 9.01, the Rating Agency Condition must be
satisfied in connection with any amendment, termination, or material change in a
Transaction Document. The Issuer shall not amend, terminate, or otherwise change
any Transaction Document without the consent of the Indenture Trustee and the
Credit Enhancer. The Issuer will provide notice of any termination, amendment,
or material change in any Transaction Document to the Rating Agencies. The
consent of the Indenture Trustee will not be required if the Rating Agency
Condition is satisfied with respect to the proposed action.
(d) Without derogating from the Grants to the Indenture Trustee under this
Indenture or the rights of the Indenture Trustee under this Indenture, the
Issuer agrees
(i) that it will not, without the prior consent of the Credit
Enhancer and either the Indenture Trustee or the Holders of not less than 51% of
the aggregate Outstanding Amount of all Classes, change or waive, or agree to or
otherwise permit any change to or waiver of, the terms of any Collateral (except
to the extent otherwise provided in the Sale and Servicing Agreement); and
(ii) that any change in the terms of any Collateral shall not
(A) increase or reduce the amount of, or accelerate or delay the
timing of, distributions that are required to be made for the benefit
of the Noteholders (except as may be incidental to changes or waivers
allowed under (d)(i)) or
(B) reduce the percentage of the Notes that is required to
consent to any change in the terms of any Collateral without the
consent of the Holders of all the Outstanding Notes and the Credit
Enhancer.
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If the Credit Enhancer and either the Indenture Trustee or the requisite
percentage of Holders consent to any change in the terms of any Collateral, the
Issuer agrees, promptly following a request by the Indenture Trustee to do so,
to execute and deliver, in its own name and at its own expense, any documents
the Indenture Trustee deems appropriate under the circumstances.
Section 3.08. Negative Covenants.
So long as any Notes are Outstanding, the Issuer shall not:
(a) dispose of any of the Collateral or other properties or assets of the
Issuer, except as expressly permitted by this Indenture or the Sale and
Servicing Agreement, unless directed to do so by the Indenture Trustee with the
consent of the Credit Enhancer;
(b) claim any credit on, or make any deduction from the principal or
interest or other amounts payable on, the Notes (other than amounts properly
withheld from payments under the Code or applicable State law) or assert any
claim against any present or former Noteholder for the payment of the taxes
levied or assessed on any part of the Collateral;
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be changed (except as
otherwise provided in the Sale and Servicing Agreement), or permit any person to
be released from any obligations on the Notes or under this Indenture except as
expressly permitted by this Indenture, (ii) permit any lien, charge, excise,
claim, Security Interest, mortgage, or other encumbrance (other than the lien of
this Indenture and as otherwise provided in the Sale and Servicing Agreement) to
affect any part of the Collateral, or any interest in it or its proceeds, or
(iii) permit the lien of this Indenture not to constitute a valid first priority
Security Interest in the Collateral; or
(d) dissolve or liquidate in whole or in part;
(e) make any distributions on any ownership interest in the Issuer (except
as expressly provided for in the Transaction Documents), redeem, purchase, or
otherwise retire or acquire for value any ownership interest in the Issuer
(except as expressly provided for in the Transaction Documents), or set aside
any amounts for any of these purposes;
(f) engage in any business other than financing, purchasing, owning,
selling, and managing the Collateral; issuing the Notes; and activities
incidental to those contemplated businesses, in each case, in the manner
contemplated by the Transaction Documents;
(g) issue, incur, assume, guarantee, or otherwise have the Trust become
liable, directly or indirectly, for any indebtedness except for its liabilities
under the Transaction Documents and other expenses for which the Issuer is
entitled to reimbursement under this Indenture or the Sale and Servicing
Agreement;
(h) make any loan or advance of credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment
or performance on any obligation), endorse (except for endorsement of
instruments for collection in the ordinary course
19
of business), or otherwise become contingently liable, directly or indirectly,
in connection with the obligations, stocks, or dividends of, or own, purchase,
repurchase, or acquire (or agree contingently to do so) any stock, obligations,
assets, or securities of, or any other interest in, or make any capital
contribution to, any other person out of the Trust;
(i) make any expenditure (by long-term or operating lease or otherwise)
for capital assets;
(j) subject to the Master Servicer's servicing the Mortgage Loans in
accordance with the Sale and Servicing Agreement, waive or impair, or fail to
assert rights under, the Mortgage Loans, or effect impairment of the Issuer's
interest in the Mortgage Loans, the Sale and Servicing Agreement, or any other
Transaction Document, if the action would materially and adversely affect the
interests of the Noteholders or the Credit Enhancer; or
(k) take any other action or fail to take any action that would result in
the imposition of tax on the Issuer (including the tax on prohibited
transactions under Section 860F(a)(2) or contributions after the Startup Date,
as defined in Section 860G(d) of the Code) .
Section 3.09. Annual Compliance Statement.
Within 80 days after the end of each year (commencing with the year
specified in the Adoption Annex) the Issuer will deliver to the Indenture
Trustee and the Credit Enhancer an Officer's Certificate stating, as to the
Authorized Officer signing the Officer's Certificate, that:
(i) a review of the activities of the Issuer during the calendar year
and of its performance under this Indenture and the Trust Agreement has
been made under the Authorized Officer's supervision; and
(ii) to the best of the Authorized Officer's knowledge, based on that
review, the Issuer has complied with all its obligations under this
Indenture and the Trust Agreement throughout that year or, if there has
been a default in its compliance with any obligation, specifying each
default known to the Authorized Officer and its nature and status.
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
The Issuer shall not consolidate or merge with or into or transfer all or
substantially all of its properties or assets to any other person, unless:
(i) the person (if other than the Issuer) formed by or surviving the
consolidation or merger or to which the transfer is made is organized and
existing under the laws of the United States or any State and expressly
assumes the due and punctual payment of the principal and interest on the
Notes and the performance of every obligation under each Transaction
Document on the part of the Issuer to be performed by an indenture
supplemental to this Indenture, executed and delivered to the Indenture
Trustee, in form satisfactory to the Indenture Trustee and the Credit
Enhancer;
20
(ii) immediately after giving effect to the transaction, no Incipient
Default has occurred and is continuing;
(iii) the Rating Agency Condition has been satisfied with respect to
the transaction;
(iv) the Issuer has delivered to the Indenture Trustee and the Credit
Enhancer an Opinion of Counsel to the effect that the transaction will not
have any material adverse tax consequence to the Issuer or any Noteholder;
(v) any action that is necessary to maintain the Security Interest
created by this Indenture has been taken; and
(vi) the Issuer has delivered to the Indenture Trustee and the Credit
Enhancer an Officer's Certificate and an Opinion of Counsel each stating
that the consolidation or merger and the supplemental indenture comply with
this Article and that all conditions precedent in this Indenture relating
to the transaction have been complied with (including any filing required
by the Exchange Act).
Section 3.11. Successor or Transferee.
Upon any consolidation or merger of the Issuer or transfer of all or
substantially all of its properties or assets in accordance with Section 3.10,
the person formed by or surviving the consolidation or merger (if other than the
Issuer) or to which the transfer is made shall succeed to, and be substituted
for, and may exercise every right of, the Issuer under this Indenture with the
same effect as if it had been named as the Issuer in this Indenture.
Section 3.12. Further Instruments and Acts.
On request of the Indenture Trustee or the Credit Enhancer, the Issuer will
execute and deliver any further instruments and do any further acts that may be
appropriate to carry out more effectively the purpose of this Indenture.
Section 3.13. Compliance with Laws.
The Issuer shall comply with the requirements of all laws the
non-compliance with which would, individually or in the aggregate, materially
and adversely affect the ability of the Issuer to perform its obligations under
the Notes or any Transaction Document.
Section 3.14. Master Servicer as Agent and Bailee of the Indenture
Trustee.
Solely for the purposes of perfection under Section 9-313(c) of the UCC or
other similar applicable law, rule, or regulation of the State in which property
is held by the Master Servicer, the Master Servicer is acting as agent and
bailee of the Indenture Trustee in holding amounts subject to deposit to the
Collection Account, as well as its agent and bailee in holding any Mortgage File
released to the Master Servicer, and any other items of Collateral that come
into the possession of the Master Servicer. By the Master Servicer's execution
of the Sale and Servicing Agreement, the Indenture Trustee, as a secured party
of the Mortgage Loans, has
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possession of these items for the purposes of Section 9-313(c) of the UCC of the
state in which the Issuer is organized.
Section 3.15. Investment Company Act.
The Issuer shall not become an "investment company" or under the "control"
of an "investment company" as those terms are defined in the Investment Company
Act of 1940 and the rules and regulations under it (taking into account not only
the general definition of the term "investment company" but also any available
exceptions to the general definition). The Issuer shall be in compliance with
this Section 3.15 if it obtains an order exempting it from regulation as an
"investment company" so long as it is in compliance with the conditions imposed
in the order.
Section 3.16. Representations.
(a) The Issuer represents and warrants to the Indenture Trustee and the
Credit Enhancer that as of the Closing Date, unless specifically stated
otherwise:
(i) This Indenture creates a valid and continuing Security Interest
in the Collateral in favor of the Indenture Trustee. The Security Interest
created by this Indenture is a first priority perfected Security Interest
and it is enforceable as such against creditors of, and purchasers from,
the Issuer.
(ii) The Mortgage Notes are "instruments" as defined in the UCC.
(iii) Before the Grants of the Security Interest pursuant to the
Granting Clause of this Indenture, the Issuer owns, and has good and
marketable title to, the Mortgage Loans free of any lien, claim, or
encumbrance of any person.
(iv) By the Closing Date with respect to the Mortgage Loans and within
10 days of the applicable date of substitution with respect to any Eligible
Substitute Mortgage Loan, the Issuer will file Financing Statements in the
proper filing office in the appropriate jurisdiction to perfect the
Security Interest in the Collateral Granted under this Indenture.
(v) The Issuer has received a written acknowledgement from the
Custodian that the Custodian is acting solely as agent of the Indenture
Trustee.
(vi) The Issuer has not authorized the filing of and is not aware of
any Financing Statements against the Issuer that include a description of
collateral covering the Collateral other than any financing statement (A)
relating to the Security Interests granted to the Indenture Trustee
pursuant to this Indenture, (B) that has been terminated, or (C) that names
the Indenture Trustee as secured party.
(vii) The Mortgage Notes that constitute or evidence the Collateral do
not have any marks or notations indicating that they have been pledged,
assigned, or otherwise conveyed to any person other than the Indenture
Trustee. All Financing Statements filed or to be filed against the Issuer
in favor of the Indenture Trustee in
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connection with this Indenture describing the Collateral contain a
statement to the following effect: "A purchase of the Mortgage Loans
included in the collateral covered by this financing statement will violate
the rights of the Indenture Trustee."
(viii) On the Closing Date, the Issuer is a "Qualifying SPE" as such
term is defined in the statement of Accounting Standards No. 140 of the
Financial Accounting Standards Board, as in effect on the Closing Date.
(b) The representations and warranties in this Section 3.16 shall survive
delivery of the respective Mortgage Files to the Custodian pursuant to the
Custodial Agreement and the termination of the Sale and Servicing Agreement.
(c) The Indenture Trustee and the Credit Enhancer shall not, without the
prior written consent of the Rating Agencies, waive any of the representations
and warranties in Section 3.16(a).
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.
Except for rights of conversion or transfer or exchange of Notes expressly
provided for, the rights of the Indenture Trustee under Section 6.07, the rights
of Noteholders as beneficiaries of this Indenture, and the rights of the Credit
Enhancer as subrogee of the Noteholders, this Indenture shall cease to be of
further effect, and the Indenture Trustee, on demand of and at the expense of
the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when the option of the Issuer to redeem the
Principal Amount Notes as described in Section 10.01 is exercised or, if not
exercised then:
(i) either:
(A) all Notes previously authenticated and delivered have been
delivered to the Indenture Trustee for cancellation, other than
(1) Notes that have been destroyed, lost, or stolen and
that have been replaced or paid as provided in Section 2.04;
(2) Notes for whose payment money has been deposited in
trust or segregated and held in trust by the Issuer and later
repaid to the Issuer or discharged from the trust, as provided in
Section 3.03); and
(3) Notes that have been paid in full and that by their
terms expire without the payment of a principal balance; or
(B) all Notes not previously delivered to the Indenture Trustee
for cancellation:
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(1) have become payable,
(2) will become payable at their Scheduled Maturity Date
within one year, or
(3) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving
of notice of redemption by the Indenture Trustee in the name, and
at the expense, of the Issuer or by their terms expire within one
year without the payment of a principal balance,
and the Issuer, in the case of (1), (2), or (3) above, has irrevocably
deposited with the Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States (which will mature before
the date the amounts are payable), in trust for these purposes, in an
amount sufficient to pay the entire indebtedness when due on the
unexpired Notes not previously delivered to the Indenture Trustee for
cancellation to the applicable Scheduled Maturity Date or redemption
date (if Notes have been called for redemption pursuant to Section
10.01), as the case may be;
(ii) the Issuer has paid all other sums payable under this Indenture
by the Issuer; and
(iii) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel, and (if required by the TIA, the
Indenture Trustee, or the Credit Enhancer) an Independent Certificate from
a firm of certified public accountants, each meeting the applicable
requirements of Section 11.01, each stating that all conditions precedent
provided for in this Indenture relating to the satisfaction and discharge
of this Indenture have been complied with.
Section 4.02. Application of Trust Money.
All money deposited with the Indenture Trustee pursuant to Section 4.01
shall be held in trust and applied by it, in accordance with the Notes and this
Indenture, to the payment to the Holders of the particular Notes for the payment
or redemption of which the money has been deposited with the Indenture Trustee,
of all sums due and to become due on them for principal and interest. That money
need not be segregated from other funds except to the extent required in this
Indenture or required by law.
Section 4.03. Subrogation and Cooperation.
To the extent the Credit Enhancer makes payments of principal or interest
on the Insured Notes under the Policy, the Credit Enhancer will be fully
subrogated to the rights of the Holders of the applicable Insured Notes 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
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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 Insured Notes made with moneys received
under the Policy shall not be considered payment of that Class of Insured Notes
from the Trust and shall not result in the payment of or the provision for the
payment of the principal or interest on that Class of Insured Notes under
Section 4.01. The Credit Enhancer shall be paid from the assets of the Trust
from the sources and in the manner provided in this Indenture and in the
Insurance Agreement.
The Indenture Trustee shall cooperate in all respects at the expense of the
Trust with any reasonable request or direction by the Credit Enhancer to take
any of the following actions to preserve or enforce the Credit Enhancer's
interest under each of this Indenture and the Sale and Servicing Agreement,
consistent with this Indenture and without limiting the rights of the
Noteholders under this Indenture, including upon the occurrence and continuance
of a Credit Enhancer Default:
(i) institute Proceedings for the collection of all amounts then
payable on the Insured Notes or under this Indenture with respect to the
Notes and all amounts payable under the Insurance Agreement and to enforce
any judgment obtained and collect from the Issuer monies adjudged due;
(ii) sell any part of Collateral or interests in it at one or more
public or private sales called and conducted in any manner permitted by
law;
(iii) file or record all Assignments of Mortgage that have not
previously been recorded;
(iv) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the interests of the
Credit Enhancer under this Indenture.
Following the payment in full of the Insured Notes, the Credit Enhancer
shall continue to have all the rights given to it under this Section and in all
other provisions of this Indenture, until all amounts owing to the Credit
Enhancer have been paid in full.
Section 4.04. Release of Collateral.
(a) Upon satisfaction and discharge of this Indenture pursuant to Section
4.01 and otherwise as permitted by this Indenture, the Indenture Trustee shall
execute instruments to release property from the lien of this Indenture, or
convey the Indenture Trustee's interest in the property, in a manner and under
circumstances that are not inconsistent with this Indenture. No party relying on
an instrument executed by the Indenture Trustee as provided in this Section
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shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent, or see to the application of any
moneys.
(b) When no Notes are Outstanding and the Issuer has paid all other sums
payable under this Indenture by the Issuer, the Indenture Trustee shall release
any remaining Collateral that secured the Notes from the lien of this Indenture
and release to the Issuer any funds then on deposit in any account other than
funds held in trust for the satisfaction of Notes that have not been surrendered
for payment. The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section only on receipt of an Issuer Request
accompanied by an Officer's Certificate.
(c) Whenever a Mortgage Loan has been substituted for or repurchased in
accordance with Section 2.02(b) or 2.04(d) of the Sale and Servicing Agreement,
purchased in accordance with Section 3.06 of the Sale and Servicing Agreement,
or designated for transfer in accordance with Section 2.06 of the Sale and
Servicing Agreement, the Indenture Trustee shall execute appropriate documents
to release the Mortgage Loan from the lien of this Indenture and deliver the
Mortgage File to the appropriate party.
(d) The Indenture Trustee shall release property from the lien of this
Indenture only on receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel, and Independent Certificates in accordance
with TIA Sections 314(c) and 314(d)(l) or an Opinion of Counsel in lieu of
Independent Certificates to the effect that the TIA does not require any
Independent Certificates.
ARTICLE V
REMEDIES
Section 5.01. Events of Default.
Any one of the following events is an "Event of Default" whatever the
reason:
(i) default by the Issuer in the payment of any interest on any
Interest Bearing Note when it becomes payable, and the default continues
for five days; or
(ii) default by the Issuer in the payment of the principal of any
Principal Amount Note when it becomes payable and the default continues for
five days; or
(iii) default in the performance of any obligation of the Issuer under
this Indenture (other than an obligation specifically dealt with elsewhere
in this Section), or any representation or warranty of the Issuer made in
this Indenture or in any certificate or other writing delivered in
connection with this Indenture proves to have been materially incorrect as
of the time when it was made, and the default or the circumstance making
the representation or warranty incorrect has not been cured within 60 days
after notice to the Issuer by the Indenture Trustee or to the Issuer and
the
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Indenture Trustee by the Credit Enhancer (or, if a Credit Enhancer Default
exists, by the Holders of at least 25% of the Outstanding Amount of all
Classes of Notes) by registered or certified mail specifying the default or
incorrect representation or warranty and requiring it to be remedied and
stating that the notice is a notice of default under this Indenture; or
(iv) an Insolvency Event occurs with respect to the Issuer.
The Issuer shall deliver to the Indenture Trustee and the Credit Enhancer,
within five days after its occurrence, notice in the form of an Officer's
Certificate of any Incipient Default under clause (iii), its status, and what
action the Issuer is taking or proposes to take with respect to the event.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default is continuing, then the Indenture Trustee or the
Holders of not less than 51% of the aggregate Outstanding Amount of all Classes
of Principal Amount Notes, in either case with the consent of the Credit
Enhancer, or the Credit Enhancer, may declare all the Notes to be immediately
payable, by a notice in writing to the Issuer (and to the Indenture Trustee if
given by Noteholders), and upon that declaration the unpaid principal amount of
the Principal Amount Notes, together with accrued interest on them through the
date of acceleration, shall become immediately payable.
At any time after the declaration of acceleration of maturity has been made
and before a judgment or decree for payment of the money due has been obtained
by the Indenture Trustee, the Holders of not less than 51% of the aggregate
Outstanding Amount of all Classes, with the consent of the Credit Enhancer, or
the Credit Enhancer, by notice to the Issuer and the Indenture Trustee, may
rescind the declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(A) all payments of principal on the Principal Amount Notes and
interest on the Interest Bearing Notes and all other amounts that
would then be due under this Indenture or on the Notes if the Event of
Default giving rise to the acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture Trustee under
this Indenture and the reasonable compensation, expenses,
disbursements, and advances of the Indenture Trustee and its agents
and counsel; and
(ii) all Events of Default, other than the nonpayment of the principal
or interest of the Notes that have become due solely by the acceleration,
have been cured or waived as provided in Section 5.13.
No rescission shall affect any subsequent default or impair any right
consequent to it.
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Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if the Notes are accelerated following an
Event of Default, then the Issuer will pay to the Indenture Trustee on demand,
for the benefit of the Noteholders or the Credit Enhancer if the Credit Enhancer
has made a payment on the Insured Notes under the Policy, the whole amount then
payable on the Notes and, in addition, any further amount needed to cover the
expenses of collection, including the reasonable compensation and expenses of
the Indenture Trustee and its agents and counsel.
(b) If the Issuer fails to pay those amounts immediately on demand, the
Indenture Trustee, in its own name and as trustee of an express trust, subject
to Section 11.16 may in its discretion with the consent of the Credit Enhancer,
and at the direction of the Credit Enhancer shall, institute a Proceeding for
the collection of the sums due, and may prosecute the Proceeding to final
decree, and may enforce the judgment against the Issuer (or other obligor on the
Notes) and collect in the manner provided by law out of the property of the
Issuer (or other obligor on the Notes) wherever situated, the moneys determined
to be payable.
(c) If an Event of Default is continuing, the Indenture Trustee subject to
Section 11.16 may in its discretion with the consent of the Credit Enhancer
(subject to Section 5.04), and at the direction of the Credit Enhancer shall,
proceed to protect and enforce its rights and the rights of the Secured Parties,
by Proceedings the Indenture Trustee deems most effective to protect and enforce
those rights, whether for the specific enforcement of any agreement in this
Indenture or in aid of the exercise of any power granted in this Indenture, or
to enforce any other proper remedy or legal or equitable right vested in the
Indenture Trustee by this Indenture or by law.
(d) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of this Indenture to which the
Indenture Trustee is a party), the Indenture Trustee shall be held to represent
all the Secured Parties, and it shall not be necessary to make any Noteholder or
the Credit Enhancer a party to the Proceedings.
(e) All rights of action and assertion of claims under this Indenture, the
Sale and Servicing Agreement, or any of the Notes may be enforced by the
Indenture Trustee without the possession of any of the Notes or their production
in any Proceedings regarding them. Any Proceedings instituted by the Indenture
Trustee shall be brought in its own name as trustee of an express trust. Any
recovery of judgment, subject to the payment of the expenses, disbursements, and
compensation of the Indenture Trustee, each predecessor Indenture Trustee, and
their agents and counsel, shall be for the ratable benefit of the Secured
Parties.
Section 5.04. Indenture Trustee May File Proofs of Claim.
(a) If
(1) Proceedings under Title 11 of the United States Code or any other
applicable federal or State bankruptcy, insolvency, or other similar law
are pending
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relating to the Issuer or any other obligor on the Notes or any person
having or claiming an ownership interest in the Collateral, or
(2) a receiver, assignee, or trustee in bankruptcy or reorganization,
or liquidator, sequestrator, or similar official has been appointed for or
taken possession of the Issuer or its property or the other obligor or
person, or
(3) any other comparable judicial Proceedings are pending relating to
the Issuer or other obligor on the Notes, or to the creditors or property
of the Issuer or the other obligor,
then, irrespective of whether the principal of any Principal Amount Notes is
then payable as expressed in them or by declaration or otherwise and
irrespective of whether the Indenture Trustee has made any demand pursuant to
this Section, with the consent of the Credit Enhancer the Indenture Trustee is
authorized by intervention in the Proceedings or otherwise:
(i) to file and prove claims for the entire amount of principal owing
on any Principal Amount Notes and interest owing on any Interest Bearing
Notes and other amounts owing on any Notes and to file any other documents
appropriate to have the claims of the Indenture Trustee, the Credit
Enhancer, and of the Noteholders allowed in the Proceedings (including any
claim for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents and counsel, and
for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith);
(ii) to vote on behalf of the Holders of Notes in any election of a
trustee, a standby trustee, or person performing similar functions in the
Proceedings; and
(iii) to collect and receive any moneys or other property payable on
any claims and to distribute all amounts received on the claims of the
Noteholders, the Credit Enhancer, and of the Indenture Trustee on their
behalf;
and any trustee, receiver, liquidator, custodian, or other similar official in
any Proceeding is hereby authorized by each of the Noteholders to make payments
to the Indenture Trustee and, if the Indenture Trustee consents to the
Noteholders receiving payments directly, to pay to the Indenture Trustee amounts
sufficient to cover reasonable compensation to the Indenture Trustee, each
predecessor Indenture Trustee, and their respective agents and counsel, and all
other expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee except as a result of negligence
or bad faith, and to pay all amounts due to the Credit Enhancer.
(b) Nothing in this Indenture authorizes the Indenture Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder or the Credit Enhancer any plan of reorganization, arrangement,
adjustment, or composition affecting the Notes or the
29
rights of any Noteholder or the Credit Enhancer or authorizes the Indenture
Trustee to vote on the claim of any Noteholder or the Credit Enhancer in any
such proceeding except to vote for the election of a trustee in bankruptcy or
similar person.
Section 5.05. Remedies; Priorities.
(a) If an Event of Default is continuing, the Indenture Trustee subject to
Section 11.16 may with the consent of the Credit Enhancer, and at the direction
of the Credit Enhancer shall, do any of the following (subject to Section 5.11):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture, whether by declaration or otherwise, and all
amounts payable under the Sale and Servicing Agreement, and enforce any
judgment obtained, and collect from the Issuer and any other obligor on the
Notes moneys adjudged due;
(ii) institute Proceedings for the complete or partial foreclosure of
this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights of the
Indenture Trustee, the Credit Enhancer, and the Noteholders;
(iv) exercise all rights of the Issuer in connection with the Purchase
Agreement and the Sale and Servicing Agreement against the Sponsor, the
Depositor, or the Master Servicer or otherwise; and
(v) sell any portion of the Collateral or interests in it as directed
by the Credit Enhancer, at one or more public or private sales called and
conducted in any manner permitted by law.
The Indenture Trustee, however, may not sell or otherwise liquidate
Collateral following an Event of Default unless
(A) the Indenture Trustee obtains the consent of the Credit Enhancer
and the Holders of 100% of the aggregate Outstanding Amount of the Notes of
all Classes,
(B) the proceeds of the sale or liquidation distributable to the
Secured Parties are sufficient to discharge in full all amounts then due on
the Principal Amount Notes and to reimburse the Credit Enhancer for any
unreimbursed Credit Enhancement Draw Amounts and any other amounts due the
Credit Enhancer under the Insurance Agreement, or
(C) the Indenture Trustee determines that the Collateral will not
continue to provide sufficient funds for the payment of principal of the
Principal Amount Notes and interest on the Interest Bearing Notes as they
would have become due if the Notes had not been declared due and payable,
and the Indenture Trustee obtains the consent of the
30
Credit Enhancer and the Holders of a majority of the aggregate Outstanding
Amount of the Notes of all Classes.
In determining the sufficiency or insufficiency under clause (B) and (C),
the Indenture Trustee may, but need not, obtain and rely on an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of the proposed action and as to the sufficiency of the
Collateral for the purpose. If a Credit Enhancer Default exists at the time any
consent is required or direction may be given under this Section 5.05(a), the
consent or direction shall be by Holders representing at least 66-2/3% of the
Outstanding Amount of all Classes instead of by the Credit Enhancer.
(b) If the Indenture Trustee collects any money or property with respect
to a Loan Group under this Article, it shall pay out the money or property in
the following order with respect to the Loan Group:
FIRST: to the Indenture Trustee for the fee of the Indenture Trustee
(separately agreed to between the Master Servicer and the Indenture
Trustee) then due and any expenses incurred by it in connection with the
enforcement of the remedies under this Article and to the Owner Trustee for
the fee of the Owner Trustee (separately agreed to between the Master
Servicer and the Owner Trustee) then due and any expenses due to the Owner
Trustee under any of the Transaction Documents, each with respect to the
relevant Loan Group;
SECOND: any premium owing to the Credit Enhancer, with respect to the
relevant Loan Group;
THIRD: to the Noteholders of the related Classes of Notes for interest
due on the related Interest Bearing Notes (except for Basis Risk
Carryforward), pro rata according to the amounts due on those Notes for
interest;
FOURTH: to the related Noteholders for amounts due on the related
Principal Amount Notes for principal, pro rata according to the principal
due on those Notes, until the Note Principal Balance of each Class of Notes
is reduced to zero;
FIFTH: to the unrelated Noteholders, any amounts that if they were
being paid on a Payment Date pursuant to Section 8.03 would be Crossover
Amounts payable on the unrelated Class of Principal Amount Notes until the
Note Principal Balance of the unrelated Class of Principal Amount Notes is
reduced to zero;
SIXTH: to the Credit Enhancer, any other amounts owed to the Credit
Enhancer under the Insurance Agreement with respect to either Loan Group;
SEVENTH: to pay any related Basis Risk Carryforward owed to each Class
of Principal Amount Notes to the Noteholders of each Class of Principal
Amount Notes, pro rata according to the principal due on those Notes; and
31
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 all Classes have requested the Indenture Trustee in writing to
institute a Proceeding with respect to the Event of Default in its own name
as Indenture Trustee under this Indenture;
(iii) the Holders have offered the Indenture Trustee reasonable
indemnity against the costs and liabilities to be incurred in complying
with the request;
(iv) the Indenture Trustee for 60 days after its receipt of the
request and offer of indemnity has failed to institute Proceedings;
(v) no direction inconsistent with the request has been given to the
Indenture Trustee during the 60-day period by the Holders of not less than
51% of the aggregate Outstanding Amount of all Classes; and
(vi) the Holders have obtained the consent of the Credit Enhancer.
No Holders of Notes shall have any right in any manner whatever because of
this Indenture to affect the rights of any other Holders of Notes or to obtain
or to seek to obtain priority or preference over any other Holders or to enforce
any right under this Indenture, except in the manner provided in this Indenture.
32
If the Indenture Trustee receives inconsistent requests and indemnity from
two or more groups of Holders of Notes, each representing less than 51% of the
aggregate Outstanding Amount of all Classes, the Indenture Trustee in its sole
discretion may determine what action shall be taken.
Section 5.08. Unconditional Right to Receive Principal and Interest.
Notwithstanding any other provisions in this Indenture, every Noteholder
has an absolute and unconditional right to receive payment of the principal of
the Principal Amount Notes and interest on the Interest Bearing Notes and other
amounts payable on its Note after their due dates (or, in the case of
redemption, after the redemption date) and to institute suit for the enforcement
of any payment, and this right shall not be impaired without the consent of the
Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Indenture Trustee or any Noteholder has instituted any Proceeding to
enforce any right under this Indenture and the Proceeding has been discontinued
or abandoned for any reason or has been determined adversely to the Indenture
Trustee or to the Noteholder, then the Issuer, the Indenture Trustee, the Credit
Enhancer, and the Noteholders shall, subject to any determination in the
Proceeding, be restored severally and respectively to their former positions
under this Indenture, and all rights of the Indenture Trustee and the
Noteholders shall continue as though no Proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
No right given to the Indenture Trustee, the Credit Enhancer, or to the
Noteholders in this Indenture is intended to be exclusive of any other right,
and every right shall, to the extent permitted by law, be cumulative to every
other right given under this Indenture or existing at law or in equity or
otherwise. The assertion of any right under this Indenture, or otherwise, shall
not prevent the concurrent assertion of any other appropriate right.
Section 5.11. Delay or Omission Not a Waiver.
No delay in exercising or failure to exercise any right accruing on any
Incipient Default shall impair the right or constitute a waiver of the Incipient
Default or an acquiescence in it. Every right given by this Article or by law to
the Indenture Trustee, to the Credit Enhancer, or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, by the Credit Enhancer, or by the Noteholders.
Section 5.12. Control by Credit Enhancer or Noteholders.
If no Credit Enhancer Default exists, then the Credit Enhancer, otherwise
the Holders of not less than 51% of the aggregate Outstanding Amount of all
Classes may direct the time, method, and place of conducting any Proceeding for
any remedy available to the Indenture Trustee with respect to the Notes or
exercising any right conferred on the Indenture Trustee. No direction shall be
binding unless:
(i) it does not conflict with any rule of law or with this Indenture;
and
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(ii) if no Credit Enhancer Default exists, it is by the Credit
Enhancer, otherwise by the Holders of Notes representing not less than 100%
of the aggregate Outstanding Amount of all Classes if the direction to the
Indenture Trustee is to sell or liquidate the Collateral.
The Indenture Trustee may take any other action it deems proper that is not
inconsistent with the direction, Section 5.04, or Section 5.05.
Section 5.13. Waiver of Past Defaults.
Before the declaration of the acceleration of the maturity of the Notes as
provided in Section 5.02, the Credit Enhancer or, if a Credit Enhancer Default
exists, the Holders of not less than 51% of the aggregate Outstanding Amount of
all Classes may waive any past default and its consequences except a default
(i) in payment of principal on any Principal Amount Notes or interest
on any Interest Bearing Notes or
(ii) regarding a provision of this Indenture that cannot be changed
without the consent of the Holder of each affected Note.
After any such waiver, the Incipient Default shall cease to exist and be
considered to have been cured and not to have occurred, and any Event of Default
arising from it shall be considered to have been cured and not to have occurred,
for every purpose of this Indenture. No waiver shall extend to any subsequent or
other default or impair any right consequent to it.
Section 5.14. Undertaking For Costs.
All parties to this Indenture agree, and each Holder of a Note by its
acceptance of its Note agrees, that in any suit for the enforcement of any right
under this Indenture, or in any suit against the Indenture Trustee for any
action taken, suffered, or omitted by it as Indenture Trustee, any court may in
its discretion require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and that the court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. The provisions of
this Section shall not apply to
(i) any suit instituted by the Indenture Trustee or the Credit
Enhancer,
(ii) any suit instituted by any Noteholder, or group of Noteholders,
holding in the aggregate more than 25% of the aggregate Outstanding Amount
of all Classes, or
(iii) any suit instituted by any Noteholder for the enforcement of the
payment of principal of any Principal Amount Note or interest on any
Interest Bearing Note after the due dates expressed in the Note and in this
Indenture (or, in the case of redemption, after the redemption date).
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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 transfer to the Trust Eligible
Substitute Mortgage Loans or deposit into the Collection Account the Transfer
Deposit Amount in accordance with Section 2.07(a) of the Sale and Servicing
Agreement) after the date on which written notice of the failure, requiring it
to be remedied, shall have been given to the Sponsor by the Indenture Trustee,
or to the Sponsor and the Indenture Trustee by the Credit Enhancer or the
Holders of not less than 51% of the aggregate Outstanding Amount of all Classes
of Notes;
(d) Any representation or warranty made by the Sponsor or the Depositor in
the Sale and Servicing Agreement proves to have been incorrect in any material
respect when made, as a result of which the interests of the Noteholders or the
Credit Enhancer are materially and adversely affected and that continues to be
incorrect in any material respect and continues to affect materially and
adversely the interests of the Noteholders or the Credit Enhancer for 60 days
after the date on which notice of the failure, requiring it to be remedied,
shall have been given to the Sponsor or the Depositor, as the case may be, by
the Indenture Trustee, or to the Sponsor, the Depositor, and the Indenture
Trustee by either the Credit Enhancer or the Holders of not less than 51% of the
aggregate Outstanding Amount of all Classes (a Rapid Amortization Event pursuant
to this subparagraph (d) shall not occur if the Sponsor has accepted retransfer
of the related Mortgage Loans or substituted for them during the 60-day period
(or such longer
35
period (not to exceed an additional 60 days) as the Indenture Trustee may
specify) in accordance with the Sale and Servicing Agreement);
(e) An Insolvency Event occurs with respect to the holder of the Class R-1
Certificates or the Depositor, but for this purpose the 60-day periods in the
definition of Insolvency Event shall be 30 days;
(f) The Trust becomes subject to registration as an "investment company"
under the Investment Company Act of 1940; or
(g) The aggregate of all draws under the Policy exceeds the percentage of
the Original Note Principal Balance of the Insured Notes specified in the
Adoption Annex.
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 all Classes (with the consent of the Credit Enhancer), by
notice given in writing to the holder of the Class R-1 Certificates, the
Depositor, and the Master Servicer (and to the Indenture Trustee if given by
either the Credit Enhancer or the Noteholders) may declare that an early
amortization event (a "Rapid Amortization Event") has occurred as of the date of
the notice, and in the case of any event described in subparagraph (e), (f), or
(g), a Rapid Amortization Event shall occur without any notice or other action
on the part of the Indenture Trustee, the Credit Enhancer, or the Noteholders,
immediately upon its occurrence.
Section 5.17. Sale of Collateral.
(a) The power to effect any sale or other disposition (a "Sale") of any
portion of the Collateral pursuant to Section 5.05 is subject to this Section
5.17. The Indenture Trustee waives its right to any amount fixed by law as
compensation for any Sale.
(b) In connection with a Sale of any of the Collateral,
(i) any Holder of Notes may bid for the property offered for sale,
and on compliance with the terms of sale may own the property without
further accountability, and may, in paying its purchase price, deliver any
Principal Amount Notes or claims for interest on Interest Bearing Notes
rather than cash up to the amount that would be payable on them from the
distribution of the net proceeds of the sale, and the Notes shall be
returned to the Holders after being appropriately stamped to show partial
payment if the amount payable for the property is less than the amount due
on the Notes;
(ii) the Indenture Trustee may bid for and acquire the property
offered for Sale, and may purchase any portion of the Collateral in a
private sale, and rather than paying cash, may settle the purchase price by
crediting the gross Sale price against the amount that would be
distributable as a result of the Sale in accordance with Section 5.05(b) on
the next Payment Date after the Sale without being required to produce the
36
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 all Classes if a Credit Enhancer Default exists) shall exercise all
rights of the Issuer against the Sponsor or the Master Servicer in connection
with the Sale and Servicing Agreement, including the right to take any action to
obtain performance by either Seller or the Master Servicer, as the case may be,
of each of their obligations to the Issuer under the Sale and Servicing
Agreement and to give any consent, request, notice, direction, approval,
extension, or waiver under the Sale and Servicing Agreement, and any right of
the Issuer to take such action shall not be suspended. Any direction by the
Credit Enhancer under this Section may be by telephone, promptly confirmed in
writing.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would use under the circumstances in the conduct of its own affairs, except when
this Indenture or the Sale and Servicing Agreement requires it to follow the
directions of the Credit Enhancer.
(b) Except during the continuance of an Event of Default:
(i) obligations of the Indenture Trustee shall be determined solely
by the express provisions of this Indenture and the Sale and Servicing
Agreement, the Indenture Trustee undertakes to perform only the duties
specifically stated in this
37
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 all Classes relating to the method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect
to the Notes or exercising any right conferred on the Indenture Trustee
under this Indenture or the Sale and Servicing Agreement;
(iv) the Indenture Trustee shall not be charged with knowledge of the
occurrence of an Incipient Default, a Rapid Amortization Event, or of any
failure by the Master Servicer to comply with its obligations under Section
6.01(i) or (ii) of the Sale and Servicing Agreement unless a Responsible
Officer at the Corporate Trust Office obtains actual knowledge of the
failure or the Indenture Trustee receives notice of the failure; and
38
(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.
(f) The Issuer hereby directs the Indenture Trustee to execute, deliver,
and perform its obligations under the Cap Contract Administration Agreement (in
its capacity as Cap Trustee). The Sellers, the Depositor, the Master Servicer,
and the Noteholders by their acceptance of the Notes acknowledge and agree that
the Indenture Trustee shall execute, deliver, and perform its obligations under
the Cap Contract Administration Agreement and shall do so solely in its capacity
as Cap Trustee and not in its individual capacity. Every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee shall apply to the Indenture Trustee's
execution of the Cap Contract Administration Agreement in its capacity as Cap
Trustee, and the performance of its duties and satisfaction of its obligations
under the Cap Contract Administration Agreement.
Section 6.02. Notice of Defaults.
If an Incipient Default is continuing or if a Rapid Amortization Event
occurs and, in either case, a Responsible Officer knows of it, the Indenture
Trustee shall notify the Credit Enhancer and mail to each Noteholder notice of
the Incipient Default or Rapid Amortization Event within 90 days after it
occurs. Except in the case of an Incipient Default in payment of principal or
interest on any Note, the Indenture Trustee may withhold the notice to
Noteholders so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
Section 6.03. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Officer's Certificate or Opinion of Counsel unless other evidence
is specifically required.
(c) The Indenture Trustee may execute any of the trusts or powers under
this Indenture or perform any duties under this Indenture either directly or
through agents or counsel
39
or a custodian or nominee, and the Indenture Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
agent, counsel, custodian, or nominee appointed with due care by it under this
Indenture.
(d) The Indenture Trustee may consult with counsel, and the written advice
of counsel with respect to legal matters relating to this Indenture, the
Transaction Documents, and the Notes and any Opinion of Counsel shall be full
authorization and protection from liability for any action taken, omitted, or
suffered by it under this Indenture in good faith and in accordance with the
advice of counsel or any Opinion of Counsel.
(e) The Indenture Trustee may enter into any amendment of the Sale and
Servicing Agreement as to which the Rating Agency Condition is satisfied, and
when so requested by an Issuer Request and the Rating Agency Condition is
satisfied, the Indenture Trustee shall enter into any amendment of the Sale and
Servicing Agreement
(i) that does not impose further obligations or liabilities on the
Indenture Trustee, and
(ii) as to which either the Rating Agency Condition is satisfied or
Holders of not less than 66(2)/3% of the aggregate Outstanding Amount of
all Classes and the Credit Enhancer have consented.
(f) With the consent of the Master Servicer and the Credit Enhancer, the
Indenture Trustee may appoint Custodians to hold any portion of the Collateral
as agent for the Indenture Trustee, by entering into a Custodial Agreement
substantially in the form of Exhibit B. Subject to this Article, the Indenture
Trustee agrees to comply with each Custodial Agreement and to enforce each
Custodial Agreement against the custodian for the benefit of the Secured
Parties. Each custodian shall be a depository institution (or an affiliate of a
depository institution) subject to supervision by federal or state authority and
shall be qualified to do business in the jurisdiction in which it holds any
Collateral. Each Custodial Agreement may be amended only with the consent of the
Credit Enhancer, which shall not be unreasonably withheld.
Section 6.04. Indenture Trustee Not Responsible for Certain Things.
The Indenture Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of the Collateral or any
Transaction Document (other than the signature and authentication of the
Indenture Trustee on the Notes). It shall not be responsible for any statement
in this Indenture other than Section 6.14 or in any document issued in the sale
of the Notes or in the Notes other than the Indenture Trustee's certificate of
authentication.
The Indenture Trustee is not accountable for the use or application by the
Issuer of any of the Notes or of the proceeds of the Notes, or for the use or
application of any funds paid to the Depositor or the Master Servicer on the
Mortgage Loans or deposited in or withdrawn from the Collection Account by the
Master Servicer. The Indenture Trustee shall not be responsible for:
40
(i) the validity and enforceability of any Mortgage or any Mortgage
Loan, or the perfection and priority of any Mortgage or the maintenance of
its perfection and priority, or for the sufficiency of the Trust or its
ability to generate the payments to be distributed to Noteholders under
this Indenture, or the sufficiency or validity of MERS or the MERS(R)
System, including the existence, condition, and ownership of any Mortgaged
Property;
(ii) the existence and enforceability of any hazard insurance on any
Mortgaged Property;
(iii) the validity of the assignment of any Mortgage Loan to the
Indenture Trustee or of any intervening assignment;
(iv) the completeness of any Mortgage Loan;
(v) the performance or enforcement of any Mortgage Loan;
(vi) any investment of monies by or at the direction of the Master
Servicer or any resulting loss;
(vii) the acts or omissions of any of the Depositor, the Master
Servicer, any subservicer, or any mortgagor under a Mortgage;
(viii) any action of the Master Servicer or any subservicer taken in
the name of the Indenture Trustee; or
(ix) the failure of the Master Servicer or any subservicer to act or
perform any duties required of it as agent of the Indenture Trustee.
The Indenture Trustee shall not be responsible for filing any Financing or
Continuation Statement in any public office at any time or otherwise to perfect
or maintain the perfection of any Security Interest or lien granted to it under
this Indenture or to prepare or file any Commission filing for the Trust or to
record this Indenture.
Section 6.05. Individual Rights of Indenture Trustee.
The Indenture Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Issuer, the
Sponsor, and their affiliates with the same rights it would have if it were not
Indenture Trustee. Any co-trustee, Paying Agent, Note Registrar, co-registrar,
or co-paying agent may do the same with like rights.
Section 6.06. Money Held in Trust.
Money held in trust by the Indenture Trustee need not be segregated from
other funds except to the extent required by law or the Transaction Documents.
The Indenture Trustee shall not be liable for interest on any money received by
it except as it may agree in writing.
Section 6.07. Compensation.
The compensation of the Indenture Trustee will be separately agreed to between
the Sponsor and the Indenture Trustee and, to the extent not paid otherwise,
will be payable after an Event of
41
Default as provided in Section 5.05(b). To the extent funds available under
Section 5.05(b) are insufficient to pay the full amount of the fees, they will
be paid by the Sponsor. Except for amounts available for the purpose as provided
in Section 5.05(b), the Indenture Trustee shall have no claim against the Issuer
or any of the Collateral for the payment of any of its fees and expenses. The
Indenture Trustee shall not fail to perform its duties under the Transaction
Documents if its fees and expenses are not paid.
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 all Classes may remove
the Indenture Trustee at any time and the Issuer shall then appoint a successor
Indenture Trustee reasonably acceptable to the Credit Enhancer by so notifying
the Indenture Trustee, the Transferor, the Depositor, the Master Servicer, and
the Credit Enhancer. The Issuer (and if the Issuer fails to do so, the
Transferor) shall remove the Indenture Trustee and appoint a successor
reasonably acceptable to the Credit Enhancer if:
(i) the Indenture Trustee fails to satisfy Section 6.08;
42
(ii) an Insolvency Event occurs with respect to the Indenture Trustee;
(iii) the Indenture Trustee otherwise becomes incapable of acting; or
(iv) during the period in which the Depositor is required to file
Exchange Act Reports with respect to the Trust, the Indenture Trustee fails
to comply with its obligations under the last sentence of Section 6.01 of
the Sale and Servicing Agreement, Article VII of the Sale and Servicing
Agreement, the preceding paragraph, or Section 6.12 and that failure is not
remedied within the lesser of 10 calendar days or the period in which the
applicable Exchange Act Report can be filed timely (without taking into
account any extensions).
As a condition to the effectiveness of a resignation by the Indenture
Trustee, at least 15 calendar days before the effective date of that
resignation, the Indenture Trustee must provide (x) written notice to the
Depositor of any successor pursuant to this Section and (y) in writing and in
form and substance reasonably satisfactory to the Depositor, all information
reasonably requested by the Depositor in order to comply with the Depositor's
reporting obligation under Item 6.02 of Form 8-K with respect to the resignation
of the Indenture Trustee.
If the Indenture Trustee fails to satisfy Section 6.08, any Noteholder may
petition any court of competent jurisdiction for the removal of the Indenture
Trustee and the appointment of a successor Indenture Trustee. If a successor
Indenture Trustee does not take office within 60 days after the retiring
Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the
Issuer, the Transferor, the Depositor, the Master Servicer, the Credit Enhancer,
or the Holders of not less than 51% of the aggregate Outstanding Amount of all
Classes may petition any court of competent jurisdiction for the appointment of
a successor Indenture Trustee. If the Indenture Trustee resigns or is removed or
if a vacancy exists in the office of Indenture Trustee for any reason, the
Issuer, with the approval of the Transferor and the Credit Enhancer, shall
promptly appoint a successor Indenture Trustee for the retiring Indenture
Trustee.
Section 6.11. Acceptance of Appointment by Successor.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer, the Transferor,
the Depositor, and the Master Servicer, and the Credit Enhancer. The resignation
or removal of the retiring Indenture Trustee shall become effective on the later
of (x) receipt of the written acceptance and (y) the successor providing the
Depositor in writing and in form and substance reasonably satisfactory to the
Depositor, all information reasonably requested by the Depositor in order to
comply with the Depositor's reporting obligation under Item 6.02 of Form 8-K
with respect to a replacement trustee, and the successor Indenture Trustee shall
have all the rights and obligations, and automatically succeed to the estate, of
the Indenture Trustee under this Indenture without any further act or transfer.
The successor Indenture Trustee shall mail a notice of its succession to the
Noteholders. The retiring Indenture Trustee shall promptly deliver any
instruments of transfer with respect to the trust estate requested by the Issuer
or the successor Indenture
43
Trustee and deliver all property held by it as Indenture Trustee to the
successor Indenture Trustee. No proposed successor Indenture Trustee shall
accept its appointment unless at the time of its acceptance it is eligible under
Section 6.08.
In addition, if at least one of the Cap Contract is still outstanding, the
person appointed as successor indenture trustee, in its acceptance of its
appointment, shall acknowledge accepting its appointment as successor Cap
Contract Administrator under the Cap Contract Administration Agreement and
execute and deliver any other documentation necessary to become and act as
successor Cap Contract Administrator.
Section 6.12. Successor Indenture Trustee by Merger.
If the Indenture Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving, or
transferee corporation shall be the successor Indenture Trustee if it is
otherwise eligible under Section 6.08 without any further act on the part of
anyone. The Indenture Trustee shall provide the Credit Enhancer and each Rating
Agency notice of any such transaction.
If any of the Notes have been authenticated but not delivered when the
successor Indenture Trustee takes over, it may adopt the certificate of
authentication of any predecessor Indenture Trustee and deliver the
authenticated Notes with the same effect as if it had authenticated the Notes.
At least 15 calendar days before the effective date of any merger or
consolidation of the Indenture Trustee, the Indenture Trustee will provide (x)
written notice to the Depositor of any successor pursuant to this Section and
(y) in writing and in form and substance reasonably satisfactory to the
Depositor, all information reasonably requested by the Depositor in order to
comply with the Depositor's reporting obligation under Item 6.02 of Form 8-K
with respect to a replacement Indenture Trustee.
Section 6.13. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Indenture Trustee and
the Issuer, acting jointly, may execute and deliver instruments to appoint one
or more persons approved by the Master Servicer and the Credit Enhancer to act
as a co-trustees, or separate trustees, of any part of the Collateral, and to
vest in them, in that capacity and for the benefit of the Secured Parties, title
to any part of the Collateral and any rights and obligations the Indenture
Trustee considers appropriate, subject to the other provisions of this Section.
No co-trustee or separate trustee under this Indenture need satisfy the
requirements for a successor trustee under Section 6.08, and no notice to
Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.09.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following:
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(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.
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
45
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
furnished. So long as the Indenture Trustee is the Note Registrar, the Issuer
need not furnish these lists.
Section 7.02. Preservation of Information; Communications.
(a) The Indenture Trustee shall preserve the names and addresses of the
Holders of Notes in the most recent list furnished to the Indenture Trustee as
provided in Section 7.01 and the names and addresses of Holders of Notes
received by the Indenture Trustee in its capacity as Note Registrar in as
current a form as is reasonably practicable. The Indenture Trustee may destroy
any list furnished to it under Section 7.01 on receipt of a new list so
furnished.
(b) Noteholders may communicate with other Noteholders with respect to
their rights under this Indenture or under the Notes in the manner provided
under TIA Section 312(b).
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(c) The Issuer, the Indenture Trustee, and the Note Registrar shall have
the protections provided under TIA Section 312(c).
Section 7.03. Exchange Act Reports.
(a) The Indenture Trustee shall prepare for filing and file in accordance
with the Exchange Act within 15 days after each Payment Date (subject to
permitted extensions under the Exchange Act) with the Commission a Form 10-D
with copies of the Monthly Statement and, to the extent delivered to the
Indenture Trustee, no later than 5 days following the Payment Date, any other
information identified by the Issuer or the Master Servicer (the "Additional
Designated Information") to be filed with the Commission. If the Issuer or
Master Servicer directs that any Additional Designated Information is to be
filed with any Form 10-D, the Issuer or Master Servicer, as the case may be,
shall specify the item on Form 10-D to which the information is responsive and,
with respect to any exhibit to be filed on Form 10-D, the exhibit number. Any
Additional Designated Information to be filed on Form 10-D shall be delivered to
the Indenture Trustee in ▇▇▇▇▇-compatible form. If no Additional Designated
Information is provided to the Indenture Trustee by the 5th day after a Payment
Date, the Indenture Trustee will not be required to include such information in
the Form 10-D filing for the Payment Date. The Indenture Trustee shall prepare
for filing and file any amendment to any Form 10-D previously filed with the
Commission with respect to the Issuer at the request of the Issuer or the Master
Servicer. The Master Servicer shall sign each Form 10-D filed on behalf of the
Issuer. The Indenture Trustee shall encode these filings to provide for
automated filing notification instructions to the Countrywide MBS Surveillance
Group at its email address at ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ (or at any other address
designated in writing by the Master Servicer) in its ▇▇▇▇▇ submissions when
making these filings.
(b) Other than the reports required to be filed on behalf of the Issuer by
the Indenture Trustee pursuant to Section 7.03(a), the Issuer shall:
(i) file with the Commission, the Indenture Trustee, and the Credit
Enhancer copies of the annual reports and of the information, documents,
and other reports (or copies of the portions of any of these the Commission
prescribes in its rules and regulations) that the Issuer may be required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act, within 15 days after the Issuer is required to file the same with the
Commission;
(ii) file with the Indenture Trustee, the Credit Enhancer, and the
Commission in accordance with the Commission's rules and regulations any
additional information, documents, and reports with respect to compliance
by the Issuer with the conditions and covenants of this Indenture the rules
and regulations require; and
(iii) supply to the Indenture Trustee and the Credit Enhancer
summaries of any information, documents, and reports required to be filed
by the Issuer pursuant to clauses (i) and (ii) of this Section and by the
rules and regulations of the Commission
47
(and the Indenture Trustee shall transmit them by mail to all Noteholders
described in TIA Section 313(c)).
(c) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee.
If required by TIA Section 313(a), within 60 days after the date in each
year specified in the Adoption Annex, beginning with the date specified in the
Adoption Annex, the Indenture Trustee shall mail to each Noteholder as required
by TIA Section 313(c) and to the Credit Enhancer a brief report dated that date
that complies with TIA Section 313(a). The Indenture Trustee also shall comply
with TIA Section 313(b). A copy of each report at the time of its mailing to
Noteholders shall be filed by the Indenture Trustee with the Commission and each
securities exchange on which the Notes are listed. The Issuer shall notify the
Indenture Trustee and the Credit Enhancer before the Notes are listed on any
securities exchange.
The Indenture Trustee shall deliver to each Noteholder the information
necessary for the Holder to prepare its federal and State income tax returns. On
each Payment Date, the Indenture Trustee shall make available to each
Noteholder, the Master Servicer, the Credit Enhancer, and each Rating Agency on
its Internet website the statement for Noteholders prepared by the Master
Servicer and delivered to it pursuant to Section 4.04 of the Sale and Servicing
Agreement for the Payment Date.
If the statement for Noteholders is not accessible to any of the
Noteholders, the Master Servicer, the Credit Enhancer, or either Rating Agency
on the Indenture Trustee's internet website, the Indenture Trustee shall forward
a hard copy of it to each Noteholder, the Master Servicer, the Credit Enhancer,
and each Rating Agency immediately after the Indenture Trustee becomes aware
that it is not accessible to any of them via its website. The address of the
Indenture Trustee's internet website where the statement for Noteholders will be
accessible is ▇▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇. 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 Issuer, Internal Revenue Service
Form 1099 (or any successor form) and any other tax forms required to be filed
or furnished to Noteholders covering payments by the Indenture Trustee (or the
Paying Agent) on the Notes and shall file and distribute them as required by
law. In addition, the Indenture Trustee shall promptly furnish any information
reasonably requested by the Issuer that is reasonably available to the Indenture
Trustee to enable the Issuer to perform its federal and state income tax
reporting obligations.
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ARTICLE VIII
ACCOUNTS, CAP CONTRACTS, DISBURSEMENTS, AND RELEASES
Section 8.01. Accounts.
(a) The Indenture Trustee will establish and maintain on behalf of the
Secured Parties an Eligible Account (the "Payment Account") with the title
specified in the Adoption Annex. The Indenture Trustee shall hold amounts
deposited in the Payment Account as Indenture Trustee for the benefit of the
Secured Parties. The Indenture Trustee will, promptly upon receipt, deposit in
the Payment Account and retain in it the aggregate amount remitted by the Master
Servicer pursuant to the Sale and Servicing Agreement. The Indenture Trustee
shall invest amounts on deposit in the Payment Account at the direction of the
Master Servicer in Eligible Investments payable on demand or maturing no later
than the day before the next Payment Date. All income realized from investment
of funds in the Payment Account shall be for the benefit of the Master Servicer.
Any losses incurred on funds in the Payment Account that reduce their principal
amount shall be immediately deposited in the Payment Account by the Master
Servicer out of its own funds.
Pursuant to the Sale and Servicing Agreement, the Master Servicer is
required to deposit the Interest Shortfall Deposit in the Payment Account on the
dates specified in Section 3.03 of the Sale and Servicing Agreement and, not
later than the Business Day before each Payment Date, to withdraw from the
Collection Account and remit to the Indenture Trustee the amount to be applied
on the next Payment Date by the Indenture Trustee pursuant to Section 8.03, to
the extent on deposit in the Collection Account.
Pursuant to the Sale and Servicing Agreement, the Master Servicer has
established the Collection Account. The Sale and Servicing Agreement requires
the Master Servicer to deposit specified collections on the Mortgage Loans into
the Collection Account no later than two Business Days following their receipt.
If on a Determination Date the Master Servicer notifies the Indenture
Trustee and the Credit Enhancer of the amount in the Collection Account
allocable to Interest Collections and Principal Collections for the Mortgage
Loans in each Loan Group for the related Payment Date, then the Master Servicer
may withdraw from the Collection Account and the Payment Account and retain any
amounts that constitute income and gain realized from the investment of the
collections.
(b) The Indenture Trustee shall establish and maintain an Additional Loan
Account for each Loan Group with the title specified in the Adoption Annex. Each
Additional Loan Account shall be an Eligible Account solely for the benefit of
the Secured Parties. Neither the Sponsor nor the Depositor shall have any
interest in any of the principal of the funds deposited into the Additional Loan
Accounts. The Additional Loan Accounts are not assets of any REMIC
49
created under the Trust Agreement. The Additional Loan Accounts shall be
maintained in accordance with Section 8.02.
(c) On the Closing Date, the Indenture Trustee shall establish and
maintain in its name, in trust for the benefit of the Holders of the Principal
Amount Notes, the Basis Risk Carryforward Reserve Fund and shall deposit in it,
upon receipt from or on behalf of the Depositor, $1,000. All funds on deposit in
the Basis Risk Carryforward Reserve Fund shall be held separate from, and not
commingled with, any other money, including other money held by the Indenture
Trustee pursuant to this Indenture.
The Indenture Trustee shall make withdrawals from the Basis Risk
Carryforward Reserve Fund for distribution to the Principal Amount Notes in the
manner specified in Section 8.03(f). At the earlier of the retirement of the
Principal Amount Notes and the termination of the Trust in accordance with
Section 10.01, the Indenture Trustee shall distribute to the Depositor all
monies remaining on deposit in the Basis Risk Carryforward Reserve Fund after
making the distributions specified in Section 8.03(f).
On the Closing Date, the Indenture Trustee shall establish and maintain in
its name, in trust for the benefit of the Class 1-A Notes and for the Class 2-A
Notes, the Class 1-A Cap Contract Account and the Class 2-A Cap Contract
Account, respectively, and shall deposit in it the related Cap Payment (Cap
Trust Share). The Indenture Trustee will withdraw funds from the related Cap
Contract Account up to the related Cap Payment Entitlement for payment pursuant
to Section 8.08.
In addition, the Indenture Trustee may withdraw from the Basis Risk
Carryforward Reserve Fund any amount deposited in the Basis Risk Carryforward
Reserve Fund and not required to be deposited in it.
The Indenture Trustee shall invest amounts on deposit in the Basis Risk
Carryforward Reserve Fund at the written direction of the Master Servicer in
Eligible Investments payable on demand or maturing no later than the day before
the next Payment Date. All income realized from investment of funds in the Basis
Risk Carryforward Reserve Fund shall be for the benefit of the Holders of the
Class C Certificates. Any net investment earnings on such amounts shall be
retained therein until withdrawn as provided in Section 8.03(f). Any losses
incurred on funds in the Basis Risk Carryforward Reserve Fund that reduce their
principal amount shall be charged against amounts on deposit in the Basis Risk
Carryforward Reserve Fund immediately as realized. The Basis Risk Carryforward
Reserve Fund will not be an asset of any REMIC created under the Trust
Agreement. The Class C Certificates shall evidence ownership of the Basis Risk
Carryforward Reserve Fund for federal tax purposes.
(d) The Indenture Trustee shall establish and maintain, on behalf of the
Certificateholders, a Principal Reserve Fund in the name of the Indenture
Trustee. On the Closing Date, CHL shall deposit into the Principal Reserve Fund
$100.00. Funds on deposit in the Principal Reserve Fund shall not be invested.
The Principal Reserve Fund shall be treated as
50
an outside reserve fund under applicable Treasury regulations and shall not be
part of any REMIC created under the Trust Agreement.
On the Business Day before the first Payment Date, the Indenture Trustee
shall transfer $100.00 from the Principal Reserve Fund to the Payment Account,
and on the first Payment Date, the Indenture Trustee shall withdraw $100.00 from
the Payment Account and distribute it to the Issuer for distribution pursuant to
the Trust Agreement, and thereafter terminate the Principal Reserve Fund.
Section 8.02. Withdrawals from the Collection Account and the Additional
Loan Accounts.
(a) Upon delivery of an Officer's Certificate to the Indenture Trustee,
the Master Servicer may withdraw funds with respect to the relevant Loan Group
from the Collection Account for the following purposes:
(i) to pay to the Master Servicer its Servicing Fee to the extent
that it has not been retained pursuant to Section 3.02(b) of the Sale and
Servicing Agreement;
(ii) to pay to the Master Servicer net earnings on amounts on deposit
in the Collection Account as provided in Section 8.01;
(iii) to pay from Principal Collections for the relevant Loan Group
the amounts provided for the purchase of Additional Balances pursuant to
Section 2.01 of the Sale and Servicing Agreement; and
(iv) to pay to the Master Servicer amounts deposited by the Master
Servicer that are not required to be deposited or any amount representing
payments by mortgagors made by checks subsequently returned uncollected.
If the Master Servicer deposits in the Collection Account any amount not
required to be deposited or any amount representing payments by mortgagors made
by checks subsequently returned uncollected, it may at any time withdraw that
amount from the Collection Account upon delivery of an Officer's Certificate to
the Indenture Trustee.
(b) On the date on which the Indenture Trustee receives:
(i) the Officer's Certificate specified in Section 2.01(b)(2)(H) of
the Sale and Servicing Agreement confirming satisfaction of the conditions
precedent to subsequent additions in Section 2.01(b) of the Sale and
Servicing Agreement on a Subsequent Closing Date,
(ii) the revised Mortgage Loan Schedule reflecting the addition of the
Additional Home Equity Loans covered by a Transfer Document, and
(iii) an Opinion of Counsel, substantially in the form delivered on
the Closing Date and addressed to the same addressees, to the effect that a
court in a bankruptcy context addressing the transfer of the Additional
Home Equity Loans would
51
characterize the transfer as a sale rather than as a secured lending and an
Opinion of Counsel, substantially in the form delivered on the Closing Date
and addressed to the same addressees, relating to the perfection of
security interest in the Additional Home Equity Loans,
the Indenture Trustee shall withdraw from the applicable Additional Loan
Account, and release from the lien of this Indenture an amount equal to the
Cut-off Date Asset Balance of the Additional Home Equity Loans covered by the
Transfer Document.
(c) All earnings on funds in the Additional Loan Accounts under Section
2.01(b) of the Sale and Servicing Agreement and Section 8.02(b) are for the
account of the Master Servicer. The Additional Loan Accounts shall be invested
in Eligible Investments. If any funds remain in any Additional Loan Account on
the Latest Subsequent Closing Date, to the extent that they represent earnings
on the amounts originally deposited into that Additional Loan Account, the
Indenture Trustee shall distribute them to the order of the Master Servicer. The
remaining funds shall be transferred to the Collection Account and treated as
Investor Principal Collections. Any losses incurred on these investments that
reduce their principal amount shall be deposited in the Additional Loan Accounts
by the Master Servicer out of its own funds immediately as realized.
(d) If at any time the Depositor becomes aware that the Cut-off Date Asset
Balance of Additional Home Equity Loans reflected on any Transfer Document
exceeds the actual Cut-off Date Asset Balance of the relevant Additional Home
Equity Loans, the Depositor shall so notify the Indenture Trustee in writing and
the Indenture Trustee shall redeposit into the applicable Additional Loan
Account the excess reported to it by the Depositor.
Section 8.03. Payments.
(a) Payments of Available Interest Collections and Investment Proceeds. On
each Payment Date, the Indenture Trustee shall distribute out of the Payment
Account (to the extent of Available Interest Collections for a Loan Group
collected during the related Collection Period) 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 Note Interest for that Class of Principal
Amount Notes for the Payment Date to the related Noteholders;
(iii) to pay the Investor Loss Amount for that Class of Principal
Amount Notes for the Payment Date to the related Noteholders as principal
in reduction of the related Note Principal Balance;
(iv) to pay any amounts described in item (ii) above that remain
unpaid to the Holders of the unrelated Class of Principal Amount Notes on
the Payment Date
52
(after taking into account the allocation of 100% of the Available Interest
Collections relating to the unrelated Class of Notes on the Payment Date)
to the Holders of the unrelated Class of Principal Amount Notes;
(v) 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;
(vi) after the sixth Payment Date, to pay the related Accelerated
Principal Payment Amount to the related Class of Principal Amount
Noteholders as principal in reduction of the related Note Principal
Balance;
(vii) after the sixth Payment Date, to pay the unrelated Accelerated
Principal Payment Amount that remains unpaid (after taking into account the
allocation of 100% of the Available Interest Collections relating to the
unrelated Class of Notes on the Payment Date) to the Holders of the
unrelated Class of Principal Amount as principal in reduction of the
unrelated Note Principal Balance;
(viii) to pay any amounts described in item (iii) 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 Available Interest
Collections relating to the unrelated Class of Notes on the Payment Date)
to the Holders of the unrelated Class of Principal Amount Notes;
(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 Class of Principal Amount Notes together with
interest on them at the applicable rate in the Insurance Agreement and any
other amounts owed under the Insurance Agreement with respect to the
unrelated Loan Group to the Credit Enhancer;
(xii) to the Basis Risk Carryforward Reserve Fund, first the Basis
Risk Carryforward for the related Class of Principal Amount Notes remaining
unpaid after application of amounts in the Basis Risk Carryforward Reserve
Fund under Section 8.03(f)(i) and amounts in the Cap Contract Accounts
under Section 8.08, and second to restore the amount in the Basis Risk
Carryforward Reserve Fund to $1,000; and
(xiii) any remaining amount to the Issuer for distribution in
accordance with the Trust Agreement.
53
(b) Payment of Principal Collections. Except on the Payment Date in the
month specified in the Adoption Annex, on each Payment Date, the Indenture
Trustee shall distribute out of the Payment Account to the Holders of each Class
of Principal Amount Notes the Investor Principal Collections for the related
Loan Group to the extent required to meet its related Required Transferor
Subordinated Amount and, if after allocation of unrelated Investor Principal
Collections for the unrelated Loan Group the unrelated Required Transferor
Subordinated Amount is not met, to the unrelated Class of Principal Amount Notes
until its Required Transferor Subordinated Amount is met. On each Payment Date
on or after the occurrence of a Rapid Amortization Event the Indenture Trustee
shall distribute out of the Payment Account to the Holders of each Class of
Principal Amount Notes the Investor Principal Collections for the related Loan
Group until its Note Principal Balance is reduced to zero and, if after
allocation of unrelated Investor Principal Collections for the unrelated Loan
Group the Note Principal Balance of the unrelated Class of Principal Amount
Notes is greater than zero, to the unrelated Class of Principal Amount Notes
until its Note Principal Balance is reduced to zero. On the Scheduled Maturity
Date the Indenture Trustee shall distribute to the Holders of each Class of
Principal Amount Notes all Principal Collections from the related Loan Group up
to the related Note Principal Balance and then, if not paid in full, from the
unrelated Loan Group up to the related Note Principal Balance, to the extent
funds from the unrelated Loan Group are available. In addition to Investor
Principal Collections, on the Payment Date after the end of the Funding Period,
any amount deposited in an Additional Loan Account not used during the first
Collection Period to purchase Additional Home Equity Loans will be distributed
to the holders of the related Class of Principal Amount Notes as a prepayment of
principal.
(c) Application of Subordinated Transferor Collections. If, after applying
Available Interest Collections 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 that Class in the priority
provided for Required Amounts in Section 8.03(a). 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.
(d) Payment of the Credit Enhancement Draw Amount. The Indenture Trustee
will make payments to the related Class of Insured Notes from the Credit
Enhancement Draw Amount (but not including any portion of it representing a
Preference Amount) drawn under the Policy for any Payment Date and Class of
Insured Notes pursuant to Section 8.05 on the Payment Date as follows:
FIRST, as an addition to the amount distributed pursuant to Section
8.03(a)(ii); and
54
SECOND, the portion of the Credit Enhancement Draw Amount remaining after
the application of the amounts referred to in FIRST above, as an addition
to the amounts distributed pursuant to Section 8.03(b).
The aggregate amount of principal distributed to the Holders of either Class of
Principal Amount Notes under this Indenture shall not exceed the related
Original Note Principal Balance.
(e) Distributions to Issuer. On each Payment Date, based on the
information in the Servicing Certificate for the Payment Date and subject to
Section 8.03(a),(b), and (c), the Indenture Trustee shall distribute to the
Issuer from amounts in the Payment Account
(i) any Net Draws Principal Payment for the Payment Date,
(ii) the Interest Collections for each Loan Group that are not
Available Interest Collections on the Payment Date for the related
Collection Period and are not paid out as Subordinated Transferor
Collections under Section 8.03(c), and
(iii) the portion of Transferor Principal Collections for each Loan
Group for the related Collection Period that are not paid out as
Subordinated Transferor Collections under Section 8.03(c).
For the purposes of this Section 8.03(e), payments of Subordinated
Transferor Collections under Section 8.03(c) shall be considered to be made
first from Interest Collections until they are reduced to zero, and then from
Principal Collections.
(f) Distributions of Basis Risk Carryforward. Because it is intended for
each Payment Date that any distributions of Basis Risk Carryforward be made
first from either the initial $1,000 deposit to the Basis Risk Carryforward
Reserve Fund or from moneys deposited in the Basis Risk Carryforward Reserve
Fund on prior Payment Dates and second from any moneys deposited in the Basis
Risk Carryforward Reserve Fund on such Payment Date, on each Payment Date, any
amounts in the Basis Risk Carryforward Reserve Fund shall be distributed by the
Indenture Trustee as follows:
(i) first, to the Classes of Principal Amount Notes, pro rata based
on their entitlement for Basis Risk Carryforward for that Payment Date, the
lesser of
(A) the amount available in the Basis Risk Carryforward Reserve
Fund from any prior Payment Dates (and with respect to the first
Payment Date the $1,000 on deposit therein), and
(B) the aggregate Basis Risk Carryforward with respect to the
Principal Amount Notes for that Payment Date after payment of any Cap
Payment Entitlement under Section 8.08, and
(ii) second, from amounts deposited on that Payment Date in the Basis
Risk Carryforward Reserve Fund for that purpose under Section 8.03(a)(xii),
to the
55
Principal Amount Notes, pro rata based on their remaining entitlement for
Basis Risk Carryforward for that Payment Date, up to the remaining amount
of Basis Risk Carryforward of each such Class.
(g) Distributions of Charged-off Loan Proceeds. On each Payment Date, any
Charged-off Loan Proceeds received during the related Collection Period will be
distributed in the following order of priority:
(i) to the Credit Enhancer, previously unreimbursed Credit
Enhancement Draw Amounts together with interest on such amounts at the rate
specified in the Insurance Agreement;
(ii) concurrently, to pay each Class of Notes the related Investor
Loss Amount for that Payment Date and the Class R-1 Certificates in respect
of the Net Draws (after taking into account all payments on that Payment
Date other than the payments of Charged-Off Loan Proceeds and payments
under the Policy), pro-rata based on their respective Investor Loss Amounts
and Liquidation Loss Amounts, as applicable, for that Payment Date; and
(iii) to the Owner Trustee, for distribution to the Class E-P
Certificates, any remaining Charged-Off Loan Proceeds.
Section 8.04. Calculation of the Note Rate.
On each Adjustment Date, the Indenture Trustee shall determine LIBOR for
the related Interest Period and inform the Master Servicer (at the facsimile
number given to the Indenture Trustee in writing) of the rate. On each
Determination Date, the Indenture Trustee shall determine the applicable Note
Rate for each Class and Component of Interest Bearing Notes for the related
Payment Date.
Section 8.05. Claims on the Policy; Policy Payments Account.
(a) If the Credit Enhancement Draw Amount (other than any portion of it
representing a Preference Amount) for a Class of Insured Notes specified in the
Servicing Certificate for a Payment Date is more than zero (determined as of the
close of business on the third Business Day before the Payment Date), then the
Indenture Trustee shall notify the Credit Enhancer by telephone or telecopy of
the Credit Enhancement Draw Amount (other than any portion of it representing a
Preference Amount) for the Class of Insured Notes. The notice shall be confirmed
to the Credit Enhancer in writing in the form of the Notice of Claim and
Certificate in Exhibit A to the Policy, by 10:00 A.M., New York City time, on
the second Business Day before the Payment Date. Following receipt by the Credit
Enhancer of the notice in that form, the Credit Enhancer will pay any amount
payable under the Policy (other than any portion of it representing a Preference
Amount) for the Class of Insured 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.
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(b) The Indenture Trustee shall establish the Policy Payments Account. The
Indenture Trustee shall deposit upon receipt any amount paid under the Policy in
the Policy Payments Account and distribute the amount only to pay Holders of the
Insured Notes the Guaranteed Payment for their Class of Insured Notes for which
a claim was made. No payments under the Policy may be used to pay any costs,
expenses, or liabilities of the Master Servicer, the Indenture Trustee, or the
Trust (other than payments of principal and interest on the Insured Notes).
Amounts paid under the Policy shall be transferred to the Payment Account in
accordance with the next paragraph and disbursed by the Indenture Trustee to
Holders of the related Class of Insured Notes in accordance with Section 8.03.
Payments from draws on the Policy need not be made by checks or wire transfers
separate from the checks or wire transfers used to pay other funds paid to
Noteholders on the Payment Date. The portion of any payment of principal of or
interest on the related Class of Insured Notes paid from funds transferred from
the Policy Payments Account, however, shall be noted in the statement to be
furnished to Holders of the Notes pursuant to Section 7.04. Funds held in the
Policy Payments Account shall not be invested.
On any Payment Date (or the day on which a payment on the Policy is
received, if later) for which a claim has been made under the Policy, the amount
of any funds received by the Indenture Trustee as a result of any claim under
the Policy, to the extent required to make the Guaranteed Payment on the related
Class of Insured Notes on the Payment Date, shall be withdrawn from the Policy
Payments Account and deposited in the Payment Account and applied by the
Indenture Trustee, together with the other funds to be paid from the Payment
Account pursuant to Section 8.03, directly to the payment in full of the
Guaranteed Payment due on the Insured Notes. Any funds remaining in the Policy
Payments Account on the first Business Day following the later of the Payment
Date and the Business Day after the day on which a payment on the Policy has
been paid to the Holders of the Insured Notes shall be remitted to the Credit
Enhancer, pursuant to the instructions of the Credit Enhancer, by the end of the
Business Day.
(c) The Indenture Trustee shall keep a complete and accurate record of the
amount of interest and principal paid on any Insured Note from moneys received
under the Policy. The Credit Enhancer may inspect the records at reasonable
times during normal business hours on one Business Day's notice to the Indenture
Trustee.
(d) The Indenture Trustee shall promptly notify the Credit Enhancer of any
Preference Claim of which a Responsible Officer has actual knowledge. The Credit
Enhancer shall pay Preference Amounts in the manner provided in the Policy. Each
Holder of Insured Notes by its purchase of Insured Notes, the Master Servicer,
and the Indenture Trustee agree that the Credit Enhancer may at any time during
the continuation of any proceeding relating to a Preference Claim direct all
matters relating to the Preference Claim, including the direction of any appeal
of any order relating to the Preference Claim and the posting of any surety,
supersedeas, or performance bond pending any appeal. In addition and without
limiting the
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foregoing, the Credit Enhancer shall be subrogated to the rights of the Master
Servicer, the Indenture Trustee, and each Holder of Insured Notes in the conduct
of any Preference Claim, including all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
Preference Claim.
Section 8.06. Replacement Policy.
If a Credit Enhancer Default occurs, the Depositor may substitute a new
insurance policy for the existing Policy so long as (i) the new rating of the
Insured Notes would be an improvement over their then current rating, (ii) the
new insurance policy will qualify as a "similar commercially available credit
enhancement contract" within the meaning of Treas. Reg. ss.
1.1001-3(e)(4)(iv)(B), (iii) the Credit Enhancer shall have failed to cure such
Credit Enhancer Default within 10 Business Days following its receipt of written
notice of such Credit Enhancer Default, and (iv) the Rating Agency Condition is
satisfied. No new credit enhancement may be substituted, however, unless the
Indenture Trustee receives a legal opinion, acceptable in form and substance to
the Indenture Trustee, from counsel to the provider of the new credit
enhancement with respect to its enforceability and any other matters the
Indenture Trustee reasonably requires. Within five Business Days after the
Indenture Trustee takes physical possession of the new credit enhancement and
the opinion of counsel, it will deliver the replaced Policy to the Credit
Enhancer. Any other form of credit enhancement may also be substituted for the
Policy after a Credit Enhancer Default if the new rating of the Insured Notes
would be an improvement over their then current rating and the Indenture Trustee
receives an Opinion of Counsel to the effect that the substitution will not be
treated as a significant modification within the meaning of Treas. Reg. ss.
1.1001-3 and provided that the requirements of clauses (iii) and (iv) of this
Section 8.06 are met. Notwithstanding the foregoing, the substitution of new
credit enhancement shall not affect the rights of the Credit Enhancer to receive
payments of any amounts due to it or reimbursement for any draws made on the
Policy or any other amounts owed to the Credit Enhancer, in each case pursuant
to this Indenture and the Insurance Agreement.
Section 8.07. Cap Contracts.
The Cap Contract Administrator and the Cap Contracts Counterparty have
entered into the Cap Contract Administration Agreement. The Indenture Trustee's
rights to receive certain proceeds of the Cap Contracts as provided in the Cap
Contract Administration Agreement shall be rights of the Indenture Trustee as
Cap Trustee under this Indenture, shall be an asset of the Cap Trust, and shall
not be an asset of the Trust or of any REMIC. The Cap Contract Administrator and
the Master Servicer shall remit any amounts received from time to time with
respect to the Cap Contracts to the Cap Trustee, and the Cap Trustee shall
deposit the Cap Payment (Cap Trust Share) portion of any amounts received from
time to time with respect to a Cap Contract into the related Cap Contract
Account, and shall remit to Countrywide Home Loans, Inc. the excess of any
amounts received with respect to a Cap Contract for a related Payment Date over
the related Cap Payment (Cap Trust Share) for the related Payment Date.
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No later than two Business Days following each Payment Date, the Cap
Trustee shall notify the Cap Contract Administrator of the aggregate Note
Principal Balance of each Class of Notes after all distributions on the Payment
Date.
Upon a Responsible Officer of the Cap Trustee obtaining actual knowledge of
an Event of Default (as defined in either Cap Contract) or Termination Event (as
defined in either Cap Contract) for which the Cap Contract Administrator has the
right to designate an Early Termination Date for the applicable Cap Contract (as
defined in the applicable Cap Contract), the Cap Trustee shall act at the
written direction of the Depositor as to whether to direct the Cap Contract
Administrator to designate an Early Termination Date with respect to the
applicable Cap Contract. The Cap Trustee shall provide written notice to each
Rating Agency following the Event of Default or Termination Event. Upon the
termination of a Cap Contract under the circumstances contemplated by this
Section and at the expense of the Depositor, the Cap Trustee shall use
commercially reasonable efforts to enforce the rights of the Cap Contract
Administrator under the applicable Cap Contract, consistent with this Indenture,
and the Cap Contract Administrator shall use commercially reasonable efforts to
procure a replacement cap contract with terms approximating those of that
original Cap Contract.
Section 8.08. Cap Trust; Payment of Cap Payment Entitlement.
On the Closing Date, there is hereby established a separate trust (the "Cap
Trust"), the assets of which shall consist of the Indenture Trustee's rights and
obligations under the Cap Contract Administration Agreement as Cap Contract
Administrator. The Cap Trust shall be maintained by the Cap Trustee, who
initially, shall be the Indenture Trustee. On each Payment Date, the Indenture
Trustee shall distribute to the applicable Noteholders, as Basis Risk
Carryforward, funds on deposit in the Cap Contract Account related to that Class
of Notes up to the Cap Payment Entitlement related to that Class of Notes and
any amounts remaining in that Cap Contract Account (other than any early
termination payment) to the Sponsor. For federal income tax purposes, the Cap
Trust, including the Cap Contract Accounts, shall be owned by the Sponsor. If an
early termination payment is received with respect to an Early Termination Date,
the early termination payment will be deposited by the Cap Trustee in the Cap
Contract Account related to the Cap Contract on which the early termination
payment was received to cover future Cap Payment Entitlement on that Class of
Notes until the Cap Contract Termination Date and any remaining amount will be
paid on that date to the Sponsor.
Section 8.09. Monitoring of Significance Percentage.
With respect to each Payment Date, the Indenture Trustee shall calculate
the "significance percentage" (as defined in Item 1115 of Regulation AB) of any
derivative instrument based on the aggregate Note Principal Balance of the
Classes of Notes related to that derivative instrument and Payment Date (after
all payments to be made thereon on such Payment Date) and based on the
methodology provided in writing by or on behalf of Countrywide no later than
five Business Day preceding that Payment Date. On each Payment Date, the
Indenture Trustee shall provide to Countrywide a written report (which written
report
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may include similar information with respect to other derivative instruments
relating to securitization transactions sponsored by Countrywide) specifying the
"significance percentage" of each derivative instrument, if any, for that
Payment Date. If the "significance percentage" of any derivative instrument
exceeds 7.0% with respect to any Payment Date, the Indenture Trustee shall make
a separate notation thereof in the written report described in the preceding
sentence. Such written report may contain such assumptions and disclaimers as
are deemed necessary and appropriate by the Indenture Trustee.
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
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organization to maintain or improve any rating of the Notes without taking
the Policy into account;
(ix) to modify, eliminate, or add to the provisions of this Indenture
to comply with any requirement imposed by the Code or to comply with any
rules or regulations of the Securities and Exchange Commission;
(x) to modify, eliminate, or add to the provisions of this Indenture
to the extent appropriate to maintain the qualification of the Trust as a
REMIC under the Code or to avoid or minimize the risk of the imposition of
any tax on the Trust pursuant to the Code that would be a claim against the
Trust at any time before the final redemption of the Notes;
(xi) to modify, eliminate, or add to the provisions of this Indenture
to the extent necessary to comply with any rules or regulations of the
Securities and Exchange Commission;
(xii) to modify, eliminate, or add to the provisions of this Indenture
to the extent necessary to effect the qualification of this Indenture under
the TIA or under any similar federal statute hereafter enacted and to add
to this Indenture other provisions expressly required by the TIA; or
(xiii) to provide for the acceptance of the appointment of a successor
trustee under this Indenture and to add to or change any of the provisions
of this Indenture necessary to facilitate the administration of the trusts
under this Indenture by more than one trustee, pursuant to the requirements
of Article VI.
The Indenture Trustee is authorized to join in the execution of any
supplemental indenture and to make any further appropriate agreements and
stipulations that may be contained in it.
(b) Without the consent of any of the Noteholders but with satisfaction of
the Rating Agency Condition (in connection with which the consent of the Credit
Enhancer shall not be unreasonably withheld), subject to Section 9.05, the
Issuer and the Indenture Trustee may enter into indentures supplemental to this
Indenture to change this Indenture in any manner or to modify the rights of the
Noteholders or the Credit Enhancer under this Indenture, except that, without
the consent of each affected Noteholder by an Act of the applicable Noteholders
delivered to the Issuer and the Indenture Trustee and without the consent of the
Credit Enhancer and subject to Section 9.05, no supplemental indenture under
this Section 9.01(b) shall:
(i) change the date of payment of any installment of principal of any
Principal Amount Note or interest on any Interest Bearing Note, or reduce
the principal amount of any Principal Amount Note, the interest rate on any
Interest Bearing Note, or its redemption price, or change any place of
payment where, or the coin or currency in which, any Note or its interest
is payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of available funds
to the payment of any amount
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due on the Notes after their due dates (or, in the case of redemption,
after the redemption date), as provided in Article V;
(iii) reduce the percentage of the Outstanding Amount the consent of
the Holders of which is required for any supplemental indenture, or the
consent of the Holders of which is required for any waiver of compliance
with certain provisions of this Indenture or certain defaults under this
Indenture and their consequences or to direct the liquidation of the
Collateral;
(iv) modify any provision of Section 9.01(b)(i), (ii), (iii), (iv), or
(v) except to increase any percentage specified in this Indenture or
provide that certain additional provisions of this Indenture or the
Transaction Documents cannot be modified or waived without the consent of
the Holder of each Note affected by it; modify any of the provisions of
this Indenture in a manner affecting the calculation of the amount of any
payment of interest or principal due on any Note on any Payment Date
(including the calculation of any of the individual components of the
calculation) or affect the rights of the Holders of Notes to the benefit of
any provisions for the mandatory redemption of the Notes in this Indenture;
or
(v) permit the creation of any lien ranking before or on a parity
with the lien of this Indenture with respect to any part of the Collateral
(except any change in any mortgage's lien status in accordance with the
Sale and Servicing Agreement) or, except as otherwise permitted or
contemplated in this Indenture, terminate the lien of this Indenture on any
property at any time subject to this Indenture or deprive the Holder of any
Note of the security provided by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and that determination
shall be conclusive on the Holders of all Notes, whether authenticated and
delivered under this Indenture before or after that. The Indenture Trustee shall
not be liable for any determination made in good faith.
An Act of Noteholders under this Section need not approve the particular
form of any proposed supplemental indenture, but is sufficient if it approves
the substance of the supplemental indenture.
Promptly after the execution by the Issuer and the Indenture Trustee of any
supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Noteholders to which the supplemental indenture relates a notice
stating in general terms the substance of the supplemental indenture. Any
failure of the Indenture Trustee to mail a notice, or any defect in it, shall
not, however, in any way impair or affect the validity of the supplemental
indenture.
Section 9.02. Execution of Supplemental Indentures.
In executing any supplemental indenture permitted by this Article, the
Indenture Trustee may require and, subject to Sections 6.01 and 6.03, shall be
fully protected in relying on an Opinion of Counsel (addressed to the Indenture
Trustee) stating that the execution of the
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supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but need not, enter into any supplemental indenture that
affects the Indenture Trustee's own rights or obligations under this Indenture
or otherwise.
Section 9.03. Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture pursuant to this
Indenture, this Indenture shall be changed in accordance with the supplemental
indenture, and the Indenture Trustee, the Issuer, and the Noteholders shall
bound by the supplemental indenture.
Section 9.04. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and if required by the Indenture Trustee
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in the supplemental indenture. If the Issuer so determines,
new Notes so modified as to conform, in the opinion of the Indenture Trustee and
the Issuer, to the supplemental indenture may be prepared and executed by the
Issuer and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes.
Section 9.05. Tax Opinion.
This Indenture may not be amended under this Article or otherwise unless,
in connection with the amendment, an Opinion of Counsel is furnished to the
Indenture Trustee that the amendment will not result in a tax on any REMIC
created under the Trust Agreement pursuant to the REMIC Provisions or cause any
REMIC created under the Trust Agreement to fail to qualify as a REMIC at any
time that any Securities are outstanding.
Section 9.06. Tax Matters
(a) The assets of the Issuer with respect to which a REMIC election is to
be made as provided in the Trust Agreement are intended to be a real estate
mortgage investment conduit, and the affairs of the Trust shall be conducted so
that each REMIC created pursuant to the Trust Agreement qualifies as a real
estate mortgage investment conduit.
(b) The Indenture Trustee shall act as agent on behalf of the Trust and as
such agent the Indenture Trustee shall:
(i) prepare and file in a timely manner a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066 or any successor form
adopted by the Internal Revenue Service) and prepare and file with the
Internal Revenue Service and applicable state or local tax authorities
income tax or information returns for each taxable year for each REMIC as
required by the Code or state or local tax laws, regulations, or rules, and
furnish to the Holders of the Notes and the Certificates any schedules,
statements, or information required by the Code or state or local tax laws,
regulations, or rules;
(ii) within thirty days of the Closing Date, furnish to the Internal
Revenue Service, on Forms 8811 or as otherwise may be required by the Code,
the name, title,
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address, and telephone number of the person that the Holders of the Notes
and the Certificates may contact for tax information relating to the Notes
and the Certificates, together with such additional information as may be
required by Form 8811, and update such information as required by the Code
for the Issuer;
(iii) make elections on behalf of each REMIC to be treated as a REMIC
on the federal tax return of each REMIC for its first taxable year (and, if
necessary, under applicable state law);
(iv) prepare and forward to the Holders of the Notes and the
Certificates and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required
to be provided to them in accordance with the REMIC Provisions, including
the calculation of any original issue discount;
(v) provide any information necessary for the computation of any tax
imposed on any transfer of a Residual Certificate (the reasonable cost of
computing and furnishing such information may be charged to the person
liable for the tax);
(vi) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC tax status of any
REMIC;
(vii) pay, from the sources specified in Section 3.12(c) of the Trust
Agreement or Section 9.06(c) of this Indenture, as applicable, any federal
or state tax, including prohibited transaction taxes as described below,
imposed on any REMIC before its termination when and as they become payable
(but the Indenture Trustee or any other appropriate person may contest any
such tax in appropriate proceedings and the Indenture Trustee may withhold
payment of the tax, if permitted by law, pending the outcome of such
proceedings);
(viii) ensure that federal, state, or local income tax or information
returns are signed as required by the Code or state or local laws;
(ix) maintain records relating to each REMIC necessary to prepare the
foregoing returns, schedules, statements, or information, including the
income, expenses, assets, and liabilities of each REMIC, and the fair
market value and adjusted basis of the assets determined as required by the
Code; and
(x) subject to the succeeding sentence, represent any REMIC in any
administrative or judicial proceedings relating to an examination or audit
by any governmental taxing authority, request an administrative adjustment
as to any taxable year of any REMIC, enter into settlement agreements with
any governmental taxing agency, extend any statute of limitations relating
to any tax item of any REMIC, and otherwise act on behalf of any REMIC
regarding any tax matter involving it. The Indenture Trustee, as and when
necessary and appropriate, may agree to represent the trust in any
administrative or judicial proceedings relating to an examination or audit
by any governmental taxing authority, request an administrative adjustment
as to any taxable year of the trust provided for herein, enter into
settlement agreements with any
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governmental taxing agency, extend any statute of limitation relating to
any tax matter of the trust provided for herein, and otherwise act on
behalf of the trust provided for herein in relation to any tax matter
involving the trust. The fees for any representation or other assistance
rendered by the Indenture Trustee in connection with the tax-related
services described in the preceding sentence will be set forth in and
payable by the Sponsor a separate agreement, if necessary.
To enable the Indenture Trustee to perform its duties, the Issuer shall
provide to the Indenture Trustee within ten days after the Closing Date any
information that the Indenture Trustee requests in writing and determines to be
relevant for tax purposes to the valuations and offering prices of the Notes and
the Certificates, including the price, yield, prepayment assumption, and
projected cash flows of the Notes and the Certificates and the Mortgage Loans.
Thereafter, the Issuer shall provide to the Indenture Trustee promptly upon
written request therefor, any additional information that the Indenture Trustee
requests to enable it to perform these duties.
(c) If any tax is imposed on "prohibited transactions" of any REMIC as
defined in Section 860F(a)(2) of the Code, on the "net income from foreclosure
property" of a REMIC as defined in section 860G(c) of the Code, on any
contribution to a REMIC after the Startup Day pursuant to Section 860G(d) of the
Code, or any other tax is imposed on any REMIC (including any federal, state, or
local tax), the tax shall be paid by the Indenture Trustee, if the tax arises
out of a breach by the Indenture Trustee of any of its obligations described in
Section 9.06(b).
(d) The Indenture Trustee shall treat the rights of the holders of
Principal Amount Notes to receive payments from the Basis Risk Carryforward
Reserve Fund as rights in a notional principal contract written by the Holders
of the Class C Certificates in respect of any Basis Risk Carryforward
distributed in favor of the holders of the Principal Amount Notes. Thus, the
Principal Amount Notes and the Class C Certificates shall be treated as
representing ownership of not only Master REMIC regular interests, but also
ownership of an interest in an interest rate cap contract.
(e) The Indenture Trustee shall treat the Basis Risk Carryforward Reserve
Fund as an outside reserve fund within the meaning of Treasury Regulation
1.860G-2(h) that is owned by the Holders of the Class C Certificates, and that
is not an asset of any REMIC.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) The Principal Amount Notes are subject to redemption by the Issuer
with the consent of the Credit Enhancer and the Master Servicer in whole on any
Payment Date on or after the Optional Termination Date. The redemption price for
each Class of Principal Amount
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Notes shall be the Note Principal Balance for that Class plus accrued aggregate
Note Interest for that Class through the day before the redemption date plus
interest accrued on the aggregate Unpaid Investor Interest Shortfall for that
Class of Notes, to the extent legally permissible. No premium or penalty will be
payable by the Issuer in any redemption of the Notes.
(b) The Issuer shall notify the Indenture Trustee of its election to
redeem the Principal Amount Notes not later than the first day of the month
preceding the month of the redemption. The Indenture Trustee shall first notify
the Credit Enhancer and the Master Servicer and then notify the Noteholders by
letter mailed or sent by facsimile transmission not earlier than the 15th day
and not later than the 25th day of the month before the month of the redemption.
Payment on the Principal Amount Notes will only be made on presentation and
surrender of the Notes at the office or agency of the Indenture Trustee
specified in the redemption notice. By the redemption date, the Issuer shall
deposit in the Payment Account in immediately available funds an amount that,
when added to the funds on deposit in the Payment Account and the Collection
Account that are payable to the Noteholders, equals the redemption price for
each Class of Principal Amount Notes, whereupon all the Notes called for
redemption shall be payable on the redemption date.
(c) On presentation and surrender of the Principal Amount Notes, the
Indenture Trustee shall pay to the Holders of Notes on the redemption date an
amount equal to their redemption price. On the redemption date, the Indenture
Trustee shall, based on the information in the Servicing Certificate for the
relevant Payment Date, withdraw from the Payment Account and remit to the Credit
Enhancer the lesser of
(i) the amount available for distribution on the redemption date, net
of the amount needed to pay the redemption price and
(ii) the unpaid amounts due to the Credit Enhancer for unpaid premiums
and unreimbursed draws on the Policy (together with interest on them as
provided under the Insurance Agreement) and any other sums owed under the
Insurance Agreement.
If all of the Noteholders do not surrender their Principal Amount Notes for
final payment and cancellation by the redemption date, the Indenture Trustee
shall hold in the Payment Account, for the benefit of the Noteholders and the
Issuer, the remaining amounts representing the redemption price not distributed
in redemption to Noteholders.
(d) Any election to redeem Principal Amount Notes pursuant to Section
10.01(a) shall be evidenced by an Issuer Order. The Issuer Order shall specify
the items required in the notice of redemption to be mailed to Noteholders. The
Issuer shall notify each Rating Agency of the redemption.
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Section 10.02. Form of Redemption Notice.
Notice of redemption under Section 10.01 shall be given by the Indenture
Trustee by first-class mail, postage prepaid, or by facsimile or other reliable
electronic means (promptly confirmed by mail) to each Holder of Principal Amount
Notes and to the Credit Enhancer as of the close of business on the Record Date
preceding the redemption date, at the Holder's address or facsimile number
appearing in the Note Register.
All notices of redemption shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) the amount of interest accrued to the redemption date;
(iv) the place where Principal Amount Notes are to be surrendered for
payment of the redemption price (which shall be the office or agency of the
Issuer maintained pursuant to Section 3.02); and
(v) that on the redemption date, the redemption price will become
payable on each Principal Amount Note and that interest on the Principal
Amount Notes shall cease to accrue beginning on the redemption date.
Notice of redemption of the Principal Amount Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer. Failure to give
notice of redemption, or any defect in it, to any Holder of any Principal Amount
Note shall not affect the validity of the redemption of any other Principal
Amount Note.
Section 10.03. Notes Payable on Redemption Date.
Following notice of redemption as required by Section 10.02, on the
redemption date the Principal Amount Notes shall become payable at the
redemption price and (unless the Issuer defaults in the payment of the
redemption price) no interest shall accrue on the redemption price for any
period after the date to which accrued interest is calculated for purposes of
calculating the redemption price.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.
(a) Whenever the Issuer requests the Indenture Trustee to take any action
under this Indenture, the Issuer shall furnish to the Indenture Trustee and the
Credit Enhancer an Officer's Certificate stating that any conditions precedent
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in its opinion any
conditions precedent have been complied with.
67
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each signatory of the certificate or opinion has
read the covenant or condition and the definitions in this Indenture
relating to it;
(ii) a brief statement as to the nature and scope of the examination
or investigation on which the statements or opinions in the certificate or
opinion are based;
(iii) a statement that, in the opinion of each signatory, the
signatory has made any examination or investigation necessary for the
signatory to express an informed opinion about whether or not the covenant
or condition has been complied with;
(iv) a statement as to whether, in the opinion of each signatory, the
condition or covenant has been complied with; and
(v) if the signer of the certificate is required to be Independent,
the statement required by the definition of Independent.
(b)
(i) Before the deposit of any Collateral or other property with the
Indenture Trustee that is to be made the basis for the release of any
property subject to the lien of this Indenture, the Issuer shall, in
addition to any obligation imposed in Section 11.01(a) or elsewhere in this
Indenture, furnish to the Indenture Trustee and the Credit Enhancer an
Officer's Certificate stating the opinion of each person signing the
certificate as to the fair value (within 90 days of the deposit) to the
Issuer of the Collateral or other property to be deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate stating the opinion of any signer as to
the matters described in clause (b)(i), the Issuer shall also deliver to
the Indenture Trustee and the Credit Enhancer an Independent Certificate as
to the same matters, if the fair value to the Issuer of the property to be
deposited as the basis of any release and of all other property made the
basis of any release since the commencement of the then-current calendar
year as described in the certificates delivered pursuant to clause (b)(i)
is 10% or more of the aggregate Outstanding Amount of all Classes of
Principal Amount Notes, but the certificate need not be furnished for any
securities deposited, if their fair value to the Issuer as described in the
related Officer's Certificate is less than $25,000 or less than 1% of the
then aggregate Outstanding Amount of all Classes of Principal Amount Notes.
(iii) Whenever any property is to be released from the lien of this
Indenture, the Issuer shall also furnish to the Indenture Trustee and the
Credit Enhancer an Officer's Certificate stating the opinion of each person
signing the certificate as to the
68
fair value (within 90 days of the release) of the property proposed to be
released and stating that in the opinion of that person the proposed
release will not impair the security under this Indenture in contravention
of the provisions of this Indenture.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate stating the opinion of any signer as to
the matters described in clause (b)(iii), the Issuer shall also furnish to
the Indenture Trustee and the Credit Enhancer an Independent Certificate as
to the same matters if the fair value of the property and of all other
property released from the lien of this Indenture since the commencement of
the then-current calendar year, as described in the certificates required
by clause (b)(iii) and this clause (b)(iv), equals 10% or more of the
aggregate Outstanding Amount of all Classes of Principal Amount Notes, but
the certificate need not be furnished for any release of property if its
fair value as described in the related Officer's Certificate is less than
$25,000 or less than 1% of the then aggregate Outstanding Amount of all
Classes of Principal Amount Notes.
(v) Notwithstanding any provision of this Indenture, the Issuer may,
without compliance with the other requirements of this Section, (A)
collect, liquidate, sell, or otherwise dispose of Collateral as and to the
extent permitted by the Transaction Documents, and (B) make cash payments
out of the Collection Account as and to the extent permitted by the
Transaction Documents, so long as the Issuer delivers to the Indenture
Trustee and the Credit Enhancer every six months, beginning six months
after the date of this Indenture, an Officer's Certificate of the Issuer
stating that all the dispositions of Collateral described in clauses (A)
and (B) that occurred during the preceding six months were in the ordinary
course of the Issuer's business and that their proceeds were applied in
accordance with the Transaction Documents.
Section 11.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified person, all the matters need not be
certified by, or covered by the opinion of, only one person, or be certified or
covered by only one document. One person may certify or give an opinion with
respect to some matters and one or more other persons as to other matters, and
any person may certify or give an opinion as to one matter in one or several
documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based on a certificate or opinion of counsel insofar as it relates to legal
matters, unless the officer knows, or in the exercise of reasonable care should
know, that with respect to the matters on which the officer's certificate or
opinion is based the certificate or opinion is erroneous. Any certificate of an
Authorized Officer or Opinion of Counsel may be based on a certificate or
opinion of officers of any appropriate party to any of the Transaction Documents
insofar as it relates to factual matters, stating that the information with
respect to the factual matters is in the
69
possession of the party, unless the person signing knows, or in the exercise of
reasonable care should know, that the certificate or opinion is erroneous.
Where any person is required to deliver two or more documents under this
Indenture, they may, but need not, be consolidated into one document.
If the Issuer is required to deliver any document as a condition of the
granting of any request, or as evidence of its compliance with this Indenture,
the request may be denied or the certification of compliance will be
unacceptable if the document is inaccurate. This provision shall not, however,
affect the Indenture Trustee's right to rely on the accuracy of any statement or
opinion in any document as provided in Article VI.
Section 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver, or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by Noteholders in person or by agents duly
appointed in writing. Except as otherwise expressly provided in this Indenture
the action shall become effective when the instruments are delivered to the
Indenture Trustee and, if expressly required, to the Issuer. The instruments
(and the action embodied in them) are referred to as the "Act" of the
Noteholders signing the instruments. Proof of execution of any instrument or of
a writing appointing an agent for a Noteholder shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any instrument may
be proved by an affidavit of a witness to the execution or the certificate of
any notary public or other person authorized by law to acknowledge the execution
of deeds. Any certificate on behalf of a jural entity executed by a person
purporting to have authority to act on behalf of the jural entity shall itself
be sufficient proof of the authority of the person executing it to act. The fact
and date of the execution by any person of any instrument may also be proved in
any other manner that the Indenture Trustee deems sufficient.
(c) The Note Register shall prove the ownership of Notes.
(d) Any Act by the Holder of a Note shall bind every Holder of the same
Note and every Note issued on its transfer or in exchange for it or in lieu of
it, in respect of anything done, omitted, or suffered to be done by the
Indenture Trustee or the Issuer in reliance on the Act, whether or not notation
of the action is made on the Note.
Section 11.04. Notices.
Any request, demand, authorization, direction, notice, consent, waiver,
Act, or other action or other documents provided or permitted by this Indenture
to be given to:
(i) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose under this Indenture if given in writing and
delivered by
70
first-class mail, postage prepaid, overnight courier, personally delivered,
or facsimile (followed by the original by any other means authorized by
this Section) to the Indenture Trustee at its Corporate Trust Office, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose under this Indenture if given in writing and
delivered by first-class mail, postage prepaid, overnight courier,
personally delivered, or facsimile (followed by the original by any other
means authorized by this Section) to the Issuer addressed as provided in
the Adoption Annex or at any other address previously furnished in writing
to the Indenture Trustee by the Issuer; or
(iii) the Credit Enhancer by the Issuer, the Indenture Trustee, or by
any Noteholder shall be sufficient for every purpose under this Indenture
if given in writing and delivered by first-class mail, postage prepaid,
overnight courier, personally delivered, or facsimile (followed by the
original by any other means authorized by this Section) (unless otherwise
specifically provided) to the Credit Enhancer addressed as provided in the
Adoption Annex or at any other address previously furnished in writing to
the Indenture Trustee by the Credit Enhancer, except that whenever a notice
or other communication to the Credit Enhancer refers to an Event of
Default, Event of Servicing Termination, a claim under the Policy, or with
respect to which failure on the part of the Credit Enhancer to respond
would constitute consent or acceptance, then a copy of the notice or other
communication shall also be sent to the attention of the General Counsel of
the Credit Enhancer and shall be marked to indicate "URGENT MATERIAL
ENCLOSED"; or
(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
71
notice that is mailed in the manner provided in this Indenture shall
conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, any person entitled
to receive it may waive the notice in writing, either before or after the event,
and the waiver shall be the equivalent of notice. Waivers of notice by
Noteholders shall be filed with the Indenture Trustee but the filing shall not
be a condition precedent to the validity of any action taken in reliance on a
waiver.
If it is impractical to mail notice of any event to Noteholders when the
notice is required to be given pursuant to this Indenture because of the
suspension of regular mail service as a result of a strike, work stoppage, or
similar activity, then any manner of giving the notice satisfactory to the
Indenture Trustee shall be considered to be a sufficient giving of the notice.
Where this Indenture provides for notice to each Rating Agency, failure to
give the notice shall not affect any other rights or obligations created under
this Indenture, and shall not under any circumstance constitute an Incipient
Default.
Section 11.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to the Holder, that is different from the methods provided for in
this Indenture. The agreement may not accelerate the timing or increase the
amount of any payments to the Noteholder; cause any release of or other change
in any Collateral; or affect the timing, amount, or method of any payments by
the Credit Enhancer under the Policy. The Issuer will furnish to the Indenture
Trustee and the Credit Enhancer a copy of each such agreement and the Indenture
Trustee will cause payments to be made and notices to be given in accordance
with them.
Federal funds wire transfers to the Credit Enhancer shall be made with the
details provided in the Adoption Annex specifically stated on the wire
instructions, unless another account is designated by written notice from the
president or a managing director of the Credit Enhancer to the Indenture Trustee
and the Issuer at least five Business Days before the date on which the funds
are to be transferred to the Credit Enhancer.
Section 11.07. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision of this Indenture that is required to be included in this
Indenture by the Trust Indenture Act, the required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically included in this Indenture unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically in this Indenture.
72
Section 11.08. Effect of Headings and Table of Contents.
The Article and Section headings and the Table of Contents are for
convenience only and shall not affect the construction of this Indenture.
Section 11.09. Successors and Assigns.
All agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors, assigns,
co-trustees, and agents.
Section 11.10. Separability.
If any provision in this Indenture or in the Notes is invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining
provisions of this Indenture and the Notes shall not be affected in any way.
Section 11.11. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall give
to any person, other than the parties to this Indenture and their successors
under this Indenture, the Master Servicer (under Article VIII), the Credit
Enhancer, any person with an ownership interest in the Trust, and the
Noteholders, any benefit or any legal or equitable right under this Indenture.
The Credit Enhancer is a third party beneficiary of this Indenture.
Section 11.12. Legal Holidays.
If the date on which any payment is due is not a Business Day, then
(notwithstanding any other provision of the Notes or this Indenture) payment
need not be made on that date, but may be made on the next Business Day with the
same force as if made on the date on which nominally due, and no interest shall
accrue for the period after the nominal due date.
Section 11.13. Governing Law.
THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 11.14. Counterparts; Electronic Delivery.
This Indenture may be executed in any number of counterparts, each of which
so executed shall be considered an original, but all the counterparts shall
together constitute a single instrument. Any signature page to this Indenture
containing a manual signature may be delivered by facsimile transmission or
other electronic communication device capable of transmitting or creating a
printable written record, and when so delivered shall have the effect of
delivery of an original manually signed signature page.
Section 11.15. Recording of Indenture.
This Indenture is a Security Agreement under the UCC. If this Indenture is
subject to recording in any appropriate public recording offices, the recording
is to be effected by the Issuer but only at the request and expense of
Noteholders accompanied by an Opinion of
73
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that the recording
materially and beneficially affects the interests of the Noteholders or any
other person secured under this Indenture or the enforcement of any right
granted to the Indenture Trustee under this Indenture.
Section 11.16. No Petition.
The Indenture Trustee, by entering into this Indenture, any Paying Agent,
by accepting its appointment as such, the Issuer, and each Noteholder, by
accepting a Note, hereby covenant that they will not at any time institute
against the Issuer or the Depositor, or join in any institution against the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency, or
liquidation proceedings, or other proceedings under any United States federal or
State bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture, or any of the other Transaction Documents. This
Section shall survive the termination of this Indenture.
Section 11.17. Non-recourse.
The Issuer and each Noteholder, by its acceptance of its Note, agree that
the indebtedness represented by the Notes is non-recourse to the Issuer, and is
payable solely from the assets of the Trust.
Section 11.18. Act on Instructions from Credit Enhancer.
Notwithstanding any provision of this Indenture to the contrary other than
Section 9.01(b)(i), (ii), (iii), (iv), or (v), so long as no Credit Enhancer
Default exists, the Credit Enhancer shall at all times be treated as if it were
the exclusive owner of all Insured Notes Outstanding for the purposes of all
approvals, consents, waivers, and the institution of any action and the
direction of all remedies, and the Indenture Trustee shall act in accordance
with the directions of the Credit Enhancer so long as it is indemnified therefor
to its reasonable satisfaction. The Credit Enhancer shall not be treated as if
it were the exclusive owner of any Notes (other than those it may actually own)
for the purposes of Section 9.01(b)(i), (ii), (iii), (iv), or (v).
Section 11.19. Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, or the Indenture Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection this Indenture, against (i) the Indenture Trustee, or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer, or (iii) any partner, owner, beneficiary, agent, officer, director,
employee, or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee, or the Owner Trustee in its individual capacity. For all
purposes of this Indenture, in the performance of any obligations of the Issuer
under this Indenture, the Owner Trustee shall be subject to, and entitled to the
benefits of, Articles VI, VII, and VIII of the Trust Agreement.
74
IN WITNESS WHEREOF, the parties to this Indenture have caused this
Indenture to be duly executed by their officers, thereunto duly authorized, all
as of the day and year first above written.
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2006-I
By: WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Financial Services Officer
THE BANK OF NEW YORK
Indenture Trustee,
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
75
ANNEX 1
MASTER GLOSSARY OF DEFINED TERMS
▇▇▇-1-1
EXHIBIT A-1
FORM OF NOTES
Each transferee or purchaser of this Note that is a plan or is investing plan
assets, by acceptance of this Note or an interest in this Note, represents that
the investment and holding of this Note satisfy the conditions for exemptive
relief under ▇▇▇▇ ▇▇-▇▇, ▇▇▇▇ ▇▇-▇, ▇▇▇▇ ▇▇-▇▇, ▇▇▇▇ ▇▇-▇▇, ▇▇▇▇ 96-23, the
service provider exemption provided under Section 408(b)(17) of ERISA and
Section 4975(d)(20) of the Code or a similar exemption. A "plan" is an employee
benefit plan (as defined in section 3(3) of ERISA) that is subject to Title I of
ERISA, a plan (as defined in and subject to section 4975 of the Code) and any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity or otherwise.
Unless this Note is presented by an authorized representative of the Depository
to the Issuer or its agent for registration of transfer, exchange, or payment,
and any Note issued in exchange for this Note is registered in the name of the
Depository or in another name requested by an authorized representative of the
Depository (and any payment on this Note is made to the Depository or to another
entity requested by an authorized representative of the Depository), any
transfer, pledge, or other use of this Note for value or otherwise by or to any
person is wrongful inasmuch as the registered owner of this Note, the
Depository, has an interest in this Note.
Solely for U.S. Federal Income Tax purposes, this note is a "regular
interest" in a "real estate mortgage investment conduit," as those terms are
defined, respectively, in Sections 860G and 860D of the internal revenue code of
1986, as amended.
Any transfer in violation of either of the foregoing will be void ab
initio, and will not operate to transfer any rights to the transferee,
notwithstanding any instructions to the contrary.
A-2-1
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200[o]-[o]
REVOLVING HOME EQUITY LOAN ASSET BACKED NOTE
SERIES 200[o]-[o]
--------------------------------------------------------------------------------
Registered Principal Amount: $[___________]
--------------------------------------- ----------------------------------------
No. [____] Percentage Interest: [__]%
--------------------------------------- ----------------------------------------
CUSIP No. [_______] Initial Payment Date: [___________]
--------------------------------------- ----------------------------------------
Class [_____] Note Rate: Variable
--------------------------------------------------------------------------------
The Issuer, CWHEQ Revolving Home Equity Loan Trust, Series 20[o]-[o], promises
to pay to CEDE & CO. or registered assigns the Principal Amount, payable on each
Payment Date in an amount equal to the Percentage Interest of the aggregate
amount payable from the Payment Account as principal on the Notes pursuant to
Section 8.03 of the Indenture, dated as of [o][o], 200[o] (the "Indenture"),
between the Issuer, The Bank of New York, as Indenture Trustee. The entire
remaining outstanding principal balance of this Note is payable on the Payment
Date in [INSERT MATURITY DATE]. Capitalized terms used in this Note that are not
otherwise defined have the meanings given to them in the Indenture.
Interest will be paid on the 15th day of each month or if that is not a Business
Day, then on the next Business Day (the "Payment Date"), commencing on the first
Payment Date specified above, to the person in whose name this Note is
registered at the close of business on the last day preceding the Payment Date
(the "Record Date") at the Note Rate. Interest will be computed on the basis of
the actual number of days in the Interest Period and a 360-day year.
The "Note Rate" is a per annum rate equal to the least of (i) for the first
Interest Period a per annum rate equal to the sum of the interpolated one-month
and two-month LIBOR and [INSERT SPREAD]%, and for any subsequent Interest
Period, a per annum rate equal to the sum of LIBOR as of the second LIBOR
Business Day before the first day of that Interest Period, (ii) the Maximum Rate
for the Class [INSERT CLASS DESIGNATION] Notes for that Interest Period, and
(iii) [INSERT FIXED CAP IF APPLICABLE TO THAT CLASS OF NOTES]%.
The interpolated one-month and two-month LIBOR shall be equal to one-month LIBOR
for the first Interest Period plus the product of
o the excess of two-month LIBOR for the first Interest Period over
one-month LIBOR for the first Interest Period, multiplied by
o a fraction whose numerator is the number of days from the
one-month anniversary of the Closing Date to the first Payment Date and
whose denominator is 30.
A-2-2
The "Maximum Rate" for any Interest Period is the Weighted Average Net Loan Rate
for the Mortgage Loans in the related Loan Group for the Collection Period
during which an Interest Period begins (adjusted to an effective rate reflecting
accrued interest calculated on the basis of the actual number of days in the
Collection Period commencing in the month in which that Interest Period
commences and a year assumed to consist of 360 days).
"LIBOR" for any day means the rate for United States dollar deposits for one
month that appears on the Moneyline Telerate Screen Page 3750 as of 11:00 A.M.,
London time that day. If LIBOR does not appear on that page (or a page replacing
that page on that service or, if that service is no longer offered, any other
service for displaying LIBOR or comparable rates reasonably selected by the
Depositor after consultation with the Indenture Trustee), the rate will be the
reference bank rate.
The reference bank rate for an Interest Period means the arithmetic mean
(rounded upwards to the nearest one sixteenth of a percent) of the offered rates
for United States dollar deposits offered by three major banks engaged in
transactions in the London interbank market, selected by the Depositor after
consultation with the Indenture Trustee, as of 11:00 A.M., London time, on the
second LIBOR Business Day before the first day of the Interest Period, to prime
banks in the London interbank market for a period of one month in amounts
approximately equal to the outstanding Note Principal Balance if at least two of
the banks provide an offered rate.
If fewer than two offered rates are quoted, the reference bank rate will be the
arithmetic mean of the rates quoted by one or more major banks in New York City,
selected by the Depositor after consultation with the Indenture Trustee, as of
11:00 A.M., New York City time, on the second LIBOR Business Day before the
first day of the Interest Period, for loans in U.S. dollars to leading European
banks for a period of one month in amounts approximately equal to the
outstanding Note Principal Balance. If no such quotations can be obtained, the
reference bank rate shall be LIBOR for the preceding Interest Period.
"LIBOR Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in the State of New York or in the City of London,
England are required or authorized by law to be closed.
This Note is one of the Notes from a duly authorized issue of Notes issued by
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, designated as Revolving
Home Equity Loan Asset Backed Notes, Series 2006-I.
Payments on this Note will be made by the Indenture Trustee, or by the Paying
Agent appointed pursuant to the Indenture, by check mailed to the person
entitled thereto as its name and address appears on the Note Register or, upon
written request by the person delivered to the Indenture Trustee at least five
Business Days before the related Record Date, by wire transfer (but only if the
person owns of record Notes having principal denominations aggregating at least
A-2-3
$1,000,000), or by any other means of payment the person and the Indenture
Trustee agree to. Notwithstanding the above, the final payment on this Note will
be made after due notice by the Indenture Trustee or the Paying Agent, and only
upon presentation and surrender of this Note at the office or agency appointed
by the Indenture Trustee for that purpose.
This Note does not purport to summarize the Indenture and reference is made to
the Indenture for the rights and obligations under it.
Solely for U.S. federal income tax purposes, this Note is a "regular interest "
in a "Real Estate Mortgage Investment Conduit," as those terms are defined in
sections 860G and 860D of the Internal Revenue Code of 1986.
Without the consent of the Holders of any Notes but with the consent of the
Credit Enhancer, the Issuer, and the Indenture Trustee may amend the Indenture
in certain limited ways. Without the consent of any of the Noteholders but with
satisfaction of the Rating Agency Condition, the Issuer, and the Indenture
Trustee, may amend the Indenture to change the Indenture in any manner or to
modify the rights of the Noteholders or the Credit Enhancer under the Indenture
except amendments that require the consent of each affected Noteholder. No
supplemental indenture may, without the consent of each affected Noteholder:
change the date of payment of any installment of principal or interest on any
Note, or reduce its principal amount, its interest rate, or its redemption
price, or change any place of payment where, or the coin or currency in which,
any Note or its interest is payable;
impair the right to institute suit for the enforcement of the provisions of the
Indenture requiring the application of available funds to the payment of any
amount due on the Notes after their due dates (or, in the case of redemption,
after the redemption date);
reduce the percentage of the Outstanding Amount the consent of the Holders of
which is required for any supplemental indenture, or the consent of the Holders
of which is required for any waiver of compliance with certain provisions of the
Indenture or certain defaults under the Indenture and their consequences or to
direct the liquidation of the Collateral;
modify any provision of the Section of the Indenture covering indenture
supplements only with the consent of affected Noteholders except to increase any
percentage specified in the Indenture or provide that certain additional
provisions of the Indenture or the Transaction Documents cannot be modified or
waived without the consent of the Holder of each Note affected by it;
modify any of the provisions of the Indenture in a manner affecting the
calculation of the amount of any payment of interest or principal due on any
Note on any Payment Date (including the calculation of any of the individual
components of the calculation) or affect the
A-2-4
rights of the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes in the Indenture; or
permit the creation of any lien ranking before or on a parity with the lien of
the Indenture with respect to any part of the Collateral (except any change in
any mortgage's lien status in accordance with the Sale and Servicing Agreement)
or, except as otherwise permitted or contemplated in the Indenture, terminate
the lien of the Indenture on any property at any time subject to the Indenture
or deprive the Holder of any Note of the security provided by the lien of the
Indenture.
As provided in the Indenture, the transfer of this Note is registrable in the
Note Register of the Note Registrar on surrender of this Note for registration
of transfer at the office or agency maintained by the Note Registrar for that
purpose, accompanied by a written instrument of transfer in form satisfactory to
the Master Servicer, the Indenture Trustee, and the Note Registrar duly executed
by its Holder or the Holder's attorney duly authorized in writing, and thereupon
new Notes of the same Class and of authorized denominations and evidencing the
same aggregate Percentage Interest of the Notes will be issued to the designated
transferees. The Notes are issuable only as registered Notes without coupons in
denominations specified in the Indenture. As provided in the Indenture, Notes
are exchangeable for new Notes of like tenor in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any registration of transfer or exchange, but
the Indenture Trustee or the Note Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Before due presentment for registration of transfer of this Note, the Issuer,
the Indenture Trustee, and any agent of the Issuer, or the Indenture Trustee may
treat the person in whose name this Note is registered as its owner for all
purposes, whether or not this Note is overdue, and none of the Issuer, the
Indenture Trustee, or any such agent shall be affected by notice to the
contrary.
The Issuer with the consent of the Credit Enhancer and the Master Servicer may
effect an early retirement of all Classes of Notes by paying the retransfer
price and accepting retransfer of the Trust Assets on any Payment Date after the
Note Principal Balance of all Classes of Notes is less than or equal to 10% of
the Original Note Principal Balance of all Classes of Notes.
Each Holder or beneficial owner of this Note, by acceptance of a Note or, in the
case of a beneficial owner of this Note, a beneficial interest in this Note,
agrees by accepting the benefits of the Indenture that will not at any time
institute against the Depositor, the Sponsor, the Master Servicer, or the
Issuer, or join in any institution against any of them of, any bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceedings under any
United States
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federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture, or the Transaction Documents.
Anything in this Note to the contrary notwithstanding, none of Wilmington Trust
Company in its individual capacity, The Bank of New York, in its individual
capacity, any owner of a beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees, or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the obligations under the
Indenture. The holder of this Note by its acceptance of this Note agrees that
the holder shall have no claim against any of the foregoing for any deficiency,
loss, or claim. Nothing in this Note shall be taken to prevent recourse to, and
enforcement against, the assets of the Issuer for any obligations under the
Indenture or in this Note.
The Issuer and each Noteholder, by its acceptance of its Note, agree that the
indebtedness represented by the Notes is non-recourse to the Issuer, and is
payable solely from the assets of the Issuer and their proceeds.
This Note shall be governed by and construed in accordance with the laws of the
State of New York, without reference to its provisions that would result in the
application of the laws of another State.
Unless the certificate of authentication on this Note has been executed by or on
behalf of the Indenture Trustee, by manual or facsimile signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid for any
purpose.
In Witness Whereof, the Issuer has caused this Note to be duly executed.
Dated:
Wilmington Trust Company
not in its individual capacity but
solely as Owner Trustee on behalf of
the Trust
By: ____________________________
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Certificate of Authentication:
This is one of the Notes referenced
in the within-mentioned Indenture.
THE BANK OF NEW YORK , not in its
individual capacity but solely as Indenture Trustee
By: ________________________
Authorized Officer
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EXHIBIT B
FORM OF CUSTODIAL AGREEMENT
================================================================================
CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 2006-I
Issuer
COUNTRYWIDE HOME LOANS, INC.
Master Servicer
THE BANK OF NEW YORK
Indenture Trustee
TREASURY BANK, A DIVISION OF COUNTRYWIDE BANK, N.A.
Custodian
______________________________
CUSTODIAL AGREEMENT
Dated as of [___________], 20[__]
20[__]-[_]
______________________________
================================================================================
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CUSTODIAL AGREEMENT
This Custodial Agreement, dated as of [______________], 20[__] (this
"Agreement"), among CWHEQ, Inc. (the "Depositor"), Countrywide Home Loans, Inc.,
as master servicer (the "Master Servicer"), CWHEQ Revolving Home Equity Loan
Trust, Series 2006-I (the "Issuer"), and Treasury Bank, a division of
Countrywide Bank, N.A., as agent, custodian, and bailee for the Owner Trustee as
owner and the Indenture Trustee as secured party (when acting for the Issuer,
the "Trust Custodian," and when acting for the Indenture Trustee, the "Indenture
Custodian," and when referring to both capacities, the "Custodian"), and The
Bank of New York, as indenture trustee (in that capacity the "Indenture
Trustee"),
WITNESSETH:
WHEREAS, the Depositor will sell all of its interest in the Mortgage Loans
to the Issuer pursuant to the Sale and Servicing Agreement; and
WHEREAS, the Issuer will Grant a Security Interest to the Indenture Trustee
for the benefit of the Secured Parties in all of the Issuer's interest in the
Collateral; and
WHEREAS, the Issuer wants to hold its assets through a custodian acting as
its agent and bailee under a custodial agreement, and authorize the custodian to
deliver the Collateral to the Indenture Trustee; and
WHEREAS, the Indenture Trustee wants to hold the Collateral through a
custodian acting as its agent and bailee under a custodial agreement in
connection with the Issuer's delivery of the Collateral to the Indenture
Trustee;
NOW, THEREFORE, the parties agree as follows.
Section 1. Defined Terms and Rules of Construction.
Capitalized terms used but not otherwise defined in this Agreement have the
meanings given to them in the Master Glossary of Defined Terms. In addition,
Section 1.04 (Rules of Construction) of the Indenture is incorporated by
reference with appropriate substitution of this Agreement for references in that
Section to the Indenture so that the language of that Section will read
appropriately as applying to this Agreement.
Section 2. Acknowledgment of Receipt and Certification;
Appointment as Custodian.
(a) Appointment as Custodian; Acknowledgment of Receipt.
The Issuer appoints the Trust Custodian to act as its agent, custodian, and
bailee to accept delivery of the items transferred to it under the Sale and
Servicing Agreement and to hold them for the Issuer, and deliver any of them to
the Indenture Trustee as called for under the Indenture. The Indenture Trustee
appoints the Indenture Custodian to act as its agent, custodian, and bailee to
maintain custody of the Mortgage Files for the Indenture Trustee for the benefit
of
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the Noteholders and the Credit Enhancer. Treasury Bank, a division of
Countrywide Bank, N.A. accepts both of these appointments. The Trust Custodian
will maintain custody of the items transferred to it under the Sale and
Servicing Agreement that are not delivered to the Indenture Trustee subject to
instructions from the Issuer. The Indenture Custodian will maintain continuous
custody of the Mortgage Files at its office identified in Section 3 until (i)
the Indenture Trustee delivers to the Indenture Custodian an Officer's
Certificate to the effect that the conditions for the release of Collateral have
been satisfied or (ii) the conditions specified in Section 4(b) for the release
of the Mortgage Files to the Master Servicer have been met. In performing its
duties under this Agreement, the Custodian agrees to act with the degree of care
and skill consistent with the degree of care and skill that the Custodian
exercises with respect to the loan files relating to similar loans owned,
serviced, or held as custodian by the Custodian, and the Custodian agrees to
follow its customary policies and procedures.
(b) Review and Certification.
In connection with the transfers under Sections 2.01(a) and 2.01(b) of the
Sale and Servicing Agreement by the Depositor, the Depositor is required to
effect certain deliveries to the Issuer and the Indenture Trustee under Section
2.01(d) of the Sale and Servicing Agreement. The Trust Custodian shall accept
those deliveries for the Issuer, and shall make the deliveries to the Indenture
Trustee required of the Issuer. The Indenture Custodian acting as custodian for
the Indenture Trustee shall accept those deliveries.
On the Closing Date, the Custodian will execute and deliver to the
Depositor, the Master Servicer, and the Sponsor (with a copy to the Issuer, the
Indenture Trustee, and the Credit Enhancer) an Initial Certification in the form
of Exhibit A. Based on its review and examination, the Custodian will
acknowledge that the documents identified in the Initial Certification appear
regular on their face (i.e. are not mutilated, damaged, defaced, torn, or
otherwise physically altered) and relate to each Mortgage Loan. No later than
thirty-two days after the Closing Date, if Mortgage Loans have been delivered
after the Closing Date pursuant to Section 2.01(d) of the Sale and Servicing
Agreement, the Custodian will execute and deliver to the Depositor, the Master
Servicer, and the Sponsor (with a copy to the Issuer, the Indenture Trustee, and
the Credit Enhancer) a Delay Delivery Certification in the form of Exhibit B.
Based on its review and examination, the Custodian will acknowledge that the
documents identified in the Delay Delivery Certification appear regular on their
face (i.e. are not mutilated, damaged, defaced, torn, or otherwise physically
altered) and relate to each Mortgage Loan.
Not later than 180 days after the Closing Date, the Custodian will deliver
to the Depositor, the Master Servicer, and the Sponsor (with a copy to the
Issuer, the Indenture Trustee, and the Credit Enhancer) a Final Certification in
the form of Exhibit C, noting any applicable exceptions. For the purpose of the
Final Certification, the title policy required for the Mortgage File is any of
the final original title policy, a signed binder or commitment for a title
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
B-3
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 Indenture Custodian's facilities.
Section 4. Duties of Custodian.
B-4
(a) Safekeeping. The Indenture Custodian shall (i) segregate the Mortgage
Files from all other documents in the Indenture Custodian's possession; (ii)
identify the Mortgage Files as being held, and hold the Mortgage Files, for the
Indenture Trustee as secured party for the benefit of all present and future
Noteholders and the Credit Enhancer; (iii) maintain at all times a current
inventory of the Mortgage Files; and (iv) secure the Mortgage Files in fire
resistant facilities and conduct periodic physical inspections of them in
accordance with customary standards for custody of this type. The Indenture
Custodian will promptly report to the Issuer and the Indenture Trustee any
failure on its part to hold the Mortgage Files as provided in this Agreement and
promptly take appropriate action to remedy the failure.
(b) Stamping Trigger Event. If a Stamping Trigger Event has occurred in
accordance with Section 2.02(e) of the Sale and Servicing Agreement and the
Credit Enhancer so instructs the Custodian in writing, the Custodian, within 30
days of such written instruction by the Credit Enhancer, will stamp on the blank
endorsement on each loan agreement the following: "CWHEQ Revolving Home Equity
Loan Trust, Series ▇▇▇▇-▇, ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, as Indenture Trustee." On the
earlier of the completion of the stamping and 60 days after the receipt by the
Custodian of the notice mentioned above, the Credit Enhancer shall have the
right to inspect the loan agreements upon 5 day's written notice to the
Custodian, the Indenture Trustee and the Sponsor. If the Custodian fails to
stamp the loan agreements in accordance with the requirements of this Section
4(b), the Custodian will make the Mortgage Loans available for stamping by the
Credit Enhancer or its agent under the supervision (but not the direction) of
the Custodian. All costs in connection with any stamping in accordance with this
Section 4(b) shall be at the sole expense of the Credit Enhancer and shall not
be charged to the Sponsor, the Trust, or the Custodian. The fees for the
stamping will be mutually agreed between the Custodian and the Credit Enhancer
before stamping the loan agreements. If a Mortgage Loan is released from the
lien of the Indenture in accordance with the terms hereof the stamping shall be
removed from the related loan agreement at the sole expense of the Credit
Enhancer.
(c) Release of Documents. On receipt by the Indenture Custodian of the
certification of the Master Servicer, in physical or electronic form,
substantially in the form of Exhibit D to the Sale and Servicing Agreement, the
Indenture Custodian shall release to the Master Servicer the related Mortgage
Files for the Mortgage Loan covered by the certification. The certification may
be delivered to the Indenture Custodian in a mutually agreed electronic format,
and to the extent the request originates on its face from a servicing officer,
need not be manually signed.
Section 5. Access to Records.
The Custodian shall permit the Indenture Trustee, the Issuer, the Master
Servicer, the Credit Enhancer, or their respective duly authorized officers,
attorneys, or auditors, and the supervisory agents and examiners of each of
them, to inspect the items delivered to it under this Agreement and the books
and records maintained by the Custodian pursuant to this Agreement,
B-5
without charge but only after not less than two Business Days' prior notice and
during normal business hours at the offices of the Custodian.
Section 6. Instructions; Authority to Act.
The Indenture Custodian may follow any instructions with respect to the
Collateral received in the form of an Officer's Certificate of the Indenture
Trustee. The instructions may be general or specific in terms. An executed
incumbency certificate of the Indenture Trustee certifying the authority of
certain officers to take specified actions may be accepted by the Indenture
Custodian as conclusive evidence of the authority of the officers to act and may
be considered in full force until receipt of written notice to the contrary by
the Indenture Custodian from the Indenture Trustee.
The Trust Custodian may follow any instructions with respect to any items
held exclusively for the Issuer received in the form of an Officer's Certificate
of the Issuer. The instructions may be general or specific in terms. An executed
incumbency certificate of the Issuer certifying the authority of certain
officers to take specified actions may be accepted by the Trust Custodian as
conclusive evidence of the authority of the officers to act and may be
considered in full force until receipt of written notice to the contrary by the
Trust Custodian from the Issuer.
Section 7. Advice of Counsel.
The Custodian may rely and act on the advice of counsel, including in-house
counsel, with respect to its performance under this Agreement as Custodian and
shall not be liable for any action reasonably taken pursuant to advice of
counsel.
Section 8. Representations and Warranties.
The Custodian represents and warrants that on the Closing Date:
(a) it is a national association duly organized, validly existing, and in
good standing under the laws of its place of organization;
(b) it has full power and authority to execute, deliver, and perform this
Agreement, and has taken all necessary action to authorize the execution,
delivery, and performance by it of this Agreement;
(c) the consummation of the transactions contemplated by this Indenture
and the fulfillment of its terms do not conflict with, result in any breach of,
or constitute (with or without notice or lapse of time) a default under, the
charter or bylaws of the Custodian or any agreement or other instrument to which
it is a party or by which it is bound;
(d) to the Custodian's best knowledge, no proceedings or investigations
concerning the Custodian are pending or threatened before any court, regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over it or its properties:
(1) asserting the invalidity of this Agreement,
B-6
(2) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or
(3) seeking any determination that might affect its performance of
its obligations under this Agreement or the validity or enforceability of
this Agreement; and
(e) it is acting solely as the agent for the Indenture Trustee.
Section 9. Effective Period, Termination, and Amendment, and Interpretive
and Additional Provisions.
This Agreement shall become effective as of its date and shall continue in
full force until terminated in accordance with its terms. This Agreement may be
terminated by either the Indenture Trustee with the consent of the Issuer and
the Credit Enhancer or by the Custodian in a writing delivered or mailed,
postage prepaid, to the other parties and the Credit Enhancer. The termination
shall take effect no sooner than sixty days after the date of delivery or
mailing. Concurrently with, or as soon as practicable after, the termination of
this Agreement, the Indenture Custodian shall deliver the Collateral to the
Indenture Trustee (or to a person designated by the Indenture Trustee) anywhere
the Indenture Trustee reasonably designates with the consent of the Credit
Enhancer, and the Trust Custodian shall deliver any items held exclusively for
the Issuer to the Issuer (or to a person designated by the Issuer) anywhere the
Issuer reasonably designates with the consent of the Credit Enhancer.
Section 10. Limitation of Liability.
(a) The Custodian undertakes to perform only the obligations specified in
this Agreement. The Issuer, the Owner Trustee, Master Servicer, and Indenture
Trustee acknowledge that no implied obligations exist under this Agreement.
Neither the Custodian nor any of its affiliates, officers, directors, employees,
or agents shall be liable, directly or indirectly, for any damages or expenses
arising out of the services performed under this Agreement other than damages
that result from their gross negligence, willful misconduct, or bad faith. The
Custodian and its officers, directors, employees, and agents will not be liable
for any consequential, indirect, punitive, or special damages.
(b) Except as provided in Section 2, the Custodian makes no warranty or
representation and has no responsibility for the completeness, validity,
sufficiency, value, genuineness, ownership, or transferability of the Mortgage
Loans or any of the documents in the Mortgage Files.
(c) The Custodian need not expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties under this
Agreement, or in the exercise of its rights, if the Custodian believes that
repayment of the funds or adequate indemnity against the risk or liability is
not reasonably assured to it.
B-7
(d) Without limiting the generality of the foregoing, the Custodian may
rely on and shall be protected in acting in good faith on any notice or other
communication received by it that it reasonably believes to be genuine and duly
authorized with respect to all matters pertaining to this Agreement and its
duties under this Agreement.
(e) The Custodian shall not be responsible or liable for, and makes no
representation or warranty with respect to, the validity, adequacy, or
perfection of any lien on or security interest in any Mortgage Loan.
(f) Any other provision of this Agreement to the contrary notwithstanding,
the Custodian shall have no notice of, and shall not be bound by, any other
document or agreement executed or delivered in connection with, or intended to
control any part of, the transactions anticipated by or referred to in this
Agreement unless the Custodian is a signatory party to that document or
agreement. Notwithstanding the foregoing sentence, the Custodian shall be deemed
to have notice of the terms (including definitions not otherwise set forth in
full in this Agreement) of other documents and agreements executed or delivered
in connection with, or intended to control any part of, the transactions
anticipated by or referred to in this Agreement, to the extent the terms are
referenced, or are incorporated by reference, into this Agreement only as long
as the Indenture Trustee has provided a copy of the document or agreement to the
Custodian.
(g) The Custodian shall have only the obligations expressly set forth in
this Agreement or in a written amendment to this Agreement executed by the
parties to this Agreement or their successors and assigns. If any provision of
this Agreement implies or requires that action or forbearance be taken by a
party, but is silent as to which party has the duty to act or refrain from
acting, the parties agree that the Custodian shall not be the party required to
take the action or refrain from acting. In no event shall the Custodian have any
responsibility to ascertain or take action except as expressly provided in this
Agreement.
(h) Nothing in this Agreement shall impose on the Custodian any duty to
qualify to do business in any jurisdiction, other than (i) any jurisdiction
where any Mortgage File is or may be held by the Custodian from time to time
under this Agreement, and (ii) any jurisdiction where its ownership of property
or conduct of business requires such qualification and where failure to qualify
could have a material adverse effect on the Custodian or its property or
business or on the ability of the Custodian to perform its duties under this
Agreement.
(i) The Custodian may execute any of its duties under this Agreement
through any of its agents, attorneys-in-fact, or affiliates. Any agent,
attorney-in-fact, or affiliate of the Custodian (and any affiliate's directors,
officers, agents, and employees) that performs duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification, waiver,
and other protective provisions to which the Custodian is entitled under this
Agreement, but the Custodian shall remain responsible for the performance of
those duties.
B-8
(j) The Custodian shall not be responsible for delays or failures in
performance resulting from acts beyond its control. Acts beyond its control
include acts of God, strikes, lockouts, riots, acts of war or terrorism,
epidemics, nationalization, expropriation, currency restrictions, governmental
regulations superimposed after the fact, fire, communication line failures,
computer viruses, power failures, earthquakes, or other disasters.
Section 11. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 12. Amendment.
This agreement may not be amended without the written consent of all the
parties.
Section 13. Notices.
All notices, demands, instructions, consents, and other communications
required or permitted under this Agreement shall be in writing and shall be
personally delivered or sent by first class or express mail (postage prepaid),
national overnight courier service, or by facsimile transmission or other
electronic communication device capable of transmitting or creating a written
record (confirmed by first class mail) and shall be considered to be given for
purposes of this Agreement on the day that the writing is delivered when
personally delivered or sent by facsimile or overnight courier or three Business
Days after it was sent to its intended recipient if sent by first class mail.
Unless otherwise specified in a notice sent or delivered in accordance with the
provisions of this Section, notices, demands, instructions, consents, and other
communications in writing shall be given to or made on the respective parties at
their respective addresses indicated in the Adoption Annex attached to the
Indenture.
Section 14. Binding Effect.
This Agreement shall be binding on and inure to the benefit of the parties
to this Agreement and their respective successors and assigns. Except as
contemplated in this Agreement, none of the parties may assign any of its rights
and obligations under this Agreement or any interest in this Agreement without
the consent of the other parties and the Credit Enhancer. The Custodian may
assign its rights and obligations under this Agreement, in whole or in part, to
any affiliate with the consent of the Credit Enhancer. The Custodian agrees to
notify the other parties of any assignment. An affiliate is any entity that
directly or indirectly is under common control with the Custodian, or is under
contract to be under common control with the Custodian, and includes a
subsidiary or parent company of the Custodian.
Section 15. Counterparts.
B-9
This Agreement may be executed in one or more counterparts and by the
different parties to this Agreement on separate counterparts, each of which,
when so executed, shall be an original and all of which shall constitute one
agreement.
Section 16. Severability of Provisions.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or affecting the validity or enforceability of the provision in
any other jurisdiction.
Section 17. Third Party Beneficiary.
The Credit Enhancer is a third party beneficiary of this Agreement.
Section 18. Merger of Custodian.
Any entity into which the Custodian may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion, or consolidation to which the Custodian is a party, or any entity
succeeding to the business of the Custodian, shall be the successor of the
Custodian under this Agreement, without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement, anything in
this Agreement to the contrary notwithstanding.
Section 19. Indemnification.
The Issuer agrees to indemnify the Custodian and its affiliates, directors,
officers, agents, and employees, against any losses, claims, damages, or
liabilities of any kind, including reasonable attorneys' fees, that may arise
against Custodian or its affiliates, directors, officers, agents, or employees,
in any way arising out of this Agreement or any action taken or not taken by
Custodian or its permitted successors and assigns under this Agreement unless
they arise because of the breach by the Custodian of its obligations under this
Agreement, which breach was caused by the gross negligence, lack of good faith,
or willful misconduct on the part of Custodian or any of its affiliates,
directors, officers, agents, or employees.
The Custodian agrees to indemnify the Issuer against any losses, claims,
damages, or liabilities of any kind, including reasonable attorneys' fees, it
suffers arising out of the gross negligence, lack of good faith, or willful
misconduct on the part of Custodian or any of its affiliates, directors,
officers, agents, or employees.
The foregoing indemnifications shall survive any termination or expiration
of this Agreement or the resignation or removal of the Custodian.
Section 20. Dispute Resolution, Arbitration.
This Agreement evidences a transaction involving interstate commerce. Any
disputes arising from this Agreement shall be decided by binding arbitration
which shall be conducted, at the request of any party, in New York, New York,
before one arbitrator designated by the
B-10
American Arbitration Association (the "AAA"), in accordance with the Commercial
Arbitration Rules of the AAA, and to the maximum extent applicable, the United
States Arbitration Act (Title 9 of the United States Code). Notwithstanding
anything in this Agreement to the contrary, any party may proceed to a court of
competent jurisdiction to obtain equitable relief at any time. An arbitrator
shall have no authority to award punitive damages or other damages not measured
by the prevailing party's actual damages. To the maximum extent practicable, an
arbitration proceeding under this Agreement shall be concluded within 180 days
of the filing of the dispute with the AAA. This arbitration clause shall survive
any termination, amendment, or expiration of the Agreement and if any provision
of this arbitration clause is found to be unenforceable, the remaining parts of
the arbitration clause shall not be affected and shall remain fully enforceable.
Section 21. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of the Issuer, in the exercise
of the powers and authority conferred and vested in it under the Trust
Agreement, (b) each of the representations, undertakings and agreements herein
made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose of binding only the Issuer and (c) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligations, representation, warranty or covenant made
or undertaken by the Issuer under this Agreement or the other related documents.
B-11
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
CWHEQ, INC.
By: _______________________________
Name:
Title:
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2006-I
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee
By: _______________________________
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Indenture Trustee
By: /s/
------------------------------------
Name:
Title:
TREASURY BANK,
A DIVISION OF COUNTRYWIDE BANK, N.A.,
as Custodian for the Indenture Trustee
By: _______________________________
Name:
Title:
TREASURY BANK,
A DIVISION OF COUNTRYWIDE BANK, N.A.,
as Custodian for the Issuer
B-12
By: _______________________________
Name:
Title:
B-13
EXHIBIT A
TO CUSTODIAL AGREEMENT
FORM OF INITIAL CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Credit Enhancer]
_____________________
_____________________
Re: Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer, CWHEQ
Revolving Home Equity Loan Trust, Series 2006-I, as the Trust, and The
Bank of New York, as Indenture Trustee, Revolving Home Equity Loan
Asset Backed Notes, Series 2006-I
----------------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and Servicing
Agreement (the "Sale and Servicing Agreement"), the undersigned, as Indenture
Custodian for the Indenture Trustee, hereby certifies that as to each Mortgage
Loan listed in the Mortgage Loan Schedule delivered pursuant to Section 2.01(d)
of the Sale and Servicing Agreement (other than any Mortgage Loan paid in full
or any Mortgage Loan listed on the attached Document Exception Report) it has
received, among other things:
(i) the original Mortgage Note endorsed in blank or, if the original
Mortgage Note has been lost or destroyed and not replaced, an original lost
note affidavit from the Sponsor stating that the original Mortgage Note was
lost, misplaced or destroyed, together with a copy of the related Mortgage
Note; and
(ii) unless the Mortgage Loan is registered on the MERS(R) System, an
original Assignment of Mortgage in blank in recordable form.
B-A-1
Based on its review and examination and only as to the foregoing documents,
such documents appear regular on their face (i.e. are not mutilated, damaged,
defaced, torn, or otherwise physically altered) and related to such Mortgage
Loan.
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction, or
whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether any
signature on any document is genuine, but shall only be required to determine
whether a document has been executed, that it appears to be what it purports to
be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the meanings
assigned to them in the Sale and Servicing Agreement.
Treasury Bank,
a division of Countrywide Bank, N.A.,
as Custodian for the Indenture Trustee
By:____________________________
Name:
Title:
B-A-2
EXHIBIT B
TO CUSTODIAL AGREEMENT
FORM OF DELAY DELIVERY CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Credit Enhancer]
_____________________
_____________________
Re: Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer, CWHEQ
Revolving Home Equity Loan Trust, Series 2006-I, as the Trust, and The
Bank of New York, as Indenture Trustee, Revolving Home Equity Loan
Asset Backed Notes, Series 2006-I
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and Servicing
Agreement (the "Sale and Servicing Agreement"), the undersigned, as Indenture
Custodian for the Indenture Trustee, hereby certifies that as to each Mortgage
Loan listed in the Mortgage Loan Schedule delivered pursuant to Section 2.01(d)
of the Sale and Servicing Agreement (other than any Mortgage Loan paid in full
or any Mortgage Loan listed on the attached Document Exception Report) it has
received, among other things:
(i) the original Mortgage Note endorsed in blank or, if the original
Mortgage Note has been lost or destroyed and not replaced, an original lost
note affidavit from the Sponsor stating that the original Mortgage Note was
lost, misplaced or destroyed, together with a copy of the related Mortgage
Note; and
(ii) unless the Mortgage Loan is registered on the MERS(R) System, an
original Assignment of Mortgage in blank in recordable form.
B-B-1
Based on its review and examination and only as to the foregoing documents,
such documents appear regular on their face (i.e. are not mutilated, damaged,
defaced, torn, or otherwise physically altered) and related to such Mortgage
Loan.
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction, or
whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether any
signature on any document is genuine, but shall only be required to determine
whether a document has been executed, that it appears to be what it purports to
be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the meanings
assigned to them in the Sale and Servicing Agreement.
Treasury Bank,
a division of Countrywide Bank, N.A.,
as Custodian for the Indenture Trustee
By:____________________________
Name:
Title:
B-B-2
EXHIBIT C
TO CUSTODIAL AGREEMENT
FORM OF FINAL CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Credit Enhancer]
_____________________
_____________________
Re: Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer, CWHEQ
Revolving Home Equity Loan Trust, Series 2006-I, as the Trust, and The
Bank of New York, as Indenture Trustee, Revolving Home Equity Loan
Asset Backed Notes, Series 2006-I
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and Servicing
Agreement (the "Sale and Servicing Agreement"), the undersigned, as Indenture
Custodian for the Indenture Trustee, hereby certifies that as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attached Document Exception Report) it has received:
(i) the original Mortgage Note endorsed in blank or, if the original
Mortgage Note has been lost or destroyed and not replaced, an original lost
note affidavit from the Sponsor stating that the original Mortgage Note was
lost, misplaced or destroyed, together with a copy of the related Mortgage
Note;
(ii) unless the Mortgage Loan is registered on the MERS(R) System, an
original Assignment of Mortgage in blank in recordable form;
B-C-1
(iii) the original recorded Mortgage, noting the presence of the MIN
of the Mortgage Loan and language indicating that the Mortgage Loan is a
MOM Loan if the Mortgage Loan is a MOM Loan, or, if, in connection with any
Mortgage Loan, the original recorded Mortgage with evidence of recording
thereon cannot be delivered on or before the Closing Date or Subsequent
Closing Date, as applicable, because of a delay caused by the public
recording office where such original Mortgage has been delivered for
recordation or because such original Mortgage has been lost, an accurate
copy of such Mortgage, together with (i) in the case of a delay caused by
the public recording office, an Officer's Certificate of the Sponsor which
may be in the form of a blanket certificate of the Sponsor covering more
than one Mortgage stating that such original Mortgage has been dispatched
to the appropriate public recording official or (ii) in the case of an
original Mortgage that has been lost, a copy certified by the appropriate
county recording office where such Mortgage is recorded;
(iv) if applicable, the original of each intervening assignment needed
for a complete chain of title for the mortgage from its original mortgagee
or beneficiary to the Trust or in blank (or if the Mortgage Loan is
registered on the MERS(R) System to MERS and noting the presence of a MIN)
with evidence of recording thereon, or, if any such original intervening
assignment has not been returned from the applicable recording office or
has been lost, a true and correct copy thereof, together with (i) in the
case of a delay caused by the public recording office, an Officer's
Certificate of the Sponsor or the Depositor, which may be a blanket
certificate covering more than one intervening assignment, stating that
such original intervening assignment has been dispatched to the appropriate
public recording official for recordation or (ii) in the case of an
original intervening assignment that has been lost, a copy certified by the
appropriate county recording office where such Mortgage is recorded;
(v) a title policy "(e.g., ALTA, FACT, PIRT, etc.)", a signed binder
or commitment for a title policy, or a preliminary title report (in those
states in which preliminary title reports are the customary form of title
policy commitment) for each Mortgage Loan with a Credit Limit in excess of
$100,000;
(vi) the original of any guaranty executed in connection with the
Mortgage Note;
(vii) the original of each assumption, modification, consolidation or
substitution agreement, if any, relating to the Mortgage Loan; and
(viii) any security agreement, chattel mortgage or equivalent
instrument executed in connection with the Mortgage.
Based on its review and examination and only as to the foregoing documents,
(a) such documents appear regular on their face (i.e. are not mutilated,
damaged, defaced, torn, or otherwise physically altered) and related to such
Mortgage Loan, and (b) the information set
B-C-2
forth in items (ii), (iii), and (iv), of the itemization of contents of the
"Mortgage Loan Schedule" in the Adoption Annex to the Indenture accurately
reflects information set forth in the Mortgage File, and (c) the information set
forth in item (v) of the itemization of contents of the "Mortgage Loan Schedule"
in the Adoption Annex to the Indenture was delivered to the Custodian.
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction, or
whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether any
signature on any document is genuine, but shall only be required to determine
whether a document has been executed, that it appears to be what it purports to
be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the meanings
assigned to them in the Sale and Servicing Agreement.
Treasury Bank,
a division of Countrywide Bank, N.A.,
as Custodian for the Indenture Trustee
By:____________________________
Name:
Title:
B-C-3
EXHIBIT D
TO CUSTODIAL AGREEMENT
FORM OF FURTHER FINAL CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
[Credit Enhancer]
_____________________
_____________________
Re: Sale and Servicing Agreement among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer, CWHEQ
Revolving Home Equity Loan Trust, Series 2006-I, as the Trust, and The
Bank of New York, as Indenture Trustee, Revolving Home Equity Loan
Asset Backed Notes, Series 2006-I
----------------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Sale and Servicing
Agreement (the "Sale and Servicing Agreement"), the undersigned, as Indenture
Custodian for the Indenture Trustee, hereby certifies that as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attached Document Exception Report) it has received:
(i) for each Mortgage Loan with a Credit Limit in excess of $100,000,
a final original title policy "(e.g., ALTA, FACT, PIRT, etc.)".
Based on its review and examination and only as to the foregoing documents,
such documents appear regular on their face (i.e. are not mutilated, damaged,
defaced, torn, or otherwise physically altered) and related to such Mortgage
Loan.
B-D-1
The Indenture Custodian has made no independent examination of any
documents in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The Indenture Custodian makes no representations
as to: (i) the validity, legality, sufficiency, enforceability, or genuineness
of any of the documents in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
In reviewing any Mortgage File pursuant to this certification, the
Custodian is not responsible for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Issuer or the
Indenture Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction, or
whether a blanket assignment is permitted in any applicable jurisdiction,
whether any person executing any document is authorized to do so or whether any
signature on any document is genuine, but shall only be required to determine
whether a document has been executed, that it appears to be what it purports to
be, and, where applicable, that it purports to be recorded.
Capitalized words and phrases used in this Certification have the meanings
assigned to them in the Sale and Servicing Agreement.
Treasury Bank,
a division of Countrywide Bank, N.A.,
as Custodian for the Indenture Trustee
By: ________________________
Name:
Title:
▇-▇-▇
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▇▇▇▇▇ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2006-I
____________________________________
MASTER GLOSSARY OF DEFINED TERMS
Dated as of December 29, 2006
____________________________________
================================================================================
MASTER GLOSSARY OF DEFINED TERMS...............................................1
ADOPTION ANNEX...............................................................A-1
i
MASTER GLOSSARY OF DEFINED TERMS
"Accelerated Principal Payment Amount" for each Payment Date after the
sixth Payment Date and each Class of Principal Amount Notes means the amount of
Available Interest Collections for the related Loan Group applied on that
Payment Date as a payment of principal to decrease the Note Principal Balance of
that Class of Principal Amount Notes until the difference between the Loan Group
Balance of the related Loan Group (reduced by related Net Draws) and the Note
Principal Balance of that Class of Principal Amount Notes is an amount equal to
the related Required Transferor Subordinated Amount for the Payment Date.
"Accountant's Attestation" as to any person means a report of a registered
public accounting firm reasonably acceptable to the Depositor that attests to,
and reports on, the Servicing Criteria Compliance Assessment Report made by the
person. The attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g)
of Regulation S-X under the Securities Act and the Exchange Act, including that
if an overall opinion cannot be expressed, the registered public accounting firm
shall state in the report why it was unable to express an overall opinion. The
report must be available for general use and not contain restricted use
language.
"Act" has the meaning specified in Section 11.03(a) of the Indenture.
"Additional Balance" as to any Mortgage Loan means the aggregate amount of
all additional borrowings by the mortgagor under the relevant Credit Line
Agreement after the Cut-off Date or the related Subsequent Cut-off Date, as
applicable, for the Mortgage Loan.
"Additional Home Equity Loans" means the Mortgage Loans funded after the
Cut-off Date acquired by the Trust on a Subsequent Closing Date pursuant to
Section 2.01(b) of the Sale and Servicing Agreement.
"Additional Loan Account" for a Loan Group means the trust account
maintained by the Indenture Trustee into which is deposited on the Closing Date
the amount specified in the Adoption Annex for a Loan Group. The account will be
an Eligible Account, and will be available only for purchases of Additional Home
Equity Loans for the relevant Loan Group.
"Adjustment Date" for any Interest Period commencing with the second
Interest Period, the second LIBOR Business Day preceding the first day of the
Interest Period.
"Administration Agreement" means the Administration Agreement, dated as of
the Closing Date, among the Administrator, the Trust, and the Indenture Trustee.
"Administrator" means the person acting as such under the Administration
Agreement.
"Adoption Annex" means the Adoption Annex contained in this Master Glossary
of Defined Terms.
"Affiliate" of any person means any other person controlling, controlled by
or under common control with the person. For purposes of this definition,
"control" means the power to direct the management and policies of a person,
directly or indirectly, whether through
1
ownership of voting securities, by contract or otherwise and "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Aggregate Note Interest" for each Payment Date and each Class of Principal
Amount Notes means the Note Interest for that Class of Principal Amount Notes
for the Payment Date and the related Unpaid Investor Interest Shortfall (other
than any related Basis Risk Carryforward) for the Payment Date.
"Allocated Transferor Interest" for each Payment Date and each Loan Group
is the excess of
o the sum of the related Loan Group Balance as of the close of
business on the day before the Payment Date (minus related Net Draws) plus
any funds in the Additional Loan Account related to that Loan Group over
o the Note Principal Balance of the related Class of Principal
Amount Notes on the Payment Date (after giving effect to the payment of all
amounts actually paid on those Notes on that Payment Date).
"Applicable Margin" has the meaning given to it in the Adoption Annex.
"Appraised Value" for any Mortgaged Property means the value established by
any of the following: (i) with respect to Credit Line Agreements with Credit
Limits greater than $100,000, by a full appraisal, (ii) with respect to Credit
Line Agreements with Credit Limits equal to or less than $100,000, by either a
drive by inspection or electronic appraisal of the Mortgaged Property made to
establish compliance with the underwriting criteria then in effect in connection
with the application for the Mortgage Loan secured by the Mortgaged Property,
and (iii) with respect to any Mortgage Loan as to which the Servicer consents to
a new senior lien pursuant to Section 3.01(b) of the Sale and Servicing
Agreement, in compliance with the underwriting criteria then in effect in
connection with the application for the related senior mortgage loan.
"Asset Balance" on any day for any Mortgage Loan, other than a Liquidated
Mortgage Loan or a Charged-off Mortgage Loan, means its Cut-off Date Asset
Balance, plus any Additional Balance for the Mortgage Loan, minus all
collections credited as principal against the Asset Balance of the Mortgage Loan
in accordance with the related Credit Line Agreement.
"Assets" means all assets and property of the Trust pursuant to the Sale
and Servicing Agreement.
"Assignment of Mortgage" for any mortgage means an assignment, notice of
transfer, or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction in which the related Mortgaged Property is located to
reflect the sale of the mortgage to the Trust, which assignment, notice of
transfer, or equivalent instrument may be in the form of one or
2
more blanket assignments covering the Mortgage Loans secured by Mortgaged
Properties located in the same jurisdiction.
"Auction Fee" means the fee payable to the Master Servicer in connection
with the auction of any Charged-off Mortgage Loan, which shall be an amount
equal to 10% of the net proceeds from the auction of the related Charged-off
Mortgage Loan.
"Auction Period" with respect to a Charged-off Mortgage Loan means the
period commencing on the related Charge-off Date and ending one-year after such
date.
"Authorized Officer" for any corporation or other entity establishing such
designations means the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, President, Executive Vice President, any Vice President, the
Secretary, or the Treasurer of the corporation, for any partnership means any of
its general partners, and for any person means any person who is identified on a
list of Authorized Officers delivered by the person to the Indenture Trustee on
the Closing Date. These lists may be updated from time to time.
"Available Interest Collections" for any Payment Date and a Loan Group
means the Interest Shortfall Deposit plus the product of the Interest
Collections for the Loan Group during the related Collection Period and the
related Floating Allocation Percentage for the Payment Date.
"Available Investor Interest" for any Payment Date and Class of Principal
Amount Notes 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 that Class
of Principal Amount Notes pursuant to Section 8.03(a)(ii) of the Indenture on
the Payment Date:
o Available Interest Collections for the Loan Group on deposit in
the Collection Account or the Payment Account available to pay interest on
the related Class of Notes of the close of business on the third Business
Day preceding the Payment Date,
o Available 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 Available Interest Collections are available pursuant to Section
8.03(a)(iv) of the Indenture to be paid to the related Loan Group as
Crossover Amounts,
o any Interest Shortfall Deposit for the Loan Group made on the
Business Day preceding the Payment Date, as reported by the Master Servicer
to the Credit Enhancer in the servicing certificate delivered on the
related Determination Date,
o the amount on deposit in the Collection Account or the Payment
Account for the Payment Date as of the close of business on the preceding
3
Determination Date for optional advances for the related Loan Group by the
Master Servicer made pursuant to Section 4.03 of the Sale and Servicing
Agreement,
o the Subordinated Transferor Collections for the related Loan
Group on deposit in the Collection Account or the Payment Account on the
third Business Day preceding the Payment Date, and
o the Subordinated Transferor Collections for the unrelated Loan
Group on deposit in the Collection Account or the Payment Account on the
third Business Day preceding the Payment Date to the extent such
Subordinated Transfer Collections are not applied to the payments of the
premium on the Policy or Aggregate Note Interest on the other Class of
Notes pursuant to Section 8.03(c) of the Indenture.
"Available Principal Collections" for any Payment Date and each Loan Group
are the excess of Principal Collections from that Loan Group for the related
Collection Period over the Additional Balances related to that Loan Group for
that Collection Period.
"Basis Risk Carryforward" for any Payment Date and Class of Principal
Amount Notes means the sum of
o Basis Risk Carryforward for that Class of Principal Amount Notes
remaining unpaid from prior Payment Dates,
o in any Interest Period in which the related Note Rate is the related
Maximum Rate, the excess of
(a) the amount of interest that would have accrued on that Class of
Principal Amount Notes during the related Interest Period had interest been
determined pursuant to the related Interest Formula Rate over
(b) the interest actually accrued at the related Note Rate on that Class
of Principal Amount Notes during the Interest Period, and
o interest at the related Interest Formula Rate (as adjusted from time
to time) on Basis Risk Carryforward for that Class of Principal Amount Notes
remaining unpaid from prior Payment Dates for the period from the previous
Payment Date to the current Payment Date.
"Basis Risk Carryforward Reserve Fund" means the Eligible Account
established and maintained by the Indenture Trustee on behalf of and for the
benefit of the Principal Amount Notes and the Class C Certificates pursuant to
Section 8.01(c) of the Indenture.
"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.
4
"Book-Entry Notes" has the meaning given to it in the Adoption Annex.
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in New York, California, or Illinois are authorized
or obligated by law, regulation, or executive order to remain closed.
"Cap Contract" means the Class 1-A Cap Contract or the Class 2-A Cap
Contract, as applicable.
"Cap Contract Termination Date" is as identified in the Adoption Annex.
"Cap Contract Administration Agreement" means the cap contract
administration agreement dated as of the Closing Date among CHL, the Indenture
Trustee, and Cap Contract Administrator.
"Cap Contract Administrator" means The Bank of New York, in its capacity as
cap contract administrator under the Cap Contract Administration Agreement.
"Cap Contract Assignment Agreement" means each assignment agreement dated
as of the Closing Date among CHL, the Cap Contract Administrator, and the Cap
Counterparty.
"Cap Counterparty" is as identified in the Adoption Annex.
"Cap Payment (Cap Trust Share)" for each Cap Contract and any Payment Date
through the Cap Contract Termination Date means the product of:
(i) the excess of One-Month LIBOR (as determined by the Cap
Counterparty) for the Payment Date over the percentage specified in the
related Cap Payment Schedule for the Payment Date,
(ii) the lesser of the Note Principal Balance of the related Class of
Notes as of the related Determination Date and the related Cap Contract
Notional Balance for the Payment Date, and
(iii) the actual number of days in the related Accrual Period divided
by 360.
"Cap Payment Entitlement" for either Class of Notes and any Payment Date
means any outstanding Basis Risk Carryforward for that Class of Notes on that
Payment Date before the application of Available Interest Collections to the
payment of such Basis Risk Carryforward under clause Section 8.03(a)(xii) of the
Indenture.
"Cap Payment (Total)" for any Payment Date and either Cap Contract through
the related Cap Payment Termination Date means the amount payable by the Cap
Counterparty under that Cap Contract equal to the product of:
(i) the excess of One-Month LIBOR (as determined by the Cap
Counterparty) for the Payment Date over the applicable Cap Contract Strike
Rate,
(ii) the related Cap Contract Notional Balance, and
5
(iii) the actual number of days in the related Accrual Period divided
by 360.
"Cap Trust" means the trust fund established by Section 8.08 of the
Indenture.
"Cap Trustee" means The Bank of New York, not in its individual capacity,
but solely in its capacity as trustee for the benefit of the Holders of the
Class 1-A Notes and Class 2-A Notes under this Indenture.
"Charge-off Date" with respect to a Charged-off Mortgage Loan means the
last day of the Collection Period in which the 180th day after the date on which
the related Minimum Monthly Payment was due.
"Charged-off Loan Proceeds" of a Charged-off Mortgage Loan means any
Insurance Proceeds and all other net proceeds received with respect to the
Charged-off Mortgage Loan after the related Charge-off Date in connection with
the partial or complete liquidation of the Charged-off Mortgage Loan, whether
through a trustee's sale, foreclosure sale, auction, or otherwise, or in
connection with any condemnation or partial release of the related Mortgaged
Property, together with the net proceeds received after the related Charge-off
Date with respect to any Mortgaged Property acquired by the Master Servicer by
foreclosure or deed in lieu of foreclosure in connection with the Charged-off
Mortgage Loan, less the sum of related optional advances and any related Auction
Fee.
"Charged-off Mortgage Loan" means any Mortgage Loan with respect to which a
Minimum Monthly Payment has not been paid in full within 180 days of the Due
Date for the Minimum Monthly Payment.
"Certificate" means any of the Class C Certificates, the Class E-P
Certificates, the Class R-1 Certificates, and the Class R-2 Certificates.
"Certificate of Trust" means the Certificate of Trust in the form of
Exhibit A of the Trust Agreement to be filed for the Trust pursuant to Section
3810(a) of the Statutory Trust Statute.
"Certificate Register" means the register maintained by the Indenture
Trustee pursuant to Section 3.04 of the Trust Agreement.
"Certificateholder" means the registered holder of a Certificate issued in
connection with the creation of the Trust.
"Certification Party" means the entity for which a Certifying Person acts
as an officer, the Certifying Person, and each of the entity's officers,
directors, and Affiliates.
"Certifying Person" means the person who signs a ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification.
"Class" means a Class of Notes listed in the Adoption Annex.
6
"Class 1-A Cap Contract" means the transaction relating to the Class 1-A
Notes evidenced by the related confirmation (as assigned to the Cap Contract
Administrator pursuant to the Cap Contract Assignment Agreement).
"Class 1-A Cap Contract Account" means the account established and
maintained on the Closing Date by the Indenture Trustee and in its name, in
trust for the benefit of the Class 1-A Notes, pursuant to Section 8.01(c) of the
Indenture.
"Class 1-A Cap Contract Notional Balance" for the Class 1-A Cap Contract
for each Payment Date means the amount in the Class 1-A Cap Payment Schedule
under "Notional Schedule ($)."
"Class 2-A Cap Contract" means the transaction relating to the Class 2-A
Notes evidenced by the related confirmation (as assigned to the Cap Contract
Administrator pursuant to the Cap Contract Assignment Agreement).
"Class 2-A Cap Contract Account" means the account established and
maintained on the Closing Date by the Indenture Trustee and in its name, in
trust for the benefit of the Class 2-A Notes, pursuant to Section 8.01(c) of the
Indenture.
"Class 2-A Cap Contract Notional Balance" for the Class 2-A Cap Contract
for each Payment Date means the amount in the Class 2-A Cap Payment Schedule
under "Notional Schedule ($)."
"Class 1-A Notes" has the meaning given to it in the Adoption Annex.
"Class 2-A Notes" has the meaning given to it in the Adoption Annex.
"Class C Balance" on any day means the excess of the aggregate Asset
Balance of the Mortgage Loans on that day over the sum of the Note Principal
Balance of the Principal Amount Notes and the Class R-1 Balance.
"Class C Certificate" means any Class C Certificate executed by the Owner
Trustee and authenticated by the Indenture Trustee substantially in the form of
Exhibit B-3 of the Trust Agreement.
"Class C Share" on any day means a fraction whose numerator is the Class C
Balance and whose denominator is the sum of the Class C Balance and the Class
R-1 Balance, in each case on that day.
"Class E-P Certificate" means any Class E-P Certificate executed by the
Owner Trustee and authenticated by the Indenture Trustee substantially in the
form of Exhibit B-2 of the Trust Agreement.
"Class R-1 Balance" on any day means an amount equal to Net Draws at the
close of business on the previous day.
7
"Class R-1 Certificate" means any Class R-1 Certificate executed by the
Owner Trustee and authenticated by the Indenture Trustee substantially in the
form of Exhibit B-3 of the Trust Agreement.
"Class R-1 Share" on any day means a fraction whose numerator is the Class
R-1 Balance and whose denominator is the sum of the Class C Balance and the
Class R-1 Balance, in each case on that day.
"Class R-2 Certificate" means any Class R-2 Certificate executed by the
Owner Trustee and authenticated by the Indenture Trustee substantially in the
form of Exhibit B-3 of the Trust Agreement.
"Closing Date" means the Closing Date stated in the Adoption Annex.
"Code" means the Internal Revenue Code of 1986 and Treasury regulations
promulgated under the Code.
"Collateral" means either the Group 1 Collateral or the Group 2 Collateral,
as applicable, or both the Group 1 Collateral and Group 2 Collateral as the
context may require.
"Collection Account" means the Eligible Account or Eligible Accounts
created and maintained for the benefit of the Transferor and the Secured Parties
pursuant to Section 3.02(b) of the Sale and Servicing Agreement.
"Collection Period" for any Payment Date and any Mortgage Loan means the
calendar month preceding the month of the Payment Date (or, in the case of the
first Collection Period, the period from the Cut-off Date through the date
specified in the Adoption Annex).
"Combined Loan-to-Value Ratio" for any Mortgage Loan as of any date means a
fraction:
o whose numerator is the sum of (i) the Credit Limit and (ii) the
outstanding principal balance as of the date of execution of the related
original Credit Line Agreement (or any subsequent date as of which the
outstanding principal balance may be determined in connection with an
increase in the Credit Limit for the Mortgage Loan) of any mortgage loans
that are senior or equal in priority to the Mortgage Loan and that are
secured by the same Mortgaged Property and
o whose denominator is the Valuation of the related Mortgaged
Property.
"Confirmations" means the confirmations each with a trade date of December
12, 2006 evidencing the transactions between the Cap Counterparty and the
Sponsor relating to the Cap Contracts.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business is
administered specified in the Adoption Annex, or at any other address the
Indenture Trustee designates by notice to the Noteholders, the Credit Enhancer,
and the Issuer, or the principal corporate trust office of any successor
8
Indenture Trustee at the address designated by the successor Indenture Trustee
by notice to the Noteholders, the Credit Enhancer, and the Issuer.
"Credit Enhancement Draw Amount" has the meaning given to it in the
Adoption Annex.
"Credit Enhancer" means the Credit Enhancer identified in the Adoption
Annex.
"Credit Enhancer Default" means the failure by the Credit Enhancer to make
a payment required under the Policy in accordance with its terms.
"Credit Limit" means the maximum Asset Balance for each Mortgage Loan
permitted under the terms of the related Credit Line Agreement.
"Credit Limit Utilization Rate" for any Mortgage Loan means a fraction
whose numerator is the Cut-off Date Asset Balance for the Mortgage Loan and
whose denominator is the related Credit Limit.
"Credit Line Agreement" means the related credit line account agreement for
a Mortgage Loan executed by the related mortgagor and any amendment or
modification of it.
"Crossover Amount" for a Class of Notes and any Payment Date means the
portion of the Available Interest Collections for the unrelated Loan Group that
are available pursuant to Sections 8.03(a)(iv), (vii), (viii) and (xi) of the
Indenture.
"Custodial Agreement" means the Custodial Agreement dated as of the Closing
Date, among the Indenture Trustee, the Issuer, the Master Servicer, and Treasury
Bank, a division of Countrywide Bank, N.A., as custodian.
"Cut-off Date" means either the Initial Cut-off Date or Subsequent Cut-off
Date, as applicable.
"Cut-off Date Asset Balance" for any Initial Mortgage Loan acquired by the
Trust on the Closing Date means its unpaid principal balance as of the close of
business on the Initial Cut-off Date, and for any Additional Home Equity Loan
means its unpaid principal balance as of the close of business on the relevant
Subsequent Cut-off Date.
"Defective Mortgage Loan" means a Mortgage Loan subject to retransfer
pursuant to Section 2.02(b) or 2.04(d) of the Sale and Servicing Agreement.
"Delay Delivery Certification" has the meaning given to it in the Custodial
Agreement.
"Delinquency Rate" has the meaning given to it in the Adoption Annex.
"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
9
an agreement with the Issuer. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(a)(5) of the UCC of the State of New
York.
"Determination Date" for any Payment Date means the third Business Day
before the Payment Date.
"Due Date" for any Mortgage Loan means the twentieth day of the month.
"▇▇▇▇▇" means the Securities and Exchange Commission's Electronic Data
Gathering, Analysis and Retrieval system.
"Electronic Ledger" means the electronic master record of home equity
credit line mortgage loans maintained by the Master Servicer or by the Sponsor,
as appropriate.
"Eligible Account" means
(a) an account that is maintained with a depository institution whose debt
obligations throughout the time of any deposit in it have one of the two highest
short-term debt ratings by Standard & Poor's and the highest short-term debt
rating by Moody's,
(b) an account with a depository institution having a minimum long-term
unsecured debt rating of "AA-" by Standard & Poor's and "Baa3" by Moody's, which
accounts are fully insured by either the Savings Association Insurance Fund or
the Bank Insurance Fund of the Federal Deposit Insurance Corporation,
(c) a segregated trust account maintained with the Indenture Trustee or an
affiliate of the Indenture Trustee in its fiduciary capacity, or
(d) an account otherwise acceptable to each Rating Agency and the Credit
Enhancer, as evidenced at closing by delivery of a rating letter by each Rating
Agency and thereafter by delivery of a letter from
(i) each Rating Agency to the Indenture Trustee, within 30 days of
receipt of notice of the deposit, to the effect that the deposit will not
cause the Rating Agency to reduce or withdraw its then-current rating of
the Notes (without regard to the Policy), and
(ii) the Credit Enhancer to the Indenture Trustee, within 30 days of
receipt of notice of the deposit, to the effect that the account is
acceptable to it.
"Eligible Investments" means
(a) obligations of, or guaranteed as to principal and interest by, the
United States or any U.S. agency or instrumentality that is backed by the full
faith and credit of the United States;
(b) general obligations of or obligations guaranteed by any State
receiving the highest long-term debt rating of each Rating Agency, or any lower
rating that will not result in a
10
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 ▇▇▇▇▇'▇ is not a Rating Agency) are then rated
in one of the two highest long-term and the highest short-term ratings of each
Rating Agency for the securities, or any lower ratings that will not result in a
downgrade or withdrawal of the rating then assigned to the Notes by any Rating
Agency (without regard to the Policy);
(f) demand or time deposits or certificates of deposit issued by any bank
or trust company or savings institution to the extent that the deposits are
fully insured by the FDIC;
(g) guaranteed reinvestment agreements issued by any bank, insurance
company, or other corporation that, at the time of the issuance of the
agreements, will not result in a downgrade or withdrawal of the rating then
assigned to the Notes by any Rating Agency (without regard to the Policy);
(h) repurchase obligations with respect to any security described in
clauses (a) and (b) above, in either case entered into with a depository
institution or trust company (acting as principal) described in clause (e)
above;
(i) securities (other than stripped bonds, stripped coupons, or
instruments sold at a purchase price in excess of 115% of its face amount)
bearing interest or sold at a discount issued by any corporation incorporated
under the laws of the United States or any State that, at the time of the
investment, have one of the two highest ratings of each Rating Agency (except if
the Rating Agency is Moody's, the rating must be the highest commercial paper
rating of Moody's for the securities), or any lower ratings that will not result
in a downgrade or
11
withdrawal of the rating then assigned to the Notes by any Rating Agency
(without regard to the Policy) as evidenced by a signed writing delivered by
each Rating Agency;
(j) interests in any money market fund that, at the date of acquisition of
the interests in the fund and throughout the time the interests are held in the
fund, have the highest applicable rating by each Rating Agency, or any lower
ratings that will not result in a downgrade or withdrawal of the rating then
assigned to the Notes by any Rating Agency (without regard to the Policy);
(k) short term investment funds sponsored by any trust company or national
banking association incorporated under the laws of the United States or any
State that, on the date of acquisition, have been rated by each Rating Agency in
their respective highest applicable rating category, or any lower ratings that
will not result in a downgrade or withdrawal of the rating then assigned to the
Notes by any Rating Agency (without regard to the Policy); and
(l) any other investments having a specified stated maturity and bearing
interest or sold at a discount acceptable to each Rating Agency that will not
result in a downgrade or withdrawal of the rating then assigned to the Notes by
any Rating Agency (without regard to the Policy), as evidenced by a signed
writing delivered by each Rating Agency and that is a cash flow investment
within the meaning of Section 860G(a)(5)(A) of the Code and Section
1.860G-2(g)(1) of the Treasury Regulations promulgated under the Code;
No Eligible Investment may evidence either the right to receive (a)
only interest on the obligations underlying these instruments or (b) both
principal and interest payments from obligations underlying these instruments
where the interest and principal payments on the instruments provide a yield to
maturity at par greater than 120% of the yield to maturity at par of the
underlying obligations. No Eligible Investment may be purchased at a price
greater than par if that instrument may be prepaid or called at a price less
than its purchase price before stated maturity.
In addition, no amount beneficially owned by any REMIC (including any
amounts collected by the Master Servicer but not yet deposited in the Collection
Account) may be invested in investments (other than money market funds) treated
as equity interests for federal income tax purposes, unless the Master Servicer
receives an Opinion of Counsel to the effect that the investment will not
adversely affect the status of any REMIC created under the Trust Agreement as a
REMIC under the Code or result in imposition of a tax on it.
Notwithstanding the above, unless a Credit Enhancer Default has occurred,
each Eligible Investment shall have a rating of investment grade or better.
"Eligible Substitute Mortgage Loan" means a Mortgage Loan transferred to
the Trust by the Sponsor in connection with the retransfer of a Defective
Mortgage Loan that must, on the date of its transfer to the Trust,
12
o have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan,
an aggregate Asset Balance) not greater than the Transfer Deficiency
relating to the Defective Mortgage Loan;
o have a Loan Rate not less than the Loan Rate of the Defective
Mortgage Loan and not more than 1.000% in excess of the Loan Rate of the
Defective Mortgage Loan;
o have a Loan Rate based on the same Index with adjustments to the
Loan Rate made on the same Interest Rate Adjustment Date as that of the
Defective Mortgage Loan;
o have a FICO score not less than the FICO score of the Defective
Mortgage Loan and not more than 50 points higher than the Defective
Mortgage Loan;
o have a Gross Margin that is not less than the Gross Margin of the
Defective Mortgage Loan and not more than 100 basis points higher than the
Gross Margin for the Defective Mortgage Loan;
o if the Mortgage Loan is being transferred to the Trust in
connection with the retransfer a Defective Mortgage Loan in Loan Group 1,
the Mortgage Loan's original principal balance (by credit limit) conforms
to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac guidelines;
o have a mortgage of the same or higher level of priority as the
mortgage relating to the Defective Mortgage Loan at the time the mortgage
was transferred to the Trust;
o have a remaining term to maturity not more than six months
earlier than the remaining term to maturity of the Defective Mortgage Loan,
not later than the maturity date of the Principal Amount Notes, and not
more than 60 months later than the remaining term to maturity of the
Defective Mortgage Loan;
o comply with each representation and warranty in Section 2.04 of
the Sale and Servicing Agreement (to be made as of the date of transfer to
the Trust); and
o have an original Combined Loan-to-Value Ratio not greater than
that of the Defective Mortgage Loan.
More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if the Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate and the substitution is approved in
advance by the Credit Enhancer. The procedures applied by the Sponsor in
selecting each Eligible Substitute Mortgage Loan shall not be materially adverse
to the interests of the Indenture Trustee, the Transferor, or the Secured
Parties.
13
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Event of Default" has the meaning specified in Section 5.01 of the
Indenture.
"Event of Servicing Termination" has the meaning given to it in Section
6.01 of the Sale and Servicing Agreement.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Act Reports" means any reports on form 10-D, Form 8-K, and Form
10-K required to be filed by the Depositor with respect to the Trust under the
Exchange Act.
"Excess Spread Percentage" has the meaning given to it in the Adoption
Annex.
"FDIC" means the Federal Deposit Insurance Corporation or any successor to
it.
"Floating Allocation Percentage" for any Payment Date and a Loan Group
means the lesser of 100% and a fraction whose numerator is the aggregate Note
Principal Balance of the related Class of Principal Amount Notes plus the
related Allocated Transferor Interest and whose denominator is the sum of the
related Loan Group Balance, calculated as of the beginning of the related
Collection Period and the amount of funds in the related Additional Loan
Account.
"Foreclosure Profits" on a Liquidated Mortgage Loan (other than a
Charged-off Mortgage Loan) are the excess of
o its Net Liquidation Proceeds over
o its Asset Balance (plus accrued and unpaid interest thereon at
the applicable Loan Rate from the date interest was last paid to the end of
the Collection Period during which the Mortgage Loan became a Liquidated
Mortgage Loan).
"Form 10-D Disclosure Item" for any person means any litigation or
governmental proceedings material to the holders of the Notes pending against
it, or against any of the Trust, the Depositor, the Indenture Trustee, the Owner
Trustee, or the Master Servicer or any subservicer, if it (or in the case of the
Indenture Trustee, a Responsible Officer of the Indenture Trustee) has actual
knowledge thereof.
"Form 10-K Disclosure Item" for any person means each Form 10-D Disclosure
Item, (a) any affiliations or (b) any relationships between it and any Item 1119
Party that are either not in the ordinary course of business or on other than an
arms-length basis.
"Funding Period" has the meaning given to it in the Adoption Annex.
"Grant" means mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, and ▇▇▇▇▇ ▇ ▇▇▇▇ 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
14
after an Event of Default to claim for, collect, receive, and give receipt for
principal and interest payments on the Collateral and all other moneys payable
on the Collateral, to require the repurchase of Mortgage Loans, to give and
receive notices and other communications, to make waivers or other agreements,
to exercise all rights, to bring Proceedings in the name of the granting party
or otherwise, and generally to do and receive anything that the granting party
is or may be entitled to do or receive regarding the Collateral.
"Gross Margin" for any Mortgage Loan means the percentage shown as the
"Gross Margin" for the Mortgage Loan on Exhibit A of the Sale and Servicing
Agreement.
"Group 1 Collateral" has the meaning given to it in the Granting Clause of
the Indenture.
"Group 2 Collateral" has the meaning given to it in the Granting Clause of
the Indenture.
"Guaranteed Payment" has the meaning given to it in the Adoption Annex.
"Guaranteed Principal Payment Amount" has the meaning given to it in the
Adoption Annex.
"Holder" or "Noteholder" means the person in whose name a Note is
registered in the Note Register.
"Incipient Default" means any occurrence that is, or with notice or lapse
of time or both would become, an Event of Default.
"Indenture" means the Indenture, dated as of the Closing Date between the
Trust and the Indenture Trustee.
"Indenture Trustee" means the Indenture Trustee identified in the Adoption
Annex, as Indenture Trustee under the Indenture, or any successor Indenture
Trustee under the Indenture.
"Indenture Trustee Fee" means a fee that is separately agreed to between
the Master Servicer and the Indenture Trustee.
"Independent" means that a person:
o is in fact independent of the Issuer, any other obligor on the Notes,
the Transferor, and any affiliate of any of them,
o does not have any direct financial interest or any material indirect
financial interest in the Issuer, any other obligor on the Notes, the
Transferor, or any affiliate of any of them, and
o is not connected with the Issuer, any other obligor on the Notes, the
Transferor, or any affiliate of any of them as an officer, employee,
promoter, underwriter, trustee, partner, director, or person performing
similar functions.
15
"Independent Certificate" means a certificate or opinion to be delivered to
the Indenture Trustee made by an Independent appraiser or other expert appointed
by an Issuer Order and approved by the Indenture Trustee in the exercise of
reasonable care, and the opinion or certificate states that the Issuer has read
the definition of "Independent" in the Indenture and that the signer is
Independent.
"Index" for each Interest Rate Adjustment Date for a Mortgage Loan means
the highest "prime rate" as published in the "Money Rates" table of The Wall
Street Journal as of the first business day of the month.
"Initial Cut-off Date" means the Initial Cut-off Date specified in the
Adoption Annex.
"Initial Mortgage Loan" means any Mortgage Loan transferred to the Trust on
the Closing Date and identified on Exhibit A.
"Insolvency Event" regarding a specified person means
(a) the person generally fails to pay its debts as they become due or
admits in writing its inability to pay its debts generally as they become due;
(b) the person has a decree or order for relief by a court or agency or
supervisory authority having jurisdiction in the premises entered against it or
any substantial part of its property in an involuntary case under any applicable
bankruptcy, insolvency, or other similar law and the decree or order remains
unstayed and in effect for a period of 60 days;
(c) the person has a conservator, receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official appointed for it or for
all or any substantial part of its property in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities, or other similar
proceedings, and the decree or order remains unstayed and in effect for a period
of 60 days;
(d) the person's business is ordered to be wound-up or liquidated or the
person's business is subject to readjustment of debt, marshalling of assets and
liabilities, or other similar proceedings, and the decree or order or the
proceedings remain unstayed and in effect for a period of 60 days; or
(e) the person commences a voluntary case under any applicable bankruptcy,
insolvency, or other similar law, or consents to the entry of an order for
relief in an involuntary case under any such law, or consents to the appointment
of or taking possession by a conservator, receiver, liquidator, assignee for the
benefit of creditors, a custodian, trustee, sequestrator, or similar official
for the person or for all or any substantial part of its property, or the person
makes any general assignment for the benefit of creditors.
"Insurance Agreement" has the meaning given to it in the Adoption Annex.
"Insurance Proceeds" means proceeds paid by any insurer (other than the
Credit Enhancer under the Policy) pursuant to any insurance policy covering a
Mortgage Loan net of
16
any amount (i) covering any expenses of the Master Servicer in connection with
obtaining the proceeds, (ii) applied to the restoration or repair of the related
Mortgaged Property, (iii) released to the mortgagor in accordance with the
Master Servicer's normal servicing procedures, or (iv) required to be paid to
any holder of a mortgage senior to the Mortgage Loan.
"Insured Notes" has the meaning given to it in the Adoption Annex.
"Interest Bearing Notes" has the meaning given to it in the Adoption Annex.
"Interest Collections" for each Payment Date and each Class of Notes (or,
Class A-IO Component) means
o the sum of all payments made by mortgagors of Mortgage Loans in the
related Loan Group and any other amounts constituting interest collected by
the Master Servicer under the Mortgage Loans in the related Loan Group during
the related Collection Period plus
o any optional advance for the related Loan Group made by the Master
Servicer pursuant to Section 4.03 of the Sale and Servicing Agreement for
which the Master Servicer has not been reimbursed minus
o the Servicing Fee for the related Loan Group for the related
Collection Period.
These amounts include any Net Liquidation Proceeds and net proceeds from
any other insurer pursuant to any insurance policy covering a Mortgage Loan in
the related Loan Group allocable to interest on the applicable Mortgage Loan.
These amounts exclude any fees (including annual fees) or late charges or
similar administrative fees paid by the mortgagors. The related Credit Line
Agreement shall determine the portion of each payment on the Mortgage Loan that
constitutes principal or interest.
"Interest Formula Rate" has the meaning given to it in the Adoption Annex.
"Interest Period" for the first Payment Date means the period beginning on
the Closing Date and ending on the day preceding the first Payment Date and for
any other Payment Date means the period beginning on the preceding Payment Date
and ending on the day before the Payment Date.
"Interest Rate Adjustment Date" for each Mortgage Loan means any date on
which the Loan Rate is adjusted in accordance with the related Credit Line
Agreement.
"Interest Shortfall Deposit" for each Loan Group means any deposit made by
the Sponsor on the first and second Payment Dates into the Collection Account
pursuant to Section 3.03 of the Sale and Servicing Agreement to offset
shortfalls in interest payable to the Noteholders of the related Class of Notes.
"Investor Loss Amount" for each Payment Date and a Class of Principal
Amount Notes is the excess of the Note Principal Balance of that Class of
Principal Amount Notes immediately before the Payment Date over the sum of the
related Loan Group Balance and any
17
amount deposited in the related Additional Loan Account as of the last day of
the related Collection Period.
"Investor Principal Collections" are for a Payment Date and a Class of
Principal Amount Notes
o during the Managed Amortization Period, the lesser of
(A) the excess of the amount of Principal Collections for the
related Loan Group for the Payment Date, over the aggregate of
Additional Balances created on the Mortgage Loans in the related Loan
Group during the Collection Period, minus the Net Draws Principal
Payment related to that Loan Group, and
(B) the amount required to pay the related Class of Principal
Amount Notes to maintain the related Allocated Transferor Interest at
the related Required Transferor Subordinated Amount plus the amount
required to maintain the unrelated Allocated Transferor Interest at
the Required Transferor Subordinated Amount of the unrelated Class of
Principal Amount Notes (after the application of the Investor
Principal Collections for that unrelated Class of Principal Amount
Notes on that Payment Date).
o during the Rapid Amortization Period and if no Rapid Amortization
Event has occurred, the lesser of
(A) the excess of the amount of Principal Collections for the
Payment Date for the related Loan Group over the Net Draws Principal
Payment related to that Loan Group, and
(B) the amount required to pay the related Class of Principal
Amount Notes to maintain the related Allocated Transferor Interest at
the related Required Transferor Subordinated Amount plus the amount
required to maintain the unrelated Allocated Transferor Interest at
the Required Transferor Subordinated Amount of the unrelated Class of
Principal Amount Notes (after the application of the Investor
Principal Collections for that unrelated Class of Principal Amount
Notes on that Payment Date).
o on or after which a Rapid Amortization Event has occurred, all
Principal Collections for the related Loan Group for the Payment Date and,
if applicable, Principal Collections from the unrelated Loan Group after
the unrelated Class of Principal Amount Notes have been reduced to zero.
"Issuer" means CWHEQ Revolving Home Equity Loan Trust, Series 2006-I 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.
18
"Item 1119 Party" means the Depositor, any Seller, the Master Servicer, the
Indenture Trustee, the Owner Trustee, any subservicer, any originator identified
in the Prospectus Supplement, and any other material transaction party
identified in writing as such by the Master Servicer to each of the Indenture
Trustee and the Owner Trustee.
"Latest Possible Maturity Date" as provided in Section 3.11 of the Trust
Agreement.
"Latest Subsequent Closing Date" means the date specified in the Adoption
Annex.
"LIBOR" for any day means the rate for United States dollar deposits for
one month that appears on the 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.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right, or interest or other Security
Agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of any Financing Statement under the UCC (other than any Financing
Statement filed for informational purposes only) or comparable law of any
jurisdiction to evidence any of the foregoing except that any assignment
pursuant to Section 5.02 is not a Lien.
"Lifetime Rate Cap" for each Mortgage Loan whose related Mortgage Note
provides for a lifetime rate cap means the maximum Loan Rate permitted over the
life of the Mortgage Loan under the terms of the related Credit Line Agreement,
as shown on the Mortgage Loan Schedule.
"Limited Exchange Act Reporting Obligations" means the obligations of the
Master Servicer under Section 3.09(b), Section 5.02, and Section 5.04 with
respect to notice and information to be provided to the Depositor and Article
VII (except Section 7.07(a)(1) and (2)) of the Sale and Servicing Agreement.
"Liquidated Mortgage Loan" for any Payment Date means any Mortgage Loan
that as of the end of the related Collection Period the Master Servicer has
determined in accordance with the servicing standards in the Sale and Servicing
Agreement that all liquidation proceeds that it expects to recover on the
Mortgage Loan or the related REO have been recovered.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of overhead)
that are incurred by the Master Servicer in connection with the liquidation of
any Mortgage Loan and
19
not recovered under any insurance policy, including legal fees and expenses, any
unreimbursed amount expended pursuant to Section 3.06 of the Sale and Servicing
Agreement (including amounts advanced to correct defaults on any mortgage loan
which is senior to the Mortgage Loan and amounts advanced to keep current or pay
off a mortgage loan that is senior to the Mortgage Loan) respecting the related
Mortgage Loan and any related and unreimbursed expenditures with respect to real
estate property taxes, water or sewer taxes, condominium association dues,
property restoration or preservation or insurance against casualty, loss or
damage.
"Liquidation Loss Amount" for any Payment Date and any Mortgage Loan that
becomes a Liquidated Mortgage Loan during the related Collection Period is the
unrecovered Asset Balance of the Mortgage Loan at the end of the Collection
Period after reducing the Asset Balance for the Net Liquidation Proceeds.
"Liquidation Proceeds" means proceeds (including Insurance Proceeds)
received in connection with the liquidation of any Mortgage Loan or related REO,
whether through trustee's sale, foreclosure sale, or otherwise other than
Charged-off Loan Proceeds.
"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. The principal balance of a Liquidated Mortgage Loan
after final recovery of related liquidation proceeds is zero and the principal
balance of a Charged-off Mortgage Loan after the Charged-off Date is zero.
"Loan Pool Balance" for any Payment Date is the aggregate of the Asset
Balances of all Mortgage Loans as of the last day of the related Collection
Period plus all amounts on deposit in the Additional Loan Accounts.
"Loan Rate" for any Mortgage Loan and on any day means the per annum rate
of interest applicable under the related Credit Line Agreement to the
calculation of interest for the day on the Asset Balance of the Mortgage Loan.
"Loan Rate Cap" for each Mortgage Loan means the lesser of (i) the Lifetime
Rate Cap or (ii) the applicable state usury ceiling.
20
"Loan-to-Value Ratio" for any date of determination for any first lien
mortgage loan means a fraction whose numerator is the outstanding principal
balance of the mortgage loan as of the date of determination and whose
denominator is the Valuation of the related Mortgaged Property.
"Loss Percentage" has the meaning given to it in the Adoption Annex.
"Managed Amortization Period" means the period from the Closing Date to the
Rapid Amortization Commencement Date.
"Master Servicer" means Countrywide Home Loans, Inc., a New York
corporation and any successor to it and any successor under the Sale and
Servicing Agreement.
"MERS" means Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor to it.
"MERS(R) System" means the system of recording transfers of mortgages
electronically maintained by MERS.
"MIN" means the Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
"Minimum Monthly Payment" for any Mortgage Loan and any month means the
minimum amount required to be paid by the related mortgagor in that month.
"MOM Loan" means any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of the Mortgage Loan and its successors and
assigns.
"Moneyline Telerate Screen Page 3750" means the display designated as page
3750 on the Moneyline Telerate Information Services, Inc. (or any page replacing
that page on that service for the purpose of displaying London inter-bank
offered rates of major banks).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in
interest.
"Mortgage" means any conveyance to secure the performance of an obligation
including a deed of trust to secure debt and other comparable security
instruments.
"Mortgage File" for each of the Mortgage Loans means the following
documents:
(i) the original Mortgage Note endorsed in blank or, if the original
Mortgage Note has been lost or destroyed and not replaced, an original lost
note affidavit from the Sponsor stating that the original Mortgage Note was
lost, misplaced, or destroyed, together with a copy of the Mortgage Note;
(ii) unless the Mortgage Loan is registered on the MERS(R) System, an
original Assignment of Mortgage for the Mortgage Loan in blank in
recordable form;
(iii) the original recorded mortgage with evidence of recording on it
(noting the presence of the MIN of the Mortgage Loan and language
indicating that the
21
Mortgage Loan is a MOM Loan if the Mortgage Loan is a MOM Loan) or, if the
original recorded mortgage with evidence of recording on it cannot be
delivered by the Closing Date because of a delay caused by the public
recording office where the original mortgage has been delivered for
recordation or because the original mortgage has been lost, an accurate
copy of the mortgage, together with (i) in the case of a delay caused by
the public recording office, an Officer's Certificate of the Sponsor or the
Depositor, which may be a blanket certificate covering more than one
mortgage, stating that the original mortgage has been dispatched to the
appropriate public recording official for recordation or (ii) in the case
of an original mortgage that has been lost, a certificate by the
appropriate county recording office where the mortgage is recorded;
(iv) if applicable, the original of each intervening assignment needed
for a complete chain of title for the mortgage from its original mortgagee
or beneficiary to the Trust or in blank (or, if the Mortgage Loan is
registered on the MERS(R) System, to MERS and noting the presence of a MIN)
with evidence of recording on them, or, if any original intervening
assignment has not been returned from the applicable recording office or
has been lost, a true copy of it, together with in the case of a delay
caused by the public recording office, an Officer's Certificate of the
Sponsor or the Depositor, which may be a blanket certificate covering more
than one intervening assignment, stating that the original intervening
assignment has been dispatched to the appropriate public recording official
for recordation
(v) a title policy for each Mortgage Loan with a Credit Limit in
excess of $100,000 or a copy of the lender's title policy or a printout of
the electronic equivalent and all riders thereto;
(vi) the original of any guaranty executed in connection with the
Mortgage Note;
(vii) the original of each assumption, modification, consolidation, or
substitution agreement relating to the Mortgage Loan; and
(viii) any security agreement, chattel mortgage, or equivalent
instrument executed in connection with the Mortgage Loan;
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
22
(y) the optical image or other representation does not impair the
ability of an owner of the Mortgage Loan to transfer its interest in the
Mortgage Loan, and
(b) written confirmation that the retention of the documents in that
format will not result in a reduction in the then current rating of the Notes,
without regard to the Policy. A copy of any Opinion of Counsel shall in each
case be addressed and delivered to the Credit Enhancer.
"Mortgage Loan" means each of the mortgage loans, including Additional
Balances for it, that are transferred to the Trust pursuant to Section 2.01(a)
and (b) of the Sale and Servicing Agreement, together with all related Mortgage
Files, exclusive of Mortgage Loans that are retransferred to the Depositor, the
Master Servicer, or the Sponsor or purchased by the Master Servicer pursuant to
Section 2.02, 2.04, 2.06, or 3.06 of the Sale and Servicing Agreement, held as a
part of the Trust. The Mortgage Loans originally so held are identified in the
Mortgage Loan Schedule delivered on the Closing Date. The Mortgage Loans shall
also include any Eligible Substitute Mortgage Loan (as defined in the Sale and
Servicing Agreement) substituted by the Sponsor for a defective Mortgage Loan
pursuant to Section 2.07(a) of the Sale and Servicing Agreement.
"Mortgage Loan Schedule" on any date means the schedule of Mortgage Loans
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.
"Net Draws" on any day are the aggregate amount of advances of funds made
by the Holder of the Class R-1 Certificates to purchase Additional Balances
minus the aggregate amount of Principal Collections on the Mortgage Loans
previously paid to the Class R-1 Certificates with respect to the advances minus
any principal balances of Mortgage Loans removed by the holder of the Class R-1
Certificates to reduce the Net Draws balance pursuant to the Sale and Servicing
Agreement minus any Liquidation Loss Amount allocated to the Class R-1
Certificates.
"Net Draws Principal Payment" for a Payment Date and a Loan Group is the
amount of Principal Collections from that Loan Group applied on the Payment Date
to the payment of Net Draws related to that Loan Group to the Holder of the
Class R-1 Certificates, determined as follows:
23
o During the Managed Amortization Period, the Net Draws Principal
Payment for a Payment Date and a Loan Group will be the least of
(i) Net Draws attributable to that Loan Group,
(ii) the Available Principal Collections related to that Loan
Group, and
(iii) the sum of (a) Available Principal Collections related to
that Loan Group in an amount equal to 3% of the aggregate Note
Principal Balance of the related Class of Principal Amount Notes for
the Payment Date and (b) the remaining related Available Principal
Collections (after that 3%) times a fraction whose numerator is
related Remaining Net Draws and whose denominator is the sum of
related Remaining Net Draws and the aggregate Note Principal Balance
of the related Class of Principal Amount Notes.
o During the Rapid Amortization Period if a Rapid Amortization
Event has not occurred, the Net Draws Principal Payment for a Payment Date
and a Loan Group will be Principal Collections from that Loan Group for the
Payment Date times a fraction whose numerator is Net Draws related to that
Loan Group and whose denominator is the sum of Net Draws related to that
Loan Group and the Note Principal Balance of the related Class of Principal
Amount Notes.
o After a Rapid Amortization Event has occurred, the Net Draws
Principal Payment for a Payment Date and a Loan Group will be zero.
"Net Liquidation Proceeds" for any Liquidated Mortgage Loan means
Liquidation Proceeds net of Liquidation Expenses.
"Non-Permitted Transferee" means any person other than a Permitted
Transferee.
"Note" has the meaning given to it in the Adoption Annex.
"Note Interest" for any Class of Principal Amount Notes and Payment Date
means interest for the related Interest Period at the applicable Note Rate on
the related Note Principal Balance as of the first day of the Interest Period
(after giving effect to the distributions made on the first day of the Interest
Period).
"Note Owner" means the beneficial owner of a Book-Entry Note, as reflected
on the books of the Indenture Trustee as agent for the Depository.
"Note Principal Balance" for any Payment Date and Class of Principal Amount
Notes means the related Original Note Principal Balance less the aggregate of
amounts actually distributed as principal on that Class of Principal Amount
Notes before the Payment Date.
24
"Note Rate" for a Class of Interest Bearing Notes means its related Class
Note Rate specified in the Adoption Annex.
"Note Register" and "Note Registrar" have the meanings specified in Section
2.03.
"Noteholder" means a holder of one or more Notes.
"Officer's Certificate" means a certificate
(a) with respect to the Indenture, signed by any Authorized Officer of the
Issuer or other specified party under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01 of the
Indenture and delivered to the Indenture Trustee
(b) with respect to the Sale and Servicing Agreement,
o signed by the Chairman of the Board, the Vice Chairman of the
Board, the President, a Managing Director, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or
one of the Assistant Treasurers or Assistant Secretaries of the Depositor,
the Sponsor, the Transferor, or the Master Servicer, or
o if provided for in the Sale and Servicing Agreement, signed by a
Servicing Officer, or
o for any other person, signed by an authorized officer of the
person.
"Opinion of Counsel" means written opinions of counsel who may, except as
otherwise expressly provided in the Indenture, be an employee of or counsel to
the Issuer, the Depositor, the Sponsor, the Master Servicer, or the Transferor
(except that any opinion pursuant to Section 8.06 of the Indenture, Section 5.04
of the Sale and Servicing Agreement, or relating to taxation must be an opinion
of independent outside counsel) and who is reasonably acceptable to the parties
to whom it is to be delivered.
Opinions provided pursuant to the Indenture (except for opinions provided
pursuant to Section 8.02(b)) shall be addressed to the Indenture Trustee as
Indenture Trustee, and any other designated party, shall comply with any
applicable requirements of Section 11.01 of the Indenture, and shall be in form
and substance reasonably satisfactory to the parties to whom it is to be
delivered.
In connection with any opinion of counsel concerning the interpretation or
application of the REMIC Provisions, the counsel must in fact be independent of
the Depositor and the Master Servicer, not have any direct financial interest in
the Depositor or the Master Servicer or in any affiliate of either, and not be
connected with the Depositor or the Master Servicer as an officer, employee,
promoter, underwriter, trustee, partner, director, or person performing similar
functions.
25
Copies of all Opinions of Counsel shall be delivered to the Credit
Enhancer.
"Optional Termination Date" means any Payment Date on or after which the
Note Principal Balance of the Principal Amount Notes is less than or equal to
10% of the Original Note Principal Balance.
"Original Note Principal Balance" means the aggregate Note Principal
Balance of all Classes of Principal Amount Notes on the Closing Date as
reflected in the Adoption Annex.
"Outstanding" as of the date of determination means all Notes that have
been authenticated and delivered under the Indenture except:
(i) Notes that have been cancelled by the Note Registrar or delivered
to the Note Registrar for cancellation or that by their terms have expired;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been deposited with the Indenture Trustee or any
Paying Agent in trust for the Noteholders, and if the Notes are to be
redeemed, notice of the redemption has been duly given pursuant to the
Indenture or notice has been provided for in a manner satisfactory to the
Indenture Trustee; and
(iii) Notes in exchange for or instead of which other Notes have been
authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that those Notes are
held by a Protected Purchaser.
In determining whether the Holders of the requisite Outstanding Amount have
Acted under the Indenture or under any Transaction Document, Notes owned by the
Issuer, the Depositor, a Seller, or the Transferor, or any of their affiliates
shall be disregarded and treated as not being Outstanding, except that, in
determining whether the Indenture Trustee shall, if the Notes have first been
transferred to a non-affiliate, be protected in relying on any Act, only Notes
that a Responsible Officer knows to be so owned shall be disregarded. Notes so
owned that have been pledged in good faith, or for whose owner the Issuer, the
Depositor, a Seller, or the Transferor, or any of their affiliates is acting as
trustee or nominee, may be regarded as Outstanding if the pledgee or other
person establishes to the satisfaction of the Indenture Trustee the pledgee's or
other person's right to Act for the Notes and that the pledgee or other person
is not the Issuer, the Depositor, or the Transferor, or any of their affiliates.
To effectuate the Credit Enhancer's right of subrogation under Section 4.03
of the Indenture, all Notes that have been paid with funds provided under the
Policy shall be Outstanding until the Credit Enhancer has been paid all amounts
due to it pursuant to the Insurance Agreement with respect to those Notes.
"Outstanding Amount" means the aggregate principal amount of all Principal
Amount Notes, or of a Class of Principal Amount Notes, as applicable, that are
Outstanding at the date of determination. For the purposes of voting, the
Outstanding Amount of notional amount securities relative to Principal Amount
Notes shall be as specified in the Adoption Annex.
26
"Paying Agent" means the Indenture Trustee or any other person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.08 of
the Indenture and is authorized by the Issuer to make payments to and
distributions from the Payment Account, including payments of principal or
interest on the Notes on behalf of the Issuer.
"Payment Account" means the Eligible Account established and maintained by
the Indenture Trustee on behalf of and for the benefit of the Secured Parties
pursuant to Section 8.01 of the Indenture.
"Payment Date" means the day of each month specified in the Adoption Annex,
or if that is not a Business Day, then the next Business Day.
"Performance Certification" means a certification in the form of Exhibit
E-1 of the Sale and Servicing Agreement (in the case of any Reporting
Subcontractor of the Master Servicer or a subservicer) and the Owner Trustee)
and Exhibit E-2 of the Sale and Servicing Agreement (in the case of the
Indenture Trustee or any Reporting Subcontractor of the Indenture Trustee).
"Permitted Transferee" means any person other than
o the United States, any State or political subdivision thereof, or
any agency or instrumentality of any of them,
o a foreign government, International Organization, or any agency
or instrumentality of either of them,
o an organization (except certain farmers' cooperatives described
in Section 521 of the Code) that is exempt from tax imposed by Chapter 1 of
the Code (including the tax imposed by Section 511 of the Code on unrelated
business taxable income) on any excess inclusions (as defined in Section
860E(c)(1) of the Code) with respect to any Residual Certificate,
o rural electric and telephone cooperatives described in Section
1381(a)(2)(C) of the Code,
o an "electing large partnership" as defined in Section 775 of the
Code,
o a person that is not a citizen or resident of the United States,
a corporation, partnership, or other entity created or organized in or
under the laws of the United States, any state of the United States, or the
District of Columbia, or an estate or trust whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct
of a trade or business within the United States or a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust
27
and one or more United States persons have the authority to control all
substantial decisions of the trust unless such person has furnished the
holder of the R-1 Certificates and the Owner Trustee with a duly completed
Internal Revenue Service Form W-8ECI or any applicable successor form, and
o any other person so designated by the Depositor based on an
Opinion of Counsel that the Transfer of an Ownership Interest in a Residual
Certificate to such person may cause any REMIC to fail to qualify as a
REMIC at any time that the Certificates are outstanding.
The terms "United States," "State," and "International Organization" have
the meanings in Section 7701 of the Code or successor provisions. A corporation
will not be treated as an instrumentality of the United States or of any State
or political subdivision thereof for these purposes if all of its activities are
subject to tax and, with the exception of the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by such
government unit.
"Policy" means the financial guaranty insurance policy identified in the
Adoption Annex and all its endorsements, dated as of the Closing Date, issued by
the Credit Enhancer to the Indenture Trustee for the benefit of the Holders of
the Insured Notes.
"Policy Payments Account" means a separate special purpose trust account
that is an Eligible Account, for the benefit of Holders of the Insured Notes and
the Credit Enhancer over which the Indenture Trustee has exclusive control and
sole right of withdrawal.
"Preference Amount" has the meaning given to it in the Insurance Agreement.
"Preference Claim" means any proceeding or the institution of any action
seeking the avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership, or similar law of any distribution made with respect
to the Notes (other than Basis Risk Carryforward).
"Premium Letter" has the meaning given to it in the Adoption Annex.
"Principal Amount Notes" has the meaning given to it in the Adoption Annex.
"Principal Collections" for the Mortgage Loans in a Loan Group and any
Payment Date means the sum of all payments made by the mortgagors and any other
amounts constituting principal collected by the Master Servicer under the
Mortgage Loans in that Loan Group during the related Collection Period. These
amounts include any Net Liquidation Proceeds and net proceeds from any other
insurer pursuant to any insurance policy covering a Mortgage Loan allocable to
principal of the applicable Mortgage Loan and Transfer Deposit Amounts, but
exclude Foreclosure Profits. The terms of the related Credit Line Agreement
shall determine the portion of each payment on a Mortgage Loan that constitutes
principal or interest.
28
"Principal Reserve Fund" means the Eligible Account established and
maintained by the Indenture Trustee pursuant to Section 8.01(d) of the
Indenture.
"Proceeding" means any suit in equity, action at law, or other judicial or
administrative proceeding.
"Purchase Agreement" means the Purchase Agreement dated as of the Closing
Date among Countrywide Home Loans, Inc., as a seller, the other sellers named
therein, as sellers, and the Depositor, as purchaser, with respect to the
Mortgage Loans.
"Purchase Price" with respect to any Mortgage Loan required to be purchased
by the Sponsor pursuant to Section 2.03 or 2.04 of the Sale and Servicing
Agreement or purchased at the option of the Master Servicer pursuant to Section
3.01 or 3.06 of the Sale and Servicing Agreement means an amount equal to the
sum of
(i) 100% of the unpaid principal balance of the Mortgage Loan on the date
of such purchase,
(ii) accrued interest on the Mortgage Loan at the applicable Loan Rate (or
at the applicable Loan Rate reduced by amounts owed to the Master Servicer with
respect to that Mortgage Loan if (x) the purchaser is the Master Servicer or (y)
if the purchaser is Countrywide and Countrywide is an affiliate of the Master
Servicer) from the date through which interest was last paid by the Mortgagor to
the Due Date in the month in which the Purchase Price is to be distributed to
Noteholders, and
(iii) in the case of any Mortgage Loan required to be purchased by the
Sponsor because of, or that arises out of, a violation of any predatory or
abusive lending law with respect to the related Mortgage Loan, any costs and
damages incurred by the Trust relating to such violation of any predatory or
abusive lending law with respect to the related Mortgage Loan.
"Rapid Amortization Commencement Date" means the earlier of the Payment
Date in the month specified in the Adoption Annex and the Payment Date after the
Collection Period in which a Rapid Amortization Event occurs.
"Rapid Amortization Event" has the meaning given to it in Section 5.16 of
the Indenture.
"Rapid Amortization Period" means the period beginning on the Rapid
Amortization Commencement Date until the termination of the Indenture.
"Rating Agency" means any statistical credit rating agency, or its
successor, that rated the Notes at the request of the Depositor at the time of
the initial issuance of the Notes. If a particular Rating Agency is no longer in
existence, "Rating Agency" will mean a statistical credit rating agency, or
other comparable person, designated by the Depositor and the Credit Enhancer.
The Indenture Trustee will be notified of any such designation. References to
the highest short-term unsecured rating category of a Rating Agency mean "A-1+"
or better in the
29
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, without taking the Policy into account, will
not result in a reduction or withdrawal of its then current rating of the Notes
and the Credit Enhancer has consented to the action.
"Record Date" for a Payment Date or redemption date has the meaning given
to it in the Adoption Annex.
"Reference Bank Rate" for an Interest Period means the arithmetic mean
(rounded upwards to the nearest one sixteenth of a percent) of the offered rates
for United States dollar deposits offered by three major banks engaged in
transactions in the London interbank market, selected by the Depositor after
consultation with the Indenture Trustee, as of 11:00 A.M., London time, on the
Adjustment Date immediately preceding the Interest Period, to prime banks in the
London interbank market for a period of one month in amounts approximately equal
to the outstanding Note Principal Balance if at least two of the banks provide
an offered rate. If fewer than two offered rates are quoted, the Reference Bank
Rate will be the arithmetic mean of the rates quoted by one or more major banks
in New York City, selected by the Depositor after consultation with the
Indenture Trustee and the Credit Enhancer, as of 11:00 A.M., New York City time,
on the Adjustment Date immediately preceding the Interest Period, for loans in
U.S. dollars to leading European banks for a period of one month in amounts
approximately equal to the outstanding Note Principal Balance. If no such
quotations can be obtained, the Reference Bank Rate shall be LIBOR for the
preceding Interest Period.
"Regulation AB" means Subpart 229.1100-Asset Backed Securities (Regulation
AB), 17 C.F.R. ss.ss.229.1100-229.1123, and subject to any clarification and
interpretation provided by the Securities and Exchange Commission in the
adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518,
70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Securities and
Exchange Commission, or as may be provided by the Securities and Exchange
Commission or its staff from time to time.
"Registered Holder" means the person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"Remaining Net Draws" for a Loan Group is the related Net Draws minus 3% of
the Note Principal Balance of the related Class of Principal Amount Notes
immediately prior to that Payment Date.
30
"REMIC" means a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code, and when referring to entities means the
real estate mortgage investment conduits created under this Agreement as defined
in Section 3.11 of the Trust Agreement.
"REMIC Provisions" means Section 860A through 860G of the Code and related
provisions, and regulations and rulings promulgated under those sections.
"REO" means a Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
"Reportable Event" means any event required to be reported on Form 8-K, and
in any case, the following:
o entry into a definitive agreement related to the Trust, the
Notes, or the Mortgage Loans, or an amendment to a Transaction Document,
only if the Depositor is not a party to the agreement or amendment (e.g., a
servicing agreement with a servicer contemplated by Item 1108(a)(3) of
Regulation AB);
o termination of a Transaction Document (other than by expiration
of the agreement on its stated termination date or as a result of all
parties completing their obligations under the agreement), if the Depositor
is not a party to the agreement (e.g., a servicing agreement with a
servicer contemplated by Item 1108(a)(3) of Regulation AB);
o with respect to the Master Servicer only, if the Master Servicer
becomes aware of any bankruptcy or receivership with respect to the
Sponsor, the Depositor, the Master Servicer, any subservicer, the Indenture
Trustee, the Owner Trustee, any enhancement or support provider
contemplated by Items 1114(b) or 1115 of Regulation AB, or any other
material party contemplated by Item 1101(d)(1) of Regulation AB;
o with respect to the Indenture Trustee, the Master Servicer, and
the Depositor only, the occurrence of an early amortization, performance
trigger, or other trigger, including an Event of Default under the
Indenture, of which it (in the case of the Indenture Trustee, a Responsible
Officer of the Indenture Trustee) has actual knowledge;
o the resignation, removal, replacement, or substitution of the
Master Servicer, any subservicer (with respect to the Master Servicer
only), the Indenture Trustee, or the Owner Trustee;
o with respect to the Master Servicer only, if the Master Servicer
becomes aware that (i) any material enhancement or support specified in
Item
31
1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation AB that
was previously applicable regarding one or more Classes of the Notes has
terminated other than by expiration of the contract on its stated
termination date or as a result of all parties completing their obligations
under the agreement; (ii) any material enhancement specified in Item
1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation AB has
been added with respect to one or more Classes of the Notes; or (iii) any
existing material enhancement or support specified in Item 1114(a)(1)
through (3) of Regulation AB or Item 1115 of Regulation AB with respect to
one or more Classes of the Notes has been materially amended or modified;
and
o with respect to the Indenture Trustee, the Master Servicer, and
the Depositor only, a required distribution to Noteholders is not made as
of the required Payment Date under the Indenture.
"Required Amount" for a Payment Date and a Loan Group means the amount by
which the sum of the amounts distributable pursuant to Sections 8.03(a)(i),
(ii), and (iii) of the Indenture on the Payment Date exceed related Available
Interest Collections available for payment thereon for the Payment Date.
"Required Transferor Subordinated Amount" has the meaning given to it in
the Adoption Annex.
"Residual Certificates" means each of the Class R-1 and Class R-2
Certificates.
"Responsible Officer" any officer of the Indenture Trustee, or any officer
in the corporate trust department of the Owner Trustee, as applicable, with
direct responsibility for the administration of the Trust Agreement or the
Indenture and also, with respect to a particular matter, any other officer to
whom a matter is referred because of the officer's knowledge of and familiarity
with the particular subject. With respect to the Cap Trustee and the Cap
Contract Administrator, any officer of the Indenture Trustee with direct
responsibility for the administration of the Cap Contract and the Cap Contract
Administration Agreement, respectively.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement dated
as of the Closing Date among the Sponsor, the Depositor, the Trust, and the
Indenture Trustee.
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification" means the certification required by Rules
13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to Section 302 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder (including any interpretations
thereof by the staff of the Securities and Exchange Commission)).
"Scheduled Maturity Date" means the date specified in the Adoption Annex.
32
"Secured Parties" with respect to the Group 1 Collateral means the Holders
of the Class 1-A Notes and the Credit Enhancer, and with respect to the Group 2
Collateral means the Holders of the Class 2-A Notes and the Credit Enhancer.
"Securities Act" means the Securities Act of 1933.
"Seller" means any Seller of Mortgage Loans pursuant to the Purchase
Agreement.
"Servicing Certificate" means the certificate delivered each month pursuant
to Section 4.01 of the Sale and Servicing Agreement to the Indenture Trustee
completed and executed by any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee (with a copy to the Credit Enhancer) by the Master
Servicer on the Closing Date, as it may be amended from time to time.
"Servicing Criteria" means the "servicing criteria" in Item 1122(d) of
Regulation AB.
"Servicing Criteria Compliance Assessment Report" for any person means a
report (in form and substance reasonably satisfactory to the Depositor)
regarding the person's assessment of compliance with the Servicing Criteria
during the preceding year, as required under Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122 of Regulation AB.
"Servicing Fee" for a Loan Group and any Payment Date means the product of
o the Servicing Fee Rate specified in the Adoption Annex divided by
12 and
o the Loan Group Balance of that Loan Group as of the first day of
the Collection Period preceding the Payment Date (or as of the close of
business on the Cut-off Date for the first Payment Date).
The Servicing Fee will not accrue on any Charged-off Mortgage Loan after the
related Charge-off Date.
"Servicing Officer" means any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee and the Credit Enhancer by the Master Servicer on the
Closing Date, as the list may be amended from time to time.
"Sponsor" means Countrywide Home Loans, Inc., a New York corporation and
any successor.
"Standard & Poor's" means Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or its successor in interest.
"State" means any one of the ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ or the District
of Columbia.
33
"Statutory Trust Statute" means the Delaware Statutory Trust Act (12 Del.
Code, ss. 3801 et seq.).
"Stepdown Date" has the meaning given to it in the Adoption Annex.
"Subcontractor" means any vendor, subcontractor, or other person that is
not responsible for the overall servicing (as "servicing" is commonly understood
by participants in the mortgaged-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to the Mortgage Loans under the direction or authority of the
Master Servicer or the Indenture Trustee or any subservicer, as the case may be.
"Subordinated Transferor Collections" means for any Payment Date and a Loan
Group the Principal Collections from that Loan Group allocated to be paid with
respect to the related Allocated Transferor Interest to the holders of the
Certificates pursuant to the Trust Agreement.
"Subsequent Closing Date" means any date designated by the Depositor on
which the Trust acquires Additional Home Equity Loans pursuant to Section
2.01(b) of the Sale and Servicing Agreement.
"Subsequent Cut-off Date" means the cut-off date designated by the
Depositor in a Transfer Document in connection with the acquisition of
Additional Home Equity Loans by the Trust pursuant to Section 2.01(b) of the
Sale and Servicing Agreement.
"Tax Matters Person Certificate" means the Class R-2 Certificate with a
Denomination of $0.01.
"Transaction Documents" means the Indenture, the Notes, the Sale and
Servicing Agreement, the Purchase Agreement, the Custodial Agreement, the
Administration Agreement, the Trust Agreement, the Insurance Agreement, the
Policy, and any other document or agreement entered into in connection with the
Trust, the Notes, the Certificates, or the Mortgage Loans.
"Transfer Date" has the meaning given to it in Section 2.06 of the Sale and
Servicing Agreement.
"Transfer Deficiency" with respect to a Loan Group means that the excess of
the Loan Group Balance (minus related Net Draws) over the Note Principal Balance
of the related Class of Principal Amount Notes after a retransfer of a Mortgage
Loan pursuant to Section 2.02(b) or 2.04(d) of the Sale and Servicing Agreement
would be less than the related Required Transferor Subordinated Amount.
The amount of any Transfer Deficiency for a Loan Group is the lesser of
o the Asset Balance of the Defective Mortgage Loan and
34
o the excess of
o the Required Transferor Subordinated Amount for both Loan
Groups
over
o the Transferor Interest.
In any computation involving a Mortgage Loan required to be purchased by
the Sponsor because of, or arising out of, a violation of any predatory or
abusive lending law with respect to the Mortgage Loan, the related Allocated
Transferor Interest shall be reduced for any costs and damages incurred by the
Trust relating to the violation of any predatory or abusive lending law with
respect to the Mortgage Loan.
"Transfer Deposit Amount" has the meaning given to it in Section 2.07 of
the Sale and Servicing Agreement.
"Transfer Document" means a document substantially in the form of Exhibit C
of the Sale and Servicing Agreement.
"Transfer Notice Date" has the meaning given to it in Section 2.06 of the
Sale and Servicing Agreement.
"Transferor" means the Holder of the Class C Certificates executed and
authenticated by the Owner Trustee under the Trust Agreement.
"Transferor Certificates" has the meaning given to it in the Adoption
Annex.
"Transferor Interest" for any date is the aggregate of the Allocated
Transferor Interests on that date.
"Transferor Principal Collections" for any Payment Date means Principal
Collections received with respect to the Mortgage Loans during the related
Collection Period minus Additional Balances created on the Mortgage Loans during
the Collection Period minus the Net Draws Principal Payment minus Investor
Principal Collections.
"Trust" means the trust specified in the Adoption Annex, formed pursuant to
the Trust Agreement.
"Trust Agreement" means the trust agreement dated as of December 27, 2006,
among Countrywide Home Loans, Inc., the Depositor and the Owner Trustee forming
the Trust.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date of the Indenture, unless otherwise specifically provided.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the relevant jurisdiction, unless the context otherwise requires.
35
"Unpaid Investor Interest Shortfall" for any Payment Date and Class of
Principal Amount Notes means the aggregate amount of Note Interest on that Class
of Principal Amount Notes that was accrued for a prior Payment Date and has not
been paid to Holders of that Class of Notes.
"Valuation" of any Mortgaged Property means the lesser of (i) the Appraised
Value of the Mortgaged Property and (ii) in the case of a Mortgaged Property
purchased within one year of the origination of the related Mortgage Loan, the
purchase price of the Mortgaged Property.
"Weighted Average Net Loan Rate" for a Loan Group and any Collection Period
means the average of the daily Net Loan Rate (specified in the 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.
36
ADOPTION ANNEX
ADOPTION ANNEX
The Issuer shall issue under Section 2.02(b) of the Indenture:
o Class 1-A Notes in an aggregate principal amount of $380,000,000,
o Class 2-A Notes in an aggregate principal amount of $1,720,000,000,
The issuer will not issue Class A-IO Notes in this series.
The title of the Additional Loan Accounts for Loan Group 1 and Loan Group 2
are "The Bank of New York, as Indenture Trustee, Additional Loan Account for
Loan Group 1 for the registered holders of Revolving Home Equity Loan Asset
Backed Notes, Series 2006-I and the Credit Enhancer" and "The Bank of New York,
as Indenture Trustee, Additional Loan Account for Loan Group 2 for the
registered holders of Revolving Home Equity Loan Asset Backed Notes, Series
2006-I and Financial Security Assurance Inc.," respectively.
The title of the Payment Account is "The Bank of New York, as Indenture
Trustee, Payment Account for the registered holders of Revolving Home Equity
Loan Asset Backed Notes, Series 2006-I and Financial Security Assurance Inc."
The title of the Collection Account is "The Bank of New York, as Indenture
Trustee, Collection Account in trust for the registered holders of Revolving
Home Equity Loan Asset Backed Notes, Series 2006-I and Financial Security
Assurance Inc."
The title of the Cap Contract Accounts are "The Bank of New York, as
Indenture Trustee, Cap Contract Account in trust for the registered holders of
Revolving Home Equity Loan Asset Backed Notes, Series 2006-I, Class 1-A Notes"
and "The Bank of New York, as Indenture Trustee, Cap Contract Account in trust
for the registered holders of Revolving Home Equity Loan Asset Backed Notes,
Series 2006-I, Class 2-A Notes."
The amount deposited in the "Additional Loan Account" for Loan Group 1 and
for Loan Group 2 on the Closing Date is $47,500.66 and $99,985,958.44,
respectively.
The "Applicable Margin" means, for the Class 1-A Notes and for the Class
2-A Notes is 0.14% and 0.14%, respectively.
The "Book-Entry Notes" are the Class 1-A Notes and the Class 2-A Notes.
"Cap Contract Termination Date" for either the Class 1-A Cap Contract or
the Class 2-A Cap Contract, as applicable means the 67th Payment Date.
"Cap Counterparty" means ▇▇▇▇▇▇ Brothers Special Financing Inc. and its
successors.
"Class 1-A Cap Payment Schedule" is as follows:
A-1
Notional Notional
Payment Date Schedule ($) Cap Strike Payment Date Schedule ($) Cap Strike (%)
-------------------- ----------------- ----------------- ----------------- ------------------- ----------------
1 380,000,000 8.719% 35 119,719,875 16.827%
2 367,485,133 18.572% 36 115,633,078 15.714%
3 355,382,428 15.066% 37 111,679,843 16.280%
4 343,678,313 17.324% 38 107,866,909 18.039%
5 332,359,660 16.196% 39 104,314,435 14.584%
6 321,413,773 17.324% 40 100,878,958 16.827%
7 310,828,377 16.196% 41 97,556,624 15.715%
8 300,591,598 16.761% 42 94,343,708 16.827%
9 290,691,956 17.324% 43 91,198,577 15.715%
10 281,118,348 16.196% 44 88,132,482 16.280%
11 271,860,036 17.324% 45 85,167,364 16.827%
12 262,906,635 16.196% 46 82,299,900 15.715%
13 254,248,105 16.277% 47 79,526,872 16.828%
14 245,768,796 17.409% 48 76,845,171 15.715%
15 237,567,247 15.147% 49 74,251,788 16.280%
16 229,634,491 16.825% 50 71,743,816 18.040%
17 221,961,257 15.712% 51 69,318,441 14.585%
18 214,539,371 16.825% 52 66,972,943 16.828%
19 207,360,141 15.712% 53 64,704,691 15.716%
20 200,416,040 16.278% 54 62,511,141 16.828%
21 193,698,724 16.825% 55 60,389,834 15.716%
22 187,200,983 15.713% 56 58,338,389 16.281%
23 180,915,995 16.825% 57 56,354,506 16.829%
24 174,835,886 15.713% 58 54,435,960 15.716%
25 168,954,814 16.278% 59 52,580,445 16.829%
26 163,265,187 18.037% 60 50,786,045 15.717%
27 157,761,170 14.583% 61 49,050,749 16.282%
28 152,438,565 16.826% 62 46,927,309 17.415%
29 147,287,583 15.713% 63 44,892,366 15.152%
30 142,305,125 16.826% 64 42,942,232 16.830%
31 137,484,191 15.714% 65 41,073,373 15.718%
32 132,820,940 16.279% 66 39,282,401 16.831%
33 128,308,571 16.826% 67 37,566,070 15.718%
34 123,942,860 15.714%
A-2
"Class 2-A Cap Payment Schedule" is as follows:
Notional Notional
Payment Date Schedule ($) Cap Strike Payment Date Schedule ($) Cap Strike
-------------------- ----------------- ----------------- ----------------- ------------------- ----------------
1 1,720,000,000 8.855% 35 550,818,376 16.867%
2 1,663,349,426 18.618% 36 532,676,994 15.752%
3 1,608,564,782 15.103% 37 515,133,118 16.319%
4 1,555,584,603 17.367% 38 498,167,066 18.082%
5 1,504,349,453 16.236% 39 481,759,808 14.620%
6 1,454,801,854 17.367% 40 465,892,939 16.867%
7 1,406,886,218 16.236% 41 450,548,660 15.752%
8 1,360,548,790 16.803% 42 435,709,757 16.867%
9 1,315,737,588 17.367% 43 421,359,587 15.752%
10 1,272,402,339 16.236% 44 407,482,051 16.319%
11 1,230,494,427 17.367% 45 394,061,583 16.867%
12 1,189,966,838 16.236% 46 381,083,128 15.752%
13 1,150,774,107 16.319% 47 368,532,127 16.867%
14 1,112,872,265 17.454% 48 356,394,503 15.752%
15 1,076,218,792 15.186% 49 344,656,639 16.319%
16 1,040,772,570 16.867% 50 333,305,369 18.082%
17 1,006,493,834 15.752% 51 322,327,961 14.620%
18 973,344,130 16.867% 52 311,712,099 16.867%
19 941,286,268 15.752% 53 301,445,877 15.752%
20 910,284,286 16.319% 54 291,517,778 16.867%
21 880,303,405 16.867% 55 281,916,961 15.752%
22 851,309,994 15.752% 56 272,632,336 16.319%
23 823,271,525 16.867% 57 263,652,409 16.867%
24 796,156,547 15.752% 58 254,965,957 15.752%
25 769,934,640 16.319% 59 246,565,735 16.867%
26 744,576,390 18.082% 60 238,442,309 15.752%
27 720,053,350 14.620% 61 230,586,556 16.319%
28 696,338,009 16.867% 62 220,975,722 17.454%
29 673,403,765 15.752% 63 211,765,467 15.186%
30 651,224,890 16.867% 64 202,939,095 16.867%
31 629,776,504 15.752% 65 194,480,606 15.752%
32 609,034,547 16.319% 66 186,374,666 16.867%
33 588,975,750 16.867% 67 178,606,581 15.752%
34 569,577,614 15.752%
A-3
The "Certificates" mean the Class C Certificates, the Class E-P
Certificates, Class R-1 Certificates, and Class R-2 Certificates issued pursuant
to the Trust Agreement.
A "Class" of Notes is any of the Class 1-A Notes and the Class 2-A Notes.
A "Class 1-A Note" is any note executed by the Owner Trustee and
authenticated by the Indenture Trustee substantially in the form of Exhibit A-1
of the Indenture and related to Loan Group 1.
A "Class 2-A Note" is any note executed by the Owner Trustee and
authenticated by the Indenture Trustee substantially in the form of Exhibit A-1
of the Indenture and related to Loan Group 2.
The "Class Note Rate" for any Class of Principal Amount Notes is a per
annum rate equal to the lesser of
(i) for the first Interest Period a per annum rate equal to the sum
of the interpolated one-month and two-month LIBOR and the Applicable
Margin, and for any subsequent Interest Period, the sum of one-month LIBOR
as of the Adjustment Date for that Interest Period and the Applicable
Margin, and
(ii) the Maximum Rate for that Class of Notes for that Interest
Period.
The interpolated one-month and two-month LIBOR shall be equal to one-month LIBOR
for the first Interest Period plus the product of
o the excess of two-month LIBOR for the first Interest Period over
one-month LIBOR for the first Interest Period, multiplied by
o a fraction whose numerator is the number of days from the
one-month anniversary of the Closing Date to the first Payment Date and
whose denominator is 30.
The "Closing Date" is December 29, 2006.
The last day of the first "Collection Period" is the last day of January
2007.
The "Corporate Trust Office" of the Indenture Trustee at the date of
execution of the Indenture is located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇ Attn: Corporate Trust MBS Administration.
"Credit Enhancement Draw Amount" for each Class of Insured Notes and each
Payment Date or other applicable date in accordance with the Policy means an
amount equal to the sum of (a) the excess of the related Guaranteed Payment over
the related Available Investor Interest for that Payment Date, and (b) for each
applicable date in accordance with the Policy, any Preference Amount related to
that Class of Insured Notes to be paid pursuant to the terms of the Policy.
The "Credit Enhancer" is Financial Security Assurance Inc. and any
successor or replacement for the Credit Enhancer in accordance with Section 8.06
of the Indenture.
"Delinquency Rate" means, for any Loan Group, the ratio, stated as a
percentage, of (i) the aggregate Asset Balances of the Mortgage Loans in that
Loan Group that are, as of the close of business of the last day of the related
Collection Period, 60 or more days delinquent in payment of principal or
A-4
interest, in foreclosure, REO property, or in bankruptcy to (ii) the Loan Group
Balance of that Loan Group.
The "Funding Period" means the period from the Closing Date until the
earlier of the date on which amounts held in each Additional Loan Account is
less than $40,000 and the last day of January, 2007.
"Guaranteed Payment" for each Payment Date and each class of Insured Notes
means the sum of the related Guaranteed Principal Payment Amount and the related
Aggregate Note Interest for the Payment Date.
"Guaranteed Principal Payment Amount" for each Class of Insured Notes means
o on the Scheduled Maturity Date, the related outstanding Note
Principal Balance (after giving effect to all other allocations and
payments for that Class of Notes on that Payment Date),
o for any other Payment Date, if the Required Transferor
Subordinated Amount for that Class of Notes has been reduced to zero or
below, the excess of
(x) the excess of the Note Principal Balance of that Class of
Notes (after giving effect to all allocations and payments for
that Class of Notes on that Payment Date) over the related Loan
Group Balance plus all amounts on deposit in the related
Additional Loan Account (at the end of the related Collection
Period),
over
(y) the excess of the Loan Group Balance of the unrelated Loan
Group plus all amounts on deposit in the Additional Loan Account
related to the unrelated Loan Group (at the end of the related
Collection Period) over the Note Principal Balance of the
unrelated Class of Notes (after giving effect to all allocations
and payments for that Class of Notes on that Payment Date), and
o for any other Payment Date, zero.
The "Indenture Trustee" is The Bank of New York.
The "Initial Cut-off Date" is the later of December 22, 2006 and the date
of origination of the relevant Initial Mortgage Loan.
The "Insurance Agreement" is the insurance and indemnity agreement dated as
of the Closing Date among the Sponsor, the Depositor, the Indenture Trustee, and
the Credit Enhancer.
The "Insured Notes" are the Class 1-A Notes and the Class 2-A Notes.
The "Interest Bearing Notes" are the Class 1-A Notes and the Class 2-A
Notes.
The "Interest Formula Rate" for a Class of Principal Amount Notes is the
rate in clause (i) of the definition of Class Note Rate.
A-5
The "Latest Subsequent Closing Date" is the last day of the Funding Period.
The "Maximum Rate" for a Class of Principal Amount Notes for any Interest
Period is the Weighted Average Net Loan Rate for the Mortgage Loans in the
related Loan Group for the Collection Period during which the Interest Period
begins (adjusted to an effective rate reflecting accrued interest calculated on
the basis of the actual number of days in the Collection Period commencing in
the month in which the Interest Period commences and a year assumed to consist
of 360 days).
The "Mortgage Loan Schedule" shall specify for each Mortgage Loan its (i)
account number, (ii) Credit Limit, (iii) Gross Margin, (iv) lifetime rate cap,
(v) Cut-off Date Asset Balance, (vi) current Loan Rate, (vii) combined
loan-to-value ratio, (viii) code specifying the property type, (ix) code
specifying documentation type, (x) code specifying lien position, (xi) code
specifying whether the Mortgage Loan is a MOM Loan, and (xii) indication of the
Loan Group.
The "Net Loan Rate" for any Mortgage Loan on any day is the Loan Rate less
o the Servicing Fee Rate,
o Premium Percentage defined in the Insurance Agreement, and
o commencing with the Payment Date in February 2008, 0.50% per
annum.
A "Note" is 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-1
to the Indenture.
The "Note Rate" refers to either the Class 1-A Note Rate or the Class 2-A
Note Rate, as applicable.
The "Original Note Principal Balance" of the Notes is $2,100,000,000, the
Original Note Principal Balance of the Class 1-A Notes is $380,000,000, and the
Original Note Principal Balance of the Class 2-A Notes is $1,720,000,000.
The "Outstanding Amount" of the Principal Amount Notes or of a Class of
Principal Amount Notes that are Outstanding at the date of determination is
their aggregate principal amount.
The "Owner Trustee" is Wilmington Trust Company, or any successor owner
trustee under the Trust Agreement.
The "Payment Date" is the Business Day after the fourteenth day of each
month, beginning in February 2007.
The "Policy" is the Financial Guaranty Insurance Policy No. 51800-N issued
by the Credit Enhancer.
The "Premium Letter" means the letter agreement among the Credit Enhancer,
the Indenture Trustee, the Sponsor, and the Depositor dated the date of the
Indenture in respect of the premium payable to the Credit Enhancer in
consideration of the issuance of the Policy.
The "Principal Amount Notes" are the Class 1-A Notes and Class 2-A Notes.
A-6
The Payment Date referred to in the definition of "Rapid Amortization
Commencement Date" is the Payment Date in January 2012. The percentage of the
aggregate Original Note Principal Balance of the Insured Notes that the
aggregate of all draws under the Policy would exceed to result in a "Rapid
Amortization Event" under Section 5.16(g) is 1.00%.
The "Record Date" for a Payment Date or redemption date for Book-Entry
Notes is the close of business on the day before the Payment Date or redemption
date. The record date for definitive Notes is the last day of the preceding
month before the Payment Date or redemption date.
"Reporting Subcontractor" with respect to the Master Servicer or the
Indenture Trustee means any Subcontractor determined by the Master Servicer or
the Indenture Trustee pursuant to section 7.08(b) of the Sale and Servicing
Agreement to be "participating in the servicing function" within the meaning of
Item 1122 of Regulation AB. References to a Reporting Subcontractor shall refer
only to the Subcontractor of the Master Servicer or the Indenture Trustee and
shall not refer to Subcontractors generally.
"Required Transferor Subordinated Amount" for each Loan Group and the
related Class of Notes and any Payment Date, means (x) prior to the Stepdown
Date 2.10% of the Original Note Principal Balance of that Class of Notes; and
(y) after the Stepdown Date, the greater of (A) of 0.50% of the Original Note
Principal Balance of such Class of Notes and (B) (i) if the Stepdown Delinquency
Test and the Stepdown Cumulative Loss Test have each been met, 4.20% of the
related Loan Group Balance as of the last day of the related Collection Period
or (ii) if either the Stepdown Delinquency Test or the Stepdown Cumulative Loss
Test has not been met, the amount determined under clause (y)(B)(i) above for
the immediately preceding Payment Date.
The "Scheduled Maturity Date" is the Payment Date in January 2047.
The "Servicing Fee Rate" is 0.50% per annum.
"Spread Rate" means with respect to any Payment Date and any Class of
Insured Notes, the related Excess Spread Percentage minus the related Loss
Percentage.
The "Stepdown Date" is the later to occur of (i) the 31st Payment Date and
(ii) the Payment Date on which the aggregate Note Principal Balance is reduced
below 50% of the Original Note Principal Balance.
The "Stepdown Cumulative Loss Test" is met on any date if the percentage of
the cumulative losses on the Mortgage Loans as of such date is less than the
applicable percentage listed below of the Loan Pool Balance plus any amount on
deposit in the Additional Loan Accounts, each as of the Closing Date:
Months Percentage
---------------- -------------------
31-48 3.25%
49-60 4.00%
61+ 5.00%
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The "Stepdown Delinquency Test" is met on any date if the six month (or if
less, the number of months since the Closing Date) rolling average 60-day
delinquency rate of the Mortgage Loans in the Mortgage Loan Pool (including
Mortgage Loans that are in foreclosure or are REOs) as of such date of
determination is less than 4.50%.
The "Transferor Certificates" are the Class C Certificates and Class R-1
Certificates issued pursuant to the Trust Agreement.
The "Trust" is the CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, a
Delaware statutory trust established pursuant to the Trust Agreement, dated as
of December 27, 2006, among Countrywide Home Loans, Inc., the Depositor, and
Wilmington Trust Company.
The date in each year by which the Issuer will furnish an Opinion of
Counsel pursuant to Section 3.06(b) of the Indenture is September 30 beginning
in 2007.
The date in each year by which an annual compliance statement pursuant to
Section 3.09 of the Indenture is due is March 15, 2007.
The wiring instructions for the Indenture Trustee are:
JPMorgan Chase Bank, N.A. - Houston, TX
ABA# ▇▇▇▇▇▇▇▇▇
Acct Number: 00103409232
Acct Name: Houston Structured Finance
Ref: CWHEQ 2006-I
The wiring instructions for the Credit Enhancer are:
The Bank of New York, New York
ABA#: ▇▇▇-▇▇▇-▇▇▇
Acct Number: ▇▇▇▇-▇▇▇-▇▇▇
Acct Name: Financial Security Assurance Inc.
Ref: Policy Number 51800-N
Revolving Home Equity Loan Asset-Backed Notes,
Series 2006-I, Class 1-A and Class 2-A
The date in each year by which the Indenture Trustee will furnish reports
pursuant to Section 7.04 of the Indenture is March 15 beginning in 2007.
The date on which the Master Servicer delivers the Officer's Certificate in
each year is March 15, and the first Officer's Certificate pursuant to Section
3.09 of the Sale and Servicing Agreement is March 15, 2007.
The date of the Prospectus Supplement is December 27, 2006.
Addresses for notices under any of the Transaction Documents (unless
otherwise specified therein) are:
o For the Issuer:
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CWHEQ Revolving Home Equity Loan Trust, Series 2006-I
Wilmington Trust Company, as Owner Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
o For the Depositor:
CWHEQ, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department (CWHEQ 2006-I)
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
o For the Master Servicer:
Countrywide Home Loans, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department (CWHEQ 2006-I)
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
o For Park Monaco:
Park Monaco Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ref: CWHEQ 2006-I
o For the Indenture Trustee:
The Bank of New York,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Trust MBS Administration.
With a copy to:
The Bank of New York Trust Company. N.A.,
600 Travis, 9th Fl
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Structured Finance Services.
A-9
o For the Custodian:
Treasury Bank, a division of Countrywide Bank, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Document Custodian.
o For the Credit Enhancer:
Financial Security Assurance Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Managing Director - Transaction Oversight
Re: Revolving Home Equity Loan Asset-Backed Notes, Series 2006-I
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
and in the case of a notice of Credit Enhancer Default sent pursuant
to Section 8.08 of the Indenture, with a copy to:
Financial Security Assurance Inc.,
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇
Attention: General Counsel
Re: Revolving Home Equity Loan Asset-Backed Notes, Series 2006-I
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
o For Standard & Poor's:
Standard & Poor's,
a division of The McGraw Hill Companies, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
o For Moody's:
▇▇▇▇▇'▇ Investors Service, Inc.
Residential Loan Monitoring Group
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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